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Celsion Corporation Reports Second Quarter 2019 Financial Results and Provides Business Update

On August 14, 2019 Celsion Corporation (NASDAQ: CLSN), an oncology drug development company, reported financial results for the three and six months ended June 30, 2019 and provided an update on its development programs for ThermoDox and GEN-1 (Press release, Celsion, AUG 14, 2019, View Source [SID1234538760]). The Company’s lead program is ThermoDox, a proprietary heat-activated liposomal encapsulation of doxorubicin currently in Phase III development (the OPTIMA Study) for the treatment of hepatocellular carcinoma (HCC), or primary liver cancer. The Company’s immunotherapy candidate, GEN-1, is an IL-12 DNA plasmid vector encased in a nanoparticle delivery system that enables cell transfection followed by persistent, local secretion of the IL-12 protein. GEN-1 is currently in Phase I/II development (the OVATION 2 Study) for the localized treatment of newly diagnosed Stage III/IV ovarian cancer.

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"With a clear focus on shareholder value, Celsion continues to execute its business plan for our ongoing clinical development programs with ThermoDox and GEN-1. We are exceptionally well positioned on the fundamentals with a strong balance sheet that is expected to fund our clinical programs through transformative milestones over the next 18 months," said Michael H. Tardugno, Celsion’s chairman, president and chief executive officer. "We look forward to the first of two preplanned interim efficacy analyses for the OPTIMA Study expected in October 2019. At the current event rate, the second interim analysis, if needed, is expected to occur in early 2020. This global, pivotal study completed patient enrollment in August 2018 at more than 65 clinical sites in 14 countries, including all the major markets for primary liver cancer."

"The first cohort of patients in the dose-escalation portion of our OVATION 2 Study in newly diagnosed ovarian cancer has been enrolled. We continue to work through the activation of up to 30 clinical sites in the U.S. and Canada by the end of this year. Importantly, enrollment of patients in the Phase I portion of the study is expected to be completed and initial data reported by the end of 2019. This promising clinical development program in immunotherapy has generated impressive results in previous trials," Mr. Tardugno added.

Recent Developments

ThermoDox

Results of the National Institutes of Health Analysis of ThermoDox Published in the Journal of Vascular and Interventional Radiology. On August 13, 2019, the Company announced that results from an independent analysis of the Company’s ThermoDox HEAT Study conducted by the National Institutes of Health (NIH) were published in the peer-reviewed publication, Journal of Vascular and Interventional Radiology. The analysis was conducted by the intramural research program of the NIH and the NIH Center for Interventional Oncology (CIO), with the full data set from the Company’s HEAT Study. The analysis evaluated the full data set to determine if there was a correlation between baseline tumor volume and radiofrequency ablation (RFA) heating time (minutes/tumor volume in milliliters), with or without ThermoDox treatment, for patients with HCC. The NIH analysis was conducted under the direction of Dr. Bradford Wood, MD, Director, NIH Center for Interventional Oncology and Chief, NIH Clinical Center Interventional Radiology.

The article titled, "RFA Duration Per Tumor Volume May Correlate With Overall Survival in Solitary Hepatocellular Carcinoma Patients Treated With RFA Plus Lyso-thermosensitive Liposomal Doxorubicin," discussed the NIH analysis of results from 437 patients in the HEAT Study (all patients with a single lesion representing 62.4% of the study population). The key finding was that increased RFA heating time per tumor volume significantly improved overall survival (OS) in patients with single-lesion HCC who were treated with RFA plus ThermoDox, compared to patients treated with RFA alone. A one-unit increase in RFA duration per tumor volume was shown to result in about a 20% improvement in OS for patients administered ThermoDox, compared to RFA alone. The authors conclude that increasing RFA heating time in combination with ThermoDox significantly improves OS and establishes an improvement of over two years versus the control arm when the heating time per milliliter of tumor is greater than 2.5 minutes. This finding is consistent with the Company’s own results, which defined the optimized RFA procedure as a 45-minute treatment for tumors with a diameter of 3 centimeters. Thus, the NIH analysis lends support to the hypothesis underpinning the OPTIMA Study.

Data Lock for First Prespecified Interim Analysis in OPTIMA Phase III Study of ThermoDox in Primary Liver Cancer. On August 5, 2019, the Company announced the prescribed number of events has been reached for the first prespecified interim analysis of the OPTIMA Phase III Study with ThermoDox plus radiofrequency ablation (RFA) in patients with HCC. Following preparation of the data, the first interim analysis will be conducted by the Independent Data Monitoring Committee (iDMC). The iDMC meeting is expected to occur by mid-October. This timeline is consistent with the Company’s stated expectations and is necessary to provide a full and comprehensive data set that may represent the potential for a successful trial outcome. The iDMC recommendations will be announced as soon as possible after the meeting.

In accordance with the statistical plan, this initial interim analysis has a target of at least 118 events, or 60% of the total number required for the final analysis. At the time of the data cutoff, the Company received reports of 128 events. The hazard ratio for success at 128 events is approximately 0.63, which represents a 37% reduction in the risk of death compared with RFA alone, and is consistent with the 0.65 hazard ratio that was observed in the prospective HEAT Study subgroup, which demonstrated a two-year overall survival advantage and a median time to death of more than seven and a half years.

The OPTIMA Study was fully enrolled in August 2018 with 556 subjects from 65 clinical sites in 14 countries. The design of the OPTIMA Study is based on the Company’s HEAT Study, in which a subgroup analysis of 285 subjects with a single lesion of 3-7 cm in size received a single ThermoDox administration in combination with a 45-minute or longer RFA procedure. Followed prospectively for over 2.5 years, patients treated with ThermoDox demonstrated a median survival of more than 7.5 years and a survival benefit of more than two years over the control group. These data were published in the October 2017 issue of the peer-reviewed journal Clinical Cancer Research, and are available here.

IRB Approval to Begin a Clinical Study of ThermoDox Plus High Intensity Focused Ultrasound in Breast Cancer Patients at University Medical Center Utrecht in the Netherlands. On June 20, 2019, the Company announced that the University Medical Center Utrecht in the Netherlands received Institutional Review Board (IRB) approval to begin a Phase I study to determine the safety, tolerability and feasibility of ThermoDox in combination with Magnetic Resonance Guided High Intensity Focused Ultrasound (MR-HIFU) hyperthermia and cyclophosphamide therapy for the local treatment of the primary tumor in metastatic breast cancer (mBC). The secondary objective of this study is to assess radiological objective response of distant metastases and of the primary breast tumor.

This single-site, investigator-sponsored study – image-guided targeted doxorubicin delivery with hyperthermia to optimize loco-regional control in breast cancer; the i-GO Feasibility Study – will enroll up to 12 newly diagnosed mBC patients. Study subjects will receive up to six cycles of the following regimen at three-week intervals:

●60 minutes of MR-HIFU hyperthermia at 40oC to 42oC delivered to the primary tumor;
●50 mg/m2 of ThermoDox as a 30-minute intravenous (IV) infusion during hyperthermia; and
●600 mg/m2 of cyclophosphamide as a 15-minute IV infusion after hyperthermia.

This study further reinforces the broad potential of ThermoDox to treat a range of solid tumors with multiple localized heating sources.

Issuance of New U.S. Patent for ThermoDox. On April 17, 2019, the Company announced that the United States Patent and Trademark Office granted U.S. Patent No. 10,251,901 B2 – Thermosensitive Nanoparticle Formulations and Method of Making the Same – which is directly applicable to the method of treating cancer using a new ThermoDox formulation. The claim covers a method for preparing (as well as the composition of) a doxorubicin sulfate temperature-sensitive liposome and extends protection for the ThermoDox patent portfolio to 2033. This new patent broadens the ThermoDox intellectual property portfolio and provides for lifecycle management well into the future.

Corporate Development

Celsion Participated in Two Investor Conferences. During May 2019, the Company attended the ThinkEquity Conference in New York City and the Deutsche Bank 44th Annual Health Care Conference in Boston. A webcast of Celsion’s presentation at the ThinkEquity Conference may be accessed by visiting the "News & Investors" section of Celsion’s corporate website. The format of the Deutsche Bank Health Care Conference was comprised of one-on-one and small group meetings with leading institutional investors.

Second Quarter Financial Results

For the quarter ended June 30, 2019, Celsion reported a net loss of $5.9 million ($0.29 per share), compared with $8.2 million ($0.46 per share) in the same period of 2018. Operating expenses were $5.7 million in the second quarter of 2019, which represented a $2.4 million (30%) decrease from $8.1 million in the same period of 2018. During the second quarter of 2019, the Company incurred $0.6 million in non-cash stock option expense, compared with $3.2 million in the comparable prior-year period.

Research and development expenses decreased $1.0 million to $3.6 million in the second quarter of 2019, compared with $4.6 million in the second quarter of 2018. Clinical development costs for the Phase III OPTIMA Study decreased $0.8 million to $1.2 million in the second quarter of 2019, compared with $2.0 million in the second quarter of 2018, due to the completion of enrollment in this 556-patient trial in August 2018. Costs associated with the startup of the OVATION 2 Study were $0.1 million in the second quarter of 2019. Other costs related to clinical supplies and regulatory support for the ThermoDox and GEN-1 clinical development programs increased by $0.3 million in the second quarter of 2019 compared with the prior-year period. In the second quarter of 2019, non-cash stock compensation expense decreased $2.6 million compared with the same period of 2018.

General and administrative expenses were $2.1 million in the second quarter of 2019, compared with $3.5 million in the same period of 2018. The decrease was primarily attributable to a $1.8 million decrease in non-cash stock compensation expense, offset by a $0.2 million increase in professional fees primarily related to recruiting fees for several new positions to support the anticipated regulatory and commercialization efforts for ThermoDox.

The Company realized $0.1 million of interest income from its short-term investments during the second quarters of 2019 and 2018. In connection with the Company’s venture debt facility with Horizon entered in late June 2018, the Company incurred interest expense of $0.3 million during the second quarter of 2019. This compares with interest expense of $15,000 in the comparable prior-year period.

The Company ended the second quarter of 2019 with $21.8 million in cash, investment securities and interest receivable. With $21.8 million in cash at June 30, 2019 coupled with future sales of the Company’s New Jersey NOL’s, the Company believes it has sufficient capital resources to fund its operations into the first quarter of 2021.

Six Month Financial Results

For the six months ended June 30, 2019, the Company reported a net loss of $8.3 million ($0.42 per share), compared with $12.7 million ($0.73 per share) in the same period of 2018. Operating expenses were $10.7 million during the first six months of 2019, which represented a $1.8 million (15%) decrease from $12.5 million in the same period of 2018. During the first half of 2019, the Company incurred $1.3 million in non-cash stock option expense, compared with $3.4 million in the comparable 2018 period.

Net cash used for operating activities was $10.7 million in the first six months of 2019, compared with $8.8 million in the same period in 2018. This was in line with the Company’s projected cash utilization for 2019 of approximately $18 million, or an average of approximately $4.5 million per quarter. Cash provided by financing activities was approximately $4.5 million during the first six months of 2019.

Research and development expenses decreased $1.0 million to $6.3 million in the first half of 2019 from $7.3 million in the first half of 2018. Clinical development costs for the Phase III OPTIMA Study decreased $1.2 million to $2.1 million in the first half of 2019, compared with $3.3 million in the first half of 2018, due to the completion of enrollment in this 556-patient trial in August 2018. Costs associated with the startup of the OVATION 2 Study were $0.2 million in the first half of 2019. Other costs related to clinical supplies and regulatory support for the ThermoDox and GEN-1 clinical development programs increased by $0.2 million in the first half of 2019 compared with the same prior-year period. In the first half of 2019, non-cash stock compensation expense decreased $2.1 million compared with the same period of 2018.

Other expenses in the first half of 2019 included a non-cash gain of $2.6 million, net of a $0.4 million charge for the issuance of 200,000 warrants related to an amendment for the potential milestone payments for the GEN-1 ovarian product candidate, compared with a non-cash charge of $0.5 million for the comparable prior-year period.

The Company realized $0.2 million of interest income during the first half of 2019 and 2018. In connection with the Company’s venture debt facility with Horizon entered in late June 2018, the Company incurred interest expense of $0.7 million during the first six months of 2019, compared with interest expense of $15,000 in the comparable prior-year period.

Conference Call

The Company is hosting a conference call to provide a business update and discuss its second quarter 2019 financial results at 11:00 a.m. EDT on Thursday, August 15, 2019. To participate in the call, dial 1-800-367-2403 (Toll-Free/North America) or 1-334-777-6978 (International/Toll) and use conference ID 2816618. The call will also be broadcast live on the internet at www.celsion.com. The call will be archived for replay until August 29, 2019 and can be accessed at 1-719-457-0820 or 1-888-203-1112 using conference ID 2816618. An audio replay will also be available for 90 days at www.celsion.com.

Agilent Technologies Reports Third Quarter Fiscal Year 2019 Financial Results

On August 14, 2019 Agilent Technologies, Inc. (NYSE: A) reported revenue of $1.27 billion for the third quarter ended July 31, 2019, up 6 percent year-over-year (and up 6 percent on a core basis(1)) (Press release, Agilent, AUG 14, 2019, https://www.agilent.com/about/newsroom/presrel/2019/14aug-gp19016.html [SID1234538758]).

On a GAAP basis, third quarter net income was $191 million or $0.60 per share. This compares with $236 million or $0.73 per share in the third quarter of 2018. Non-GAAP net income(2) was $240 million or $0.76 per share during the quarter, compared with $217 million or $0.67 per share during the third quarter a year ago.

"The Agilent team delivered very strong results in the third quarter, exceeding both our top and bottom-line expectations," said Mike McMullen, Agilent president and CEO. "Building on this performance, we are increasing our guidance for the full year. In the quarter, we also announced the pending acquisition of BioTek, continuing our investments in high growth markets. BioTek will significantly expand our presence in the fast-growing field of cell analysis."

Financial Highlights

Life Sciences and Applied Markets Group

Third quarter revenue of $544 million from Agilent’s Life Sciences and Applied Markets Group (LSAG) was up 1 percent year-over-year (and flat on a core basis(1)). Demand in the pharma, environmental and forensics markets was strong, offset by expected weakness in the food market. LSAG’s operating margin for the quarter was 21.7 percent.

Agilent CrossLab Group

Third quarter revenue of $467 million from the Agilent CrossLab Group (ACG) grew 10 percent year-over-year (up 11 percent on a core basis(1)). Growth was broad-based across all regions and market segments. ACG’s operating margin for the quarter was 26.2 percent.

Diagnostics and Genomics Group

Third quarter revenue of $263 million from Agilent’s Diagnostics and Genomics Group (DGG) grew 11 percent year-over-year (up 13 percent on a core basis(1)). Growth in the company’s Nucleic Acid Solutions Division (NASD), and in the diagnostics and clinical markets drove the strong results. DGG’s operating margin for the quarter was 19.1 percent.

Full-Year and Fourth Quarter Outlook

For fiscal year 2019, the company is raising revenue guidance at the midpoint, to a range of $5.105 billion to $5.125 billion. Full-year non-GAAP earnings guidance is being increased to a range of $3.07 to $3.09 per share(3).

Agilent expects fourth quarter 2019 revenue in the range of $1.31 billion to $1.33 billion. Fourth quarter 2019 non-GAAP earnings are expected to be in the range of $0.84 to $0.86 per share(3).

Both the fiscal year and fourth quarter guidance excludes any impact of the pending BioTek acquisition. The acquisition is still expected to be completed in Agilent’s fiscal fourth quarter, subject to regulatory approvals and customary closing conditions.

Conference Call

Agilent’s management will present more details about its third quarter fiscal year 2019 financial results on a conference call with investors today at 1:30 p.m. (Pacific Time). This event will be webcast live in listen-only mode. Listeners may log on at www.investor.agilent.com and select "Q3 2019 Agilent Technologies Inc. Earnings Conference Call" in the "News & Events — Calendar of Events" section. The webcast will remain available on the company’s website for 90 days.

The adjustment for taxes excludes tax benefits that management believes are not directly related to on-going operations and which are either isolated or cannot be expected to occur again with any regularity or predictability. For the three and nine months ended July 31, 2019, management used a non-GAAP effective tax rate of 16.67% and 16.75%, respectively. In the same periods last year, management used a non-GAAP effective tax rate of 18%.

We provide non-GAAP net income and non-GAAP net income per share amounts in order to provide meaningful supplemental information regarding our operational performance and our prospects for the future. These supplemental measures exclude, among other things, charges related to amortization of intangibles, business exit and divestiture costs, transformational initiatives, acquisition and integration costs, pension settlement gain, gain on step acquisition of Lasergen, NASD site costs, special compliance costs, adjustment for Tax Reform, and tax benefit on intra-entity asset transfer.

Business exit and divestiture costs include costs associated with business divestitures.

Transformational initiatives include expenses associated with targeted cost reduction activities such as manufacturing transfers including costs to move manufacturing due to new tariffs and tariff remediation actions, small site consolidations, legal entity and other business reorganizations, insourcing or outsourcing of activities. Such costs may include move and relocation costs, one-time termination benefits and other one-time reorganization costs. Included in this category are also expenses associated with company programs to transform our product lifecycle management (PLM) system, human resources and financial systems.

Acquisition and Integration costs include all incremental expenses incurred to effect a business combination. Such acquisition costs may include advisory, legal, accounting, valuation, and other professional or consulting fees. Such integration costs may include expenses directly related to integration of business and facility operations, the transfer of assets and intellectual property, information technology systems and infrastructure and other employee-related costs.

Pension settlement gain resulted from transfer of the substitutional portion of our Japanese pension plan to the government.

Gain on step acquisition of Lasergen resulted from the measurement at fair value of our equity interest held at the date of business combination.

NASD site costs include all the costs related to the expansion of our manufacturing of nucleic acid active pharmaceutical ingredients incurred prior to the commencement of commercial manufacturing.

Special compliance costs include costs associated with transforming our processes to implement new regulations such as the EU’s General Data Protection Regulation (GDPR), revenue recognition and certain tax reporting requirements.

Other includes certain legal costs and settlements in addition to other miscellaneous adjustments.

Adjustment for Tax Reform primarily consists of an estimated provision of $480 million for U.S. transition tax and correlative items on deemed repatriated earnings of non-U.S. subsidiaries and an estimated provision of $53 million associated with the decrease in the U.S. corporate tax rate from 35% to 21% and its impact on our U.S. deferred tax assets and liabilities. The taxes payable associated with the transition tax, net of tax attributes, on deemed repatriation of foreign earnings is approximately $440 million, payable over 8 years.

Tax benefit on intra-entity asset transfer relates to our operations in Singapore along with our application of the new accounting rules for income tax consequences of intra-entity transfer of assets as adopted on November 1, 2018.

Our management uses non-GAAP measures to evaluate the performance of our core businesses, to estimate future core performance and to compensate employees. Since management finds this measure to be useful, we believe that our investors benefit from seeing our results "through the eyes" of management in addition to seeing our GAAP results. This information facilitates our management’s internal comparisons to our historical operating results as well as to the operating results of our competitors.

Our management recognizes that items such as amortization of intangibles can have a material impact on our cash flows and/or our net income. Our GAAP financial statements including our statement of cash flows portray those effects. Although we believe it is useful for investors to see core performance free of special items, investors should understand that the excluded items are actual expenses that may impact the cash available to us for other uses. To gain a complete picture of all effects on the company’s profit and loss from any and all events, management does (and investors should) rely upon the GAAP income statement. The non-GAAP numbers focus instead upon the core business of the company, which is only a subset, albeit a critical one, of the company’s performance.

Readers are reminded that non-GAAP numbers are merely a supplement to, and not a replacement for, GAAP financial measures. They should be read in conjunction with the GAAP financial measures. It should be noted as well that our non-GAAP information may be different from the non-GAAP information provided by other companies.

The preliminary non-GAAP net income and diluted EPS reconciliation is estimated based on our current information.

Income from operations reflect the results of our reportable segments under Agilent’s management reporting system which are not necessarily in conformity with GAAP financial measures. Income from operations of our reporting segments exclude, among other things, charges related to amortization of intangibles, business exit and divestiture costs, transformational initiatives, acquisition and integration costs, gain on step acquisition of Lasergen, NASD site costs, and special compliance costs.

We compare the year-over-year change in revenue excluding the effect of recent acquisitions and divestitures and foreign currency rate fluctuations to assess the performance of our underlying business.

(a) The constant currency year-over-year growth percentage is calculated by recalculating all periods in the comparison period at the foreign currency exchange rates used for accounting during the last month of the current quarter, and then using those revised values to calculate the year-over-year percentage change.

(b) The dollar impact from the current quarter currency impact is equal to the total year-over-year dollar change less the constant currency year-over-year change.

The preliminary reconciliation of GAAP revenue adjusted for recent acquisitions and divestitures and impact of currency is estimated based on our current information.

Neptune Reports Fiscal 2020 First Quarter Results

On August 14, 2019 Neptune Wellness Solutions Inc. ("Neptune" or the "Corporation") (NASDAQ: NEPT) (TSX: NEPT), reported its financial and operating results for the three-month period ended June 30, 2019. All amounts are in Canadian dollars except specified otherwise (Press release, Neptune Technologies et Bioressources inc, AUG 14, 2019, View Source [SID1234538752]).

Corporate Highlights:

On June 7, 2019, Neptune announced a three-year contract with Tilray Inc. for the extraction of cannabinoids from cannabis and hemp biomass. Tilray has committed to provide minimum biomass volumes of 125,000 kg over a three-year period.
On June 12, 2019, Neptune announced a three-year contract with The Green Organic Dutchman (TGOD) for a minimum of 230,000 kg of cannabis and hemp biomass. Neptune will provide extraction services as well as turnkey formulation, manufacturing and packaging solutions to TGOD covering a range of finished products.
On June 17, 2019, Neptune’s wholly owned subsidiary, 9354-7537 Québec Inc., received license amendments covering additional rooms where Neptune will perform encapsulation and cold ethanol extraction which will increase Neptune’s extraction capacity from 30,000 kg to 200,000 kg of biomass annually.
On July 8, 2019, Michael Cammarata, a successful entrepreneur and innovator in the wellness industry, was appointed as Chief Executive Officer and Member of the Board of Directors of Neptune. Jim Hamilton stepped down from his role as CEO and Director but remains an advisor to the Board.
On July 18, 2019, Neptune announced a successful private placement of US$41 million of which US$12 million has been used to fund the initial cash consideration for the acquisition of the assets of SugarLeaf Labs.
Michael Cammarata, CEO of Neptune stated, "Since joining Neptune, I have been listening to key stakeholders and evaluating the company its strategy and vision. I have been impressed by our significant IP that can applied to the fast-paced cannabis industry. Our extraction expertise can set us apart as we ramp up production of both raw material and finished products. I have recently implemented initiatives to address the near-term operational and capacity constraints that have impacted the growth of our cannabis extraction services, as well as put several building blocks in place to support that growth, including private placement funding and boosting production at the Sherbrooke facility. We expect to see positive impacts from these actions beginning in the second quarter."

"We expect that our new contracts with Tilray and TGOD will offer strong and consistent revenue over the next three years. The health and wellness market provides a significant opportunity in which cannabis and hemp extracts will play an important role in fulfilling customers’ needs for improved quality of life. Neptune Wellness is well positioned to benefit from this large global market opportunity, and we will continue to raise the bar when it comes to transparency, quality and industry standards," continued Mr. Cammarata.

"Mario Paradis, VP & CFO, has decided to leave Neptune. We are very grateful for all of Mario’s hard work during his time at the company. We have begun a search for a new CFO and Mario will remain CFO of Neptune to help with the transition. We are poised for strong growth and I have no doubt we’ll find the right talent to help us achieve that growth."

Financial Results

Total revenues reached $4.4 million for the three-month ended June 30, 2019, down versus last year’s revenues of $5.2 million. The majority of the revenues during the quarter were generated in the Nutraceutical segment. The decline in total revenues is explained by the timing of contracts in the Nutraceutical segment. Commercial production of cannabis extracts during the quarter was impacted by constrained operations and extraction capacity.

Neptune reported a net loss of $6.5 million for the three-month ended June 30, 2019, an increase compared to a net loss of $4.1 million last year.

For the three-month ended June 30, 2019, Adjusted EBITDA1 was a loss of $3.6 million compared with a loss of $2.3 million last year. The increased Adjusted EBITDA1 loss is due to investments made to support the growing cannabis operations.

Cash and cash equivalents were $5.4 million as of June 30, 2019. On a pro-forma basis, including the net proceeds from the private placement completed on July 18, and the initial cash consideration paid to acquire SugarLeaf, Neptune’s cash and cash equivalent would have been $39 million as at June 30, 2019.

Completion of the SugarLeaf acquisition

On July 24, 2019, Neptune announced the closing of the acquisition of the assets of U.S.-based hemp processor SugarLeaf Labs and Forest Remedies LLC (collectively, "SugarLeaf"). The initial consideration paid at closing consisted of US$18 million or US$12 million in cash and US$6 million in common shares. By achieving certain annual adjusted EBITDA and other performance targets, an additional consideration of up to US$132 million would be paid over each of the next three years as a combination of cash and shares for a maximum aggregate purchase price of up to US$150 million, reflecting a valuation multiple below 5x EBITDA.

The extraction capacity of SugarLeaf is expected to reach an annual run rate of 1,500,000 kg of biomass by the end of 2019 with opportunities to further expand capacity. The company is using a cutting-edge cold ethanol processing technology producing high-quality broad-spectrum extracts and refined full spectrum extracts. SugarLeaf has established strategic and well diversified sourcing, with multiple local and large regional hemp farmer partners, ensuring traceability of finished product directly back to the farms. The acquisition of SugarLeaf, combined with Neptune creates a leading North American extraction platform with significant capacity available to serve customers in both Canada and the United States. The acquisition also offers an opportunity to participate in both B2B and B2C hemp-derived CBD markets in the United States.

Launch of Neptune Ventures

Today, Neptune Wellness also announces the creation of Neptune Ventures, a strategic investment arm and technology incubator which is expected to stimulate innovation and partnerships in the cannabis and wellness industry. Neptune Ventures will support Neptune’s growth into the consumer market with investments in Forest Remedies, SugarLeaf’s consumer brand which includes hemp-derived CBD balms and oils.

"We are excited to launch Neptune Ventures, which will allow us to invest alongside our customers in innovative new products and technology to offer additional value to our customers and shareholders," said Mr. Cammarata. "Our venture arm will be an opportunity to get us closer to our customers by developing new intellectual property, innovations and creative solutions."

Outlook

In Canada, near-term capacity constraints are expected to be resolved in September with the commissioning of ethanol extraction equipment, which should increase Neptune’s capacity from current levels of 30,000 kg of biomass to 200,000 kg of biomass processed annually. Furthermore, Phase IIIA expansion is progressing as planned with completion expected before the end of calendar 2019 with Health Canada licensing expected thereafter. With the Phase IIIA expansion, Neptune expects to have the industry’s lowest extraction costs, translating into potentially healthy margin.

In the United States, the capacity of our SugarLeaf plant is expected to reach 1,500,000 kg by the end of December, providing Neptune with substantial capacity to supply our B2B customers with hemp extracts ingredients and finished products. SugarLeaf is expected to contribute to Neptune’s revenue growth starting in the second quarter of fiscal 2020.

Our Nutraceutical division has recently seen an increase in demand for hemp-derived CBD sourcing and formulations which could stimulate sales in the second half of fiscal 2020.

"Once the expansion phases are complete, we expect Neptune’s two extraction facilities to have impressive earnings potential. Given that we only recently acquired SugarLeaf and are still in the process of integrating those operations, we estimate that, based on a conservative capacity utilization scenario of 50%, our two facilities could support in excess of $450 million in annual revenues. In addition, our highly automated operations are expected to translate into low production costs benefiting margins, which have the potential to exceed 40% at the EBITDA level. With a focus on bringing the highest quality products to market sustainably, we believe these developments can help us achieve and surpass these scenarios. There can, of course, be no assurance that the integration of SugarLeaf will be successfully implemented, that our utilization capacity will achieve anticipated levels, or that operational costs and margins will benefit from these developments to the extent anticipated at this time." concluded Mr. Cammarata.

Brain Cancer Patients Display Decreasing Tumor Biomarkers After Treatment with Novel Immunotherapy in AIVITA Biomedical’s Phase 2 Clinical Trial

On August 14, 2019 AIVITA Biomedical, Inc., a biotech company specializing in innovative stem cell applications, repored updated clinical data from its ongoing glioblastoma Phase 2 clinical trial, investigating AIVITA’s platform immunotherapy targeting tumor-initiating cells (Press release, AIVITA Biomedical, AUG 14, 2019, View Source [SID1234538751]). Blood plasma biomarker analyses have identified a robust immune response and a decrease of tumor biomarkers in 65% of treated patients, in a sample that represents 29% of the total Phase 2 clinical trial size.

Blood was collected from subjects at multiple time points, one week after each dose administration, and assayed for 450 different immune and tumor biomarkers. Treatment elicited a robust immune response, with biomarkers suggesting progressive activation of dendritic cell cross-presentation and progressive activation of a type II hypersensitivity antibody-mediated cytotoxic response. Most notably, 65% of the treated glioblastoma patients also showed a robust decrease of 27 different biomarkers associated with tumor development, including markers of tumor-associated angiogenesis, tumor-associated growth factors, and tumors themselves.

"An objective tumor biomarker response, combined with a robust and appropriate immune response, suggests a decrease of tumor burden in 65% of our treated patients," said Dr. Hans S. Keirstead, AIVITA’s Chief Executive Officer. "Should this translate to survival, it would represent a major step forward in our fight against glioblastoma."

AIVITA is currently conducting three distinct clinical studies investigating its platform immunotherapy, in patients with ovarian cancer, glioblastoma and melanoma. AIVITA uses 100% of proceeds from the sale of its ROOT of SKIN skincare line to support the treatment of women with ovarian cancer.

CLINICAL TRIAL DETAIL

OVARIAN CANCER

AIVITA’s ovarian Phase 2 double-blind study is active and enrolling approximately 99 patients who are being randomized in a 2:1 ratio to receive either the autologous tumor-initiating cell-targeting immunotherapy or autologous monocytes as a comparator.

Patients eligible for randomization and treatment will be those (1) who have undergone debulking surgery, (2) for whom a cell line has been established, (3) who have undergone leukapheresis from which sufficient monocytes were obtained, (4) have an ECOG performance grade of 0 or 1 (Karnofsky score of 70-100%), and (5) who have completed primary therapy. The trial is not open to patients with recurrent ovarian cancer.

For additional information about AIVITA’s AVOVA-1 trial patients can visit: www.clinicaltrials.gov/ct2/show/NCT02033616

GLIOBLASTOMA

AIVITA’s glioblastoma Phase 2 single-arm study is active and is enrolling approximately 55 patients to receive the tumor-initiating cell-targeting immunotherapy.

Patients eligible for treatment will be those (1) who have recovered from surgery such that they are about to begin concurrent chemotherapy and radiation therapy (CT/RT), (2) for whom an autologous tumor cell line has been established, (3) have a Karnofsky Performance Status of > 70 and (4) have undergone successful leukapheresis from which peripheral blood mononuclear cells (PBMC) were obtained that can be used to generate dendritic cells (DC). The trial is not open to patients with recurrent glioblastoma.

For additional information about AIVITA’s AV-GBM-1 trial please visit: www.clinicaltrials.gov/ct2/show/NCT03400917

MELANOMA

AIVITA’s melanoma Phase 1B open-label, single-arm study will establish the safety of administering anti-PD1 monoclonal antibodies in combination with AIVITA’s tumor-initiating cell-targeting immunotherapy in patients with measurable metastatic melanoma. The study will also track efficacy of the treatment for the estimated 14 to 20 patients. This trial is not yet open for enrollment.

Patients eligible for treatment will be those (1) for whom a cell line has been established, (2) who have undergone leukapheresis from which sufficient monocytes were obtained, (3) have an ECOG performance grade of 0 or 1 (Karnofsky score of 70-100%), (4) who have either never received treatment for metastatic melanoma or were previously treated with enzymatic inhibitors of the BRAF/MEK pathway because of BRAF600E/K mutations and (5) are about to initiate anti-PD1 monotherapy.

For additional information about AIVITA’s AV-MEL-1 trial please visit: www.clinicaltrials.gov/ct2/show/NCT03743298

Nuvo Pharmaceuticals™ Announces 2019 Second Quarter Results

On August 14, 2019 Nuvo Pharmaceuticals Inc. (Nuvo or the Company) (TSX:NRI;OTCQX:NRIFF), a Canadian focused, healthcare company with global reach and a diversified portfolio of commercial products, reported its financial and operational results for the three and six months ended June 30, 2019 (Press release, Nuvo Pharmaceuticals, AUG 14, 2019, View Source [SID1234538750]). For further details on the results, please refer to Nuvo’s Management, Discussion and Analysis (MD&A) and Condensed Consolidated Interim Financial Statements which are available on the Company’s website (www.nuvopharmaceuticals.com). All figures are in Canadian dollars, unless otherwise noted.

"During the second quarter, our operating segments continued to perform in line with our expectations and our second quarter financial results reinforce the increase in scale the Aralez Transaction has made to our business," said Jesse Ledger, Nuvo’s President & CEO. "While the Vimovo news during the quarter was disappointing, we have made cost-saving adjustments to our operations and our underlying business and financial performance is expected to benefit from these changes moving forward."

Second Quarter Financial Summary

Adjusted total revenue(1) was $19.1 million for the three months ended June 30, 2019 compared to $6.0 million for the three months ended June 30, 2018.

Adjusted EBITDA(1) was $5.7 million for the three months ended June 30, 2019 compared to $2.0 million for the three months ended June 30, 2018.

Gross profit on total revenue was $9.6 million or 58% for the three months ended June 30, 2019 compared to a gross profit of $3.5 million or 60% for the three months ended June 30, 2018.

Cash and short-term investments were $14.7 million as at June 30, 2019 compared to $28.1 million as at December 31, 2018. The decrease was primarily related to the settlement of transaction costs and indebtedness acquired by Nuvo upon close of the Aralez Transaction.
(1)

Non-International Financial Reporting Standards (IFRS) financial measure defined by the Company below.

Second Quarter and 2019 Business Update

Canadian prescriptions of Blexten increased 64% to 105,407 for the three months ended June 30, 2019 compared to 64,404 for the three months ended June 30, 2018.

Canadian prescriptions of Cambia increased 30% to 19,500 for the three months ended June 30, 2019 compared to 15,036 for the three months ended June 30, 2018.

On April 2, 2019, the Company announced the Marketing Authorization Application for Pennsaid 2% had been accepted for review by the Austrian Agency for Health and Food Safety (AGES) acting as the reference member state for Austria, Italy, Greece and Portugal. It is anticipated that a review decision will be made in early 2020.

On May 3, 2019, the Suvexx registration dossier passed screening with Health Canada and is now under formal review. The Company anticipates a review decision from Health Canada during the first half of 2020.

On May 15, 2019, the Company announced the United States Court of Appeals for the Federal Circuit (the Court of Appeals) had reversed the decision by the United States District Court for the District of New Jersey (the District Court) that had upheld the validity of U.S. Patent Nos. 6,926,907 (the ‘907 patent) and 8,557,285 (the ‘285 patent). On July 30, 2019, the Court of Appeals rejected the Company’s en banc request to have the Court of Appeals reconsider its decision. On June 26, 2019, the Company amended its financing agreement with Deerfield Management Company, L.P. (Deerfield), to provide, among other things, for a payment deferral of a portion of mandatory minimum quarterly prepayments should Vimovo U.S. market exclusivity be lost due to a generic entry.

On June 17, 2019, the Company announced that in the second half of 2019, it will start to realize on synergies resulting from organizational changes and its acquisition of Aralez Canada that will reduce its operating expenses by approximately $7.0 million annually.
Second Quarter 2019 Financial Results

Total revenue is comprised of product sales, license revenue and contract revenue. Total revenue was $16.6 million for the three months ended June 30, 2019 compared to $5.9 million for the three months ended June 30, 2018. The significant increase in total revenue for the current quarter was the result of the timing of the Aralez Transaction. Total revenue for the six months ended June 30, 2019 was $31.1 million compared to $10.3 million for the comparative six-month period.

Adjusted total revenue increased to $19.1 million for the three months ended June 30, 2019 compared to $6.0 million for the three months ended June 30, 2018. The $13.1 million increase in adjusted total revenue in the current quarter was primarily related to the timing of the Aralez Transaction, which provided an incremental $9.7 million of total revenue contributed from the Commercial Business segment and $4.7 million attributable to the Vimovo royalties related to the U.S. and ex-U.S. territories, partially offset by a $1.2 million decrease in Production and Service revenue. Adjusted total revenue increased to $36.2 million for the six months ended June 30, 2019 compared to $10.6 for the six months ended June 30, 2018.

Adjusted EBITDA increased to $5.7 million for the three months ended June 30, 2019 compared to $2.0 million for the three months ended June 30, 2018. The increase in adjusted EBITDA for the current quarter was primarily attributable to the increase in gross profit as a result of the Aralez Transaction, partially offset by an increase in sales and marketing and general and administrative (G&A) expenses, including $1.0 million of one-time restructuring expenses. Adjusted EBITDA increased to $10.9 million for the six months ended June 30, 2019 compared to $2.7 million for the six months ended June 30, 2018.

Gross profit on total revenue was $9.6 million or 58% for the three months ended June 30, 2019 compared to a gross profit of $3.5 million or 60% for the three months ended June 30, 2018. The increase in gross profit for the current quarter was primarily attributable to an increase in gross margin on product sales and an increase in license revenue due to the timing of the Aralez Transaction. Gross profit on total revenue was $18.7 million or 60% for the six months ended June 30, 2019 compared to a gross profit of $6.1 million or 59% for the six months ended June 30, 2018.

Non-IFRS Financial Measures
The Company discloses non-IFRS measures (such as adjusted total revenue, adjusted EBITDA and adjusted EBITDA per share) that do not have standardized meanings prescribed by IFRS. The Company believes that shareholders, investment analysts and other readers find such measures helpful in understanding the Company’s financial performance and in interpreting the effect of the Aralez Transaction and the Deerfield Financing on the Company. Non-IFRS financial measures do not have any standardized meaning prescribed by IFRS and may not have been calculated in the same way as similarly named financial measures presented by other companies.

Adjusted Total Revenue
The Company defines adjusted total revenue as total revenue, plus amounts billed to customers for existing contract assets, less revenue recognized upon recognition of a contract asset. Management believes adjusted total revenue is a useful supplemental measure from which to determine the Company’s ability to generate cash from its customer contracts that is used to fund its operations.

The following is a summary of how adjusted total revenue is calculated:

Adjusted EBITDA
EBITDA refers to net income (loss) determined in accordance with IFRS, before depreciation and amortization, net interest expense (income) and income tax expense (recovery). The Company defines adjusted EBITDA as net income before net interest expense (income), depreciation and amortization and income tax expense (recovery) (EBITDA), plus amounts billed to customers for existing contract assets, inventory step-up expense, stock-based compensation expense, Other Expenses, less revenue recognized upon recognition of a contract asset and other income. Management believes adjusted EBITDA is a useful supplemental measure from which to determine the Company’s ability to generate cash available for working capital, capital expenditures, debt repayments, interest expense and income taxes.

The following is a summary of how EBITDA and adjusted EBITDA are calculated:

Management to Host Conference Call/Webcast
Management will host a conference call to discuss the results today (Wednesday, August 14, 2019) at 8:30 a.m. ET. To participate in the conference call, please dial 1 888 390 0546 or 416 764 8688. Please call in 15 minutes prior to the call to secure a line. You will be put on hold until the conference call begins.

A taped replay of the conference call will be available two hours after the live conference call and will be accessible until midnight on August 21, 2019 by calling 1 888 390 0541 or 416 764 8677 playback passcode 509912#.

A live audio webcast of the conference call will be available through www.nuvopharmaceuticals.com. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to hear the webcast.