On November 8, 2018 Cambrex Corporation (NYSE: CBM), a leading manufacturer of small molecule innovator and generic Active Pharmaceutical Ingredients ("APIs"), and finished dosage forms, reported its results for the third quarter ended September 30, 2018 (Press release, Cambrex, NOV 8, 2018, View Source;p=irol-newsArticle&ID=2376146 [SID1234530924]).

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Third Quarter 2018 Highlights

Completed the acquisition of Halo Pharma ("Halo"), a leading finished dosage form Contract Development and Manufacturing Organization ("CDMO") specializing in product development and commercial manufacturing, for $425 million in total cash consideration.

Net revenue decreased 7% under current U.S. GAAP, ASC 606 – Revenue from Contracts with Customers ("ASC 606"). Under ASC 605, the previous revenue recognition standard, Net revenue decreased 9% compared to the same quarter last year.

Under ASC 606, Diluted EPS from continuing operations was $0.79 per share compared to $0.52 per share in the same quarter last year. 2018 performance reflects a lower tax rate resulting from tax reform in the United States and New Jersey. Under ASC 605, Diluted EPS from continuing operations would have been $0.94 per share.

Under ASC 606, EBITDA decreased to $15.8 million from $33.7 million in the same quarter last year. Adjusted EBITDA, which excludes the impact of adopting ASC 606, Halo’s results and acquisition and integration costs, was $28.1 million (see table at the end of this press release).

Net debt was $227.9 million at the end of the quarter, an increase of $399.2 million during the quarter primarily driven by the acquisition of Halo Pharma and partially offset by cash flows from operations during the quarter.

The Company now expects full year 2018 Adjusted Net revenue, which excludes the impact of foreign currency and the adoption of ASC 606, to be between -1% and -3% compared to 2017 and Adjusted EBITDA to be between $153 and $159 million, excluding the impact of the Halo acquisition (see Financial Expectations – Continuing Operations section below for related explanations and additional financial guidance).
"We’re very pleased to have closed the Halo acquisition this quarter, which diversifies our business into the large, growing market for outsourced finished dosage form contract development and manufacturing. Halo’s capabilities complement Cambrex’s existing global API manufacturing expertise and Halo expands our customer base and broadens our small molecule funnel. Integration is well underway and we are confident that this business will allow us to better meet the needs of our global network of customers and create future growth synergies," commented Steven M. Klosk, President and Chief Executive Officer of Cambrex.

"Market conditions in the Innovator sector remain strong and the addition of a new late stage project during the third quarter brings our total to 18 such products. A key component of our long term growth strategy is to steadily increase the number of late stage products in our portfolio. We believe that Cambrex is increasingly well positioned to execute against this strategy."

Basis of Reporting
The Company has provided a reconciliation of GAAP to adjusted (i.e. Non-GAAP) amounts at the end of this press release. Cambrex management believes that the adjustments provide useful information to investors due to the magnitude and nature of certain amounts recorded under GAAP.

Third Quarter 2018 Operating Results – Consolidated, Continuing Operations
Net revenue under ASC 606 was $104.6 million. Under ASC 605, the previous revenue recognition standard, Net revenue decreased to $102.7 million, or 9%, from $112.6 million in the same quarter last year. Net revenue during the quarter includes the acquisition of Halo which contributed revenue of $5.2 million under ASC 606 and $6.3 million under ASC 605. Results under ASC 606 and ASC 605 include a 1% unfavorable impact of foreign exchange compared to the third quarter of 2017.

Gross margins under ASC 606 were 31%. Under ASC 605, gross margins were 38% compared to 42% in the same quarter last year.

Selling, general and administrative expenses were $14.5 million, compared to $17.2 million in the same quarter last year. The decrease was mainly due to lower personnel related costs, an accounts receivable write-off in the same quarter last year and the impact of foreign currency.

Research and development expenses were flat year over year at $4.2 million.

Acquisition and integration expenses of $7.4 million represents costs associated with the acquisition of Halo.

Operating profit under ASC 606 was $6.6 million. Under ASC 605, operating profit was $13.2 million compared to $25.5 million in the same quarter last year. The decrease was primarily the result of higher operating expenses related to the purchase of Halo and lower gross profit. Adjusted EBITDA was $28.1 million compared to $33.7 million in the same quarter last year (see table at the end of this press release).

Income tax expense was a benefit of $15.4 million compared to an expense of $7.5 million and an effective tax rate of 30% in the same quarter last year. The income tax benefit during the quarter reflects the immediate recognition of certain effects of share-based compensation, acquisition and integration expenses, unrealized gain on investment in equity securities, a $2.1 million benefit for the finalization of the toll charge on undistributed foreign earnings under U.S. tax reform, and a $12.2 million benefit for the release of a state valuation allowance and the revaluation of state deferred tax balances due to New Jersey tax reform enacted during the third quarter of 2018. Excluding these items, the effective tax rate would have been approximately 20% during the quarter.

Income from continuing operations under ASC 606 was $26.8 million or $0.79 per share.

Adjusted income from continuing operations, calculated under ASC 605 and including other adjustments described in the table at the end of this press release, was $16.7 million or $0.49 per share, compared to $18.5 million or $0.55 per share in the same quarter last year.

Capital expenditures were $10.8 million and depreciation and amortization was $9.2 million compared to $15.4 million and $8.2 million, respectively, in the same quarter last year.

Net debt was $227.9 million at the end of the third quarter, an increase of $399.2 million during the quarter. The increase was driven by the acquisition of Halo and partially offset by cash flows from operations.

Third Quarter 2018 Operating Results – Finished Dosage Form ("FDF") segment
The acquisition of Halo resulted in the creation of the FDF segment for Cambrex. Included in Cambrex’s consolidated results for the third quarter of 2018 are the results of Halo for the period from acquisition date, September 12, 2018, through September 30, 2018 and are as follows.

Net revenue in the third quarter of 2018 under ASC 606 was $5.2 million. Net revenue under ASC 605 was $6.3 million.

Gross margins under ASC 606 in the third quarter of 2018 were 32%. Gross margins under ASC 605 were 28%.

Selling, general and administrative expenses were $1.1 million in the third quarter of 2018.

Operating profit under ASC 606 was $0.5 million. Under ASC 605, operating profit was $0.6 million. Both exclude $0.4 million in integration costs and includes increased depreciation and amortization expense resulting from the application of purchase accounting.

Financial Expectations – Continuing Operations
The following table shows the Company’s current expectations for its full year 2018 financial performance versus its expectations from the previous quarter. The expectations in the table below reflect expected results from the business excluding the recent acquisition of Halo and are consistent with the basis on which prior guidance was provided.

On November 8, 2018 Histogenics Corporation (Histogenics) (Nasdaq: HSGX), a leader in the development of restorative cell therapies that may offer rapid-onset pain relief and restored function, reported its financial and operating results for the quarter ended September 30, 2018 (Press release, Histogenics, NOV 8, 2018, View Source [SID1234530923]).

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"We continue to focus on advancing NeoCart towards the potential submission of a Biologics License Application by the end of the first quarter of 2019 and have an extensive dialogue with the FDA covering all aspects of the NeoCart development program, including the clinical data and related statistics from the NeoCart Phase 3 clinical trial," said Adam Gridley, President and Chief Executive Officer of Histogenics. "We believe, based on our continued analysis of the totality of the data, that NeoCart, if approved, may offer patients a treatment alternative that provides a more rapid recovery from pain and return to daily activity than other options to treat damaged knee cartilage. We are also working closely with MEDINET, our development and commercialization partner in Japan, toward the goal of initiating the Japanese Phase 3 clinical trial of NeoCart in 2019."

Third Quarter 2018 and Recent Highlights

Meeting Held with FDA to Discuss Potential NeoCart Regulatory Submission: Histogenics recently met with the United States Food and Drug Administration (FDA) to discuss the NeoCart Phase 3 clinical trial data and the potential for the submission of a Biologics License Application (BLA) for NeoCart. The FDA and Histogenics continue to discuss the clinical data generated to date, the potential need for any additional supplemental clinical data, including longer-term data from the ongoing Phase 3 trial or additional studies, and possible alternative regulatory pathways for acceptance of the BLA. The FDA has not made a final decision regarding a potential BLA submission and based on expected feedback from the FDA, Histogenics intends to provide a further update on these negotiations by the end of November 2018.

NeoCart Top-Line Phase 3 Data Announced in Third Quarter of 2018: Histogenics reported top-line data from the NeoCart Phase 3 clinical trial in September 2018. This trial is believed to be the largest and first prospectively designed, randomized clinical trial in North America evaluating the safety and efficacy of a restorative cell therapy to treat knee cartilage damage. It is also believed to be the only trial with a dual threshold responder analysis endpoint. While the Phase 3 clinical trial did not meet its primary endpoint of a statistically significant improvement in pain and function in the dual threshold responder analysis one year after treatment as compared to microfracture, patients treated with NeoCart saw statistically significant and clinically meaningful improvements in their pain and function levels using a variety of clinically validated scales. In addition, NeoCart demonstrated superiority on the responder analysis endpoint at six months, and in different subgroups at one year such as patients with lesions greater than 2 cm or with higher body mass index. Both NeoCart and microfracture were well tolerated and exhibited strong safety profiles.

Completion of $17.0 Million Financing: In October 2018, Histogenics completed an underwritten public offering of common stock and warrants that generated $17.0 million in gross proceeds and approximately $15.4 million in net proceeds after deducting underwriting discounts and commissions, and estimated offering expenses payable by Histogenics. These amounts do not include the proceeds, if any, that Histogenics may receive in connection with any exercise of the warrants issued in the offering. The financing was led by healthcare-focused, institutional investors and supported by existing Histogenics investors. Histogenics believes the financing will be sufficient to fund its projected cash needs into the middle of 2019.

Development and Presentation of Additional NeoCart Biomechanical Data to Support Potential Commercialization: As part of their Sponsored Research Agreement, Histogenics and Cornell University continue to generate additional biomechanical data to support the potential commercialization of NeoCart, if approved. The most recent data were presented at the Biomedical Engineering Society Annual Meeting in October 2018. These data build upon earlier studies and further demonstrate the importance of the presence of extracellular matrix, or tissue, in making biomechanically competent cartilage. Histogenics believe the data may be important to both regulatory agencies and clinicians regarding the potential performance advantages of NeoCart when compared to other treatment alternatives.
Financial Results for the Third Quarter of 2018

Histogenics’ loss from operations was $(7.0) million in the third quarter of 2018, compared to $(5.7) million in the third quarter of 2017. The increase in loss from operations was due to higher operating expenses in the third quarter of 2018 relative to the third quarter of 2017.

Research and development expenses were $4.6 million in the third quarter of 2018, compared to $3.5 million in the third quarter of 2017. The increase was primarily due to increases in consulting and compensation related expenses in connection with the preparation and evaluation of the data from the NeoCart Phase 3 clinical trial and the potential submission of a BLA for NeoCart with the FDA. General and administrative expenses were $2.4 million in the third quarter of 2018, compared to $2.2 million in the third quarter of 2017. The increase was primarily due to higher salaries and consulting expenses related to increased activities to support the potential commercialization of NeoCart.

As of September 30, 2018, Histogenics had cash, cash equivalents and marketable securities of $5.2 million, compared to $8.0 million at December 31, 2017. In October 2018, Histogenics received net proceeds of approximately $15.9 million through an underwritten public offering of common stock and warrants and sales through its at-the-market offering facility. Histogenics believes its current cash position will be sufficient to fund its operations into the middle of 2019.

Conference Call and Webcast Information

Histogenics management will host a conference call on Thursday, November 8, 2018 at 8:30 a.m. ET. A question-and-answer session will follow Histogenics’ remarks. To participate on the live call, please dial (877) 930-8064 (domestic) or (253) 336-8040 (international) and provide the conference ID "5491168" five to ten minutes before the start of the call.

To access a live audio webcast of the presentation on the "Investor Relations" page of the Histogenics website, please click here. A replay of the webcast will be archived on Histogenics’ website for approximately 45 days following the presentation.

On November 8, 2018 Sesen Bio, Inc. (Nasdaq: SESN), a late-stage clinical company developing targeted fusion protein therapeutics for the treatment of people with cancer, reported operating results for the third quarter ended September 30, 2018 and recent highlights from its development program for Vicinium for patients with high-grade non-muscle invasive bladder cancer (NMIBC) (Press release, Sesen Bio, NOV 8, 2018, View Source [SID1234530922]).

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"2018 has been a year of focused execution for Sesen Bio, led by the advancement of the Phase 3 program for Vicinium for patients with NMIBC," said Dr. Thomas Cannell, president and chief executive officer of Sesen Bio. "NMIBC is a devastating disease and there remains just one recommendation for patients who do not respond or become refractory to today’s standard-of-care treatment: complete bladder removal. Our goal is to help save this essential organ and provide a meaningful treatment option for patients with BCG-unresponsive NMIBC. Our Phase 3 registration clinical trial is well-designed and preliminary data reported earlier this year suggest that Vicinium is active and has a favorable safety profile, consistent with our Phase 2 experience. We look forward to assessing six-month data from the trial next month and twelve-month data in mid-2019. If the VISTA Trial is successful, we believe Viciniumcould change the treatment outlook for patients with NMIBC, bringing us closer to achieving our mission of saving and renewing the lives of patients with cancer."

Recent Highlights

In September 2018, at the Global Congress on Bladder Cancer 2018, Sesen Bio presented a biomarker update from its Phase 3 VISTA Trial data showing that all screened patient samples expressed EpCAM, the molecular target of Vicinium.
In October 2018, the company entered into an agreement with FUJIFILM Diosynth Biotechnologies U.S.A., Inc. to provide supply services in support of the manufacturing of Vicinium for the treatment of high-grade NMIBC. The Agreement facilitates a transfer of manufacturing technology from Sesen Bio to Fujifilm.
Upcoming Events

Sesen Bio anticipates reporting six-month data from the ongoing Phase 3 VISTA Trial in December 2018. A conference call will be held to review the data, with details to follow.
Third Quarter 2018 Financial Results

Cash Position: Cash and cash equivalents were $57.9 million as of September 30, 2018, compared to $11.3 million as of September 30, 2017.
Revenue: There was no revenue for the three-month periods ended September 30, 2018 and 2017, respectively, as no revenue triggering milestones were achieved during either period under the company’s license agreement with F. Hoffmann-La Roche Ltd and Hoffmann-La Roche Inc. (Roche).
R&D Expenses: Research and development expenses were $3.4 million for the three months ended September 30, 2018, compared to $3.6 million for the same period in 2017. The decrease was due primarily to a reduction in Vicinium-related development expenses.
G&A Expenses: General and administrative expenses were $3.8 million for the three months ended September 30, 2018, compared to $1.6 million for the same period in 2017. The increase was due primarily to an increase in professional fees as well as higher personnel-related expenses.
Net Loss: Net loss was $14.0 million, or $0.18 per share, for the three months ended September 30, 2018, compared to net loss of $9.1 million, or $0.37 per share, for the same period in 2017. The increase was due primarily to the change in the fair value of contingent consideration and increased general and administrative expenses.
Financial Guidance: Based on current operating plans, Sesen Bio believes it will have capital sufficient to fund its current operating plans into 2020.

On November 8, 2018 Affimed N.V. (Nasdaq: AFMD), a clinical stage biopharmaceutical company focused on discovering and developing highly targeted cancer immunotherapies that harness the power of innate and adaptive immunity (NK cells, macrophages and T cells), reported that Dr. Adi Hoess, CEO, will present at the Jefferies 2018 London Healthcare Conference on Wednesday, November 14, 2018 at 8:40 am GMT in London (Press release, Affimed, NOV 8, 2018, View Source [SID1234530921]).

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A live webcast of the conference presentation can be accessed through the "Events" section on the "Investors & Media" page of the Affimed website at www.affimed.com/events.php. A replay of the presentation will be available from Affimed’s website for 30 days following the conference.

On November 8, 2018 Actym Therapeutics, a privately held biotechnology company focused on therapeutic targeting of intractable immune pathways in the tumor microenvironment, reported that it will be presenting data at the upcoming Society for Immunotherapy of Cancer (SITC) (Free SITC Whitepaper) annual meeting in Washington, D.C. from November 9-11, 2018 (Press release, Actym Therapeutics, NOV 8, 2018, View Source [SID1234530898]). The presentation is titled "STACT-TREX1: A novel tumor-targeting systemically-delivered STING pathway agonist demonstrates robust anti-tumor efficacy in multiple murine cancer models."

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"We look forward to sharing data demonstrating the potent anti-tumor activity of our first-in-class STING pathway agonist therapy, STACT-TREX1, in preclinical models. We are encouraged by the data showing that single-agent treatment with STACT-TREX1 generates tumor antigen-specific CD8+ T cell responses, suggesting induction of adaptive anti-tumor immunity after intravenous administration in mice. We believe this mechanism for activating the STING pathway in the tumor microenvironment represents a novel and superior approach for the treatment of cancer," said Dr. Christopher Thanos, President and CEO of Actym Therapeutics.

Details of the presentation are as follows:

Abstract

P235:

STACT-TREX1: A novel tumor-targeting systemically-delivered STING pathway agonist demonstrates robust anti-tumor efficacy in multiple murine cancer models

Date:

November 9, 2018

Location:

Hall E, Walter E. Washington Convention Center

For those unable to attend the conference who would like a copy of the presentation, please send an email request to [email protected]. Please include your name, company, title and phone number. The presentation will be emailed to those making proper requests after November 10, 2018.