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INOVIO Reports Third Quarter 2023 Financial Results and Operational Highlights

On November 9, 2023 INOVIO (NASDAQ:INO), a biotechnology company focused on developing and commercializing DNA medicines to help treat and protect people from HPV-related diseases, cancer, and infectious diseases, reported its financial results and operational highlights for the third quarter ended September 30, 2023 (Press release, Inovio, NOV 9, 2023, View Source [SID1234637374]).

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"The past quarter has seen significant progress for our lead candidate, INO-3107, for the treatment of Recurrent Respiratory Papillomatosis, or RRP," said INOVIO’s President and Chief Executive Officer, Dr. Jacqueline Shea. "Following Breakthrough Therapy designation from the FDA in September and subsequent feedback that we no longer need to complete a Phase 3 trial prior to submitting a BLA under the accelerated approval program, our team is laser-focused on next steps. These steps include holding an Initial Comprehensive Multidisciplinary Breakthrough Therapy Meeting with the FDA in the near future to confirm alignment on our accelerated development plans and to clarify timing associated with potentially making INO-3107 available to patients suffering from this devastating disease."

Shea continued: "The progress we have achieved with INO-3107 exemplifies the strategy we have been implementing over the past year, as we have focused on advancing late-stage candidates and driving toward near, mid- and long-term milestones for our pipeline. In the past 18 months, we have reshaped our company, reduced our operating spend and reprioritized our pipeline with INO-3107 as our lead candidate. I am more confident than ever that our experienced team is prepared to deliver on the next critical steps of development and on the promise of DNA medicine for patients."

INOVIO’s Chief Commercial Officer, Mark Twyman, stated: "Now that we are moving toward a BLA submission on an accelerated timeline, we are advancing our commercialization strategy expeditiously. We are implementing all aspects of our plan, including strategies for distribution, payor, specialty pharmacy and field force design, with the goal of being ready to launch rapidly if we receive approval. We are also continuing to deepen our understanding of the RRP market and applying what we have learned from our discussions with healthcare providers and RRP patients. Delivering on this opportunity now is incredibly important for patients suffering from RRP as INO-3107 represents a significant improvement in therapeutic options over the current standard of care."

Regulatory Status of INO-3107
The FDA granted Breakthrough Therapy designation to INOVIO’s lead candidate based on clinical evidence indicating INO-3107 may demonstrate substantial improvement over existing therapies for RRP. Breakthrough Therapy designation was created by the FDA to help expedite the development and review of drug candidates that are intended to treat a serious or life-threatening condition and for which preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over available therapy on a clinically significant endpoint(s).

INOVIO also received feedback from the FDA that data from its completed Phase 1/2 trial of INO-3107 could support INOVIO’s submission of a BLA for review under the FDA’s accelerated approval program. The FDA advised that completion of a Phase 3 trial would not be required to support this submission. INOVIO will be required to initiate a confirmatory trial prior to BLA submission for accelerated approval and satisfy all other FDA filing requirements. Subsequent to this feedback, INOVIO has been focused on preparing to file its BLA under the accelerated approval program. The company anticipates additional meetings with the FDA to finalize next steps, including an Initial Comprehensive Multidisciplinary Breakthrough Therapy Meeting, or Type B meeting, which it has requested to be held in the fourth quarter of 2023. INOVIO plans to pursue other benefits offered by Breakthrough Therapy designation to quickly resolve any future questions, as well as take advantage of the opportunity to submit under the FDA’s Rolling Review program and request a Priority Review once the BLA is fully submitted.

Commercialization Plans for INO-3107
INOVIO has accelerated its commercialization strategy for INO-3107 as a potential treatment for RRP as a result of the opportunity to file its BLA under the FDA’s accelerated approval program. This includes implementing its plans for product distribution and logistics, payor engagement and reimbursement, specialty pharmacy identification, patient and provider awareness and education, customer service programs, and other sales and marketing activities. The company has an experienced commercial team that is actively engaging external partners and service providers to be prepared for launch, should INO-3107 receive regulatory approval.

As part of its commercialization plans, INOVIO is continuing to deepen its market understanding of RRP as a disease and the treatment paradigm in the United States. RRP is a chronic, rare disease caused by HPV-6 and HPV-11. The current standard of care is surgery, with many patients facing a lifetime of repeated surgeries as their only option. The most widely cited U.S. epidemiology data estimated that there were approximately 14,000 active cases of RRP in the United States. A recent publication cites that on average, patients with RRP undergo about 4 surgeries per year.

Based on its ongoing market research, INOVIO believes that laryngologists are the primary healthcare providers treating patients suffering from this condition and that they are comfortable administering drugs and utilizing new tools and devices. The company estimates that approximately 300 to 400 laryngologists conduct the majority of RRP surgical procedures in the United States. Key opinion leaders estimate that approximately one-half of all laryngologists practice in academic institutions. In recent discussions with patients, INOVIO believes that RRP patients may prefer to be treated at these regional academic centers.

About INO-3107
INO-3107 is INOVIO’s lead DNA medicine product candidate and is being developed as a potential treatment for RRP. INO-3107 is designed to elicit an antigen targeted T cell response against HPV-6 and HPV-11, the HPV types responsible for causing RRP, among other HPV-related diseases. These targeted T cells are designed to seek out and kill HPV-6 and HPV-11 infected cells, with the aim of potentially preventing or slowing the growth of new papillomas. In addition to being designated a Breakthrough Therapy, INO-3107 has also received Orphan Drug designation from the European Commission and from the FDA.

In a Phase 1/2 clinical trial conducted with INO-3107, 81.3% (26/32) of patients had a decrease in surgical interventions in the year after INO-3107 administration compared to the prior year, including 28.1% (9/32) that required no surgical intervention during or after the dosing window. Patients in the trial had a median range of 4 surgeries (2-8) in the year prior to dosing. After dosing, there was a median decrease of 3 surgical interventions (95% confidence interval -3, -2). At the outset of the study (Day 0), patients could have RRP tissue surgically removed, but any surgery performed after Day 0 during the dosing window was counted against the efficacy endpoint. Treatment with INO-3107 generated a strong immune response in the trial, inducing activated CD4 T cells and activated CD8 T cells with lytic potential. T-cell responses were also observed at Week 52, indicating a persistent cellular memory response. INO-3107 was well tolerated by participants in the trial, resulting in mostly low-grade (Grade 1) treatment-emergent adverse effects such as injection site pain and fatigue.

Advancing INOVIO’s Three-Part Strategy to Develop its Pipeline
Since mid-2022, INOVIO has been advancing a three-part strategy to deliver on the promise of DNA medicines and the product candidates in its pipeline. In the near-term, INOVIO is focused on optimizing the opportunity for INO-3107 as a potential treatment for RRP patients. In the mid-term, INOVIO is working to advance eight other clinical-stage candidates targeting a number of HPV-related diseases, cancers and infectious diseases. For the longer term, INOVIO is developing next-generation DNA medicine technology, including DNA encoded monoclonal antibodies (dMAbs) targeting COVID-19, as well as DNA-launched nanoparticles (dLNPs) targeting infectious diseases and cancer vaccines that have various disease targets. INOVIO’s commitment to financial discipline and leveraging strong partnerships are also key components to its corporate strategy.

Third Quarter 2023 Financial Results

Cash, Cash Equivalents and Short-term Investments: As of September 30, 2023, cash, cash equivalents and short-term investments were $167.5 million compared to $253.0 million as of December 31, 2022.

Revenues: Total revenues for the three months ended September 30, 2023 were $388,000, compared to $9.2 million for the same period in 2022. The revenue generated in the third quarter of 2022 was associated with a Procurement Contract with the U.S. Department of Defense for INOVIO’s devices and accessories to be used for delivery of its COVID-19 vaccine candidate, INO-4800, which the company has discontinued.

Research and Development (R&D) Expenses: R&D expenses for the three months ended September 30, 2023 were $15.5 million compared to $33.1 million for the same period in 2022. The decrease in R&D expenses was primarily the result of lower drug manufacturing, clinical trial expenses and outside services related to INO-4800 and other COVID-19 studies and lower employee and consultant compensation, including stock-based compensation, among other variances.

General and Administrative (G&A) Expenses: G&A expenses for the 2023 third quarter were $9.9 million compared to $11.8 million for the same period in 2022.

Total Operating Expenses: Total operating expenses were $35.9 million compared to $44.9 million for the same period in 2022. During the three months ended September 30, 2023, the company recognized a non-cash goodwill impairment charge of $10.5 million.

Net Loss: INOVIO’s net loss for the quarter ended September 30, 2023 was $33.9 million, or $0.13 per basic and diluted share, compared to net loss of $37.8 million, or $0.15 per basic and diluted share, for the third quarter of 2022. Excluding the non-cash goodwill impairment expense, net loss for the quarter ended September 30, 2023 would have been $23.4 million, or $0.09 per basic and diluted share.

Shares Outstanding: As of September 30, 2023, INOVIO had 269.7 million common shares outstanding and 290.6 million common shares outstanding on a fully diluted basis, after giving effect to the exercise, vesting and conversion, as applicable, of its outstanding options, restricted stock units, convertible preferred stock, and convertible debt.
INOVIO’s balance sheet and statement of operations are provided below. Additional information is included in INOVIO’s quarterly report on Form 10-Q for the quarter ended September 30, 2023, which can be accessed at: View Source

Cash Guidance
Following feedback from the FDA on the accelerated approval pathway for INO-3107, INOVIO now estimates its cash runway to extend into the second quarter of 2025. This projection includes a cash burn estimate of approximately $26 million for the fourth quarter of 2023. These cash projections do not include any funds that may be raised through the Company’s existing at-the-market program or other capital-raising activities.

Conference Call / Webcast Information
INOVIO’s management will host its quarterly conference call and webcast at 4:30 p.m. ET today. A replay of the conference call will be available following the conclusion of the call. The live webcast and replay may be accessed by visiting INOVIO’s website at View Source

About INOVIO’s DNA Medicines Platform
INOVIO’s DNA medicines platform has two innovative components: precisely designed DNA plasmids, delivered by INOVIO’s proprietary investigational medical device, CELLECTRA. INOVIO uses proprietary technology to design its DNA plasmids, which are small circular DNA molecules that work like software the body’s cells can download to produce specific proteins to target and fight disease. INOVIO’s CELLECTRA delivery devices help ensure its DNA medicines enter the body’s cells for optimal effect, without chemical adjuvants or nanoparticles and without the risk of the anti-vector response seen in viral vector platforms.

Inhibrx Reports Third Quarter 2023 Financial Results and Recent Corporate Highlights

On November 9, 2023 Inhibrx, Inc. (Nasdaq: INBX), or Inhibrx, or the Company, a biopharmaceutical company with four programs in ongoing clinical trials and a strong emerging pipeline, reported financial results for the third quarter of 2023 and provided an update on recent corporate highlights (Press release, Inhibrx, NOV 9, 2023, View Source [SID1234637373]).

Recent Corporate Highlights
•On August 29, 2023, Inhibrx announced that it had entered into a securities purchase agreement, or the Purchase Agreement, for a private placement financing, or the PIPE, resulting in gross proceeds of approximately $200.0 million. Pursuant to the Purchase Agreement, the Company sold and issued to certain institutional and other accredited investors, or the Purchasers, 3,621,314 shares of its common stock at a purchase price of $19.35 per share and, with respect to certain Purchasers, pre-funded warrants to purchase 6,714,636 shares of its common stock at a purchase price of $19.3499 per pre-funded warrant, which have an exercise price of $0.0001 per share.
•On September 19, 2023, Inhibrx announced that it had retained full global rights to INBRX-101 as a result of Chiesi Farmaceutici S.p.A declining to exercise its option for the ex-North American rights to develop and commercialize INBRX-101 for the treatment of patients with emphysema due to Alpha-1 Antitrypsin Deficiency, or AATD.
•On November 2, 2023, Inhibrx announced preliminary efficacy and safety data at the Annual Connective Tissue Oncology Society (CTOS) Conference from the Phase 1 trial of INBRX-109 in combination with Irinotecan (IRI) and Temozolomide (TMZ) for the treatment of advanced or metastic, unresectable Ewing sarcoma. Among the 13 patients evaluable as of the data cut of September 8, 2023, the observed disease control rate was 76.9%, or 10 out of 13 patients as measured by RECISTv1.1, with 7 patients achieving partial responses (53.8%) and 3 patients achieving stable disease (23.1%). Durable clinical benefit was observed in 4 patients (30.8%) who achieved disease control lasting greater than 6 months. Overall, INBRX-109 in combination with IRI/TMZ was well tolerated. The most common adverse events were diarrhea, nausea and fatigue, all consistent with the known safety profile of IRI/TMZ.
Financial Results
•Cash and Cash Equivalents. As of September 30, 2023, Inhibrx had cash and cash equivalents of $337.3 million, compared to $192.5 million at June 30, 2023. During the third quarter of 2023, the Company received gross proceeds of $200.0 million from the PIPE. These proceeds were offset in part by cash outflows from operations, which increased during the third quarter of 2023 primarily due to the following activity:
◦a large upfront payment made to one of the Company’s contract development and manufacturing organizations, or CDMOs, for the prepayment of raw materials for future manufacturing runs, as well as other increased development and manufacturing costs to support its clinical candidates; and

◦the Company’s payments to its contract research organizations, or CRO, partners continue to increase as the registration-enabling Phase 2 trials progress for both INBRX-101 for the treatment of emphysema due to AATD and INBRX-109 for the treatment of unresectable or metastatic conventional chondrosarcoma, and additional cash outlay to its CRO partners for the INBRX-105 and INBRX-106 Phase 1/2 trials.
•R&D Expense. Research and development expenses were $38.1 million during the third quarter of 2023, compared to $24.9 million during the third quarter of 2022. The increase in research and development expenses was primarily due to the following factors:
◦an increase in clinical trial expenses, primarily related to the registration-enabling Phase 2 trial for INBRX-101 for the treatment of emphysema due to AATD, which was initiated during the current year, as well as the progression of its INBRX-109 registration-enabling Phase 2 trial for the treatment of unresectable or metastatic conventional chondrosarcoma;
◦an increase in CMC expenses due to the nature of the development and manufacturing activities performed at its CDMO and CRO partners supporting the Company’s clinical and preclinical therapeutic candidates, which reflect the stage-specific needs of its programs during each period, including early and late stage drug substance clinical manufacturing, drug product manufacturing, and selected biologics license applications-enabling activities; and
◦an increase in personnel-related costs, partially attributable to an increase in headcount as the Company continues to expand its clinical teams, as well as the issuance of additional stock options and the expansion of the Company’s bonus eligibility pool in the current year.
•G&A Expense. General and administrative expenses were $7.9 million during the third quarter of 2023, compared to $5.3 million during the third quarter of 2022. The increase in general and administrative expenses was primarily due to the following factors:
◦an increase in additional personnel-related costs in part due to the expansion of the Company’s commercial strategy and medical affairs team as well as the issuance of additional stock options and the expansion of its bonus eligibility pool in the current year;
◦an increase in consulting services supporting the Company’s commercial operations business intelligence strategies, as well as market research and other scientific publication expenses incurred related to the Company’s continued pre-commercialization efforts for INBRX-101 and INBRX-109; and
◦an increase in professional service expenses related to accounting and legal services which support the Company in its general corporate and intellectual property matters.
•Net Loss. Net loss was $51.8 million during the third quarter of 2023, or $1.10 per share, compared to $35.3 million during the third quarter of 2022, or $0.90 per share.

IN8bio Reports Third Quarter 2023 Financial Results and Provides Corporate Update

On November 9, 2023 IN8bio, Inc. (Nasdaq: INAB), a leading clinical-stage biopharmaceutical company developing innovative gamma-delta T cell therapies, reported financial results, operational highlights and recent corporate developments for the third quarter ended September 30, 2023 (Press release, In8bio, NOV 9, 2023, View Source [SID1234637372]).

"We have continued to execute and to make impressive clinical progress across the breadth of our pipeline, which we shared at our recent Research & Development Day," said William Ho, CEO and co-founder of IN8bio. "Having completed enrollment in the dose escalation portion of the Phase 1 trial of INB-100 in hematologic malignancies and initiated enrollment for the Phase 2 trial of INB-400 in newly diagnosed glioblastoma, we are making strides towards our mission of exploring the full potential of gamma-delta T cells as a much-needed treatment option for cancer patients. We are encouraged by the positive data we have seen thus far and are excited to share additional clinical updates on our INB-100 and INB-200 programs at the upcoming SNO and ASH (Free ASH Whitepaper) meetings."

Business Highlights and Recent Developments

Presented two posters reporting biologic correlative data from the ongoing Phase 1 clinical trial of INB-200 in GBM and preclinical data on IN8bio’s iPSC gamma-delta T cell platform at SITC (Free SITC Whitepaper). The data presented from the INB-200 trial demonstrate the potential of single and repeat doses of DeltEx drug-resistant immunotherapy (DRI) to induce T cell persistence and sustained immune responses. Updated patient, enrollment and survival data from the ongoing INB-200 study will be presented at the SNO Annual Meeting on November 17, 2023. Data from IN8bio’s iPSC platform demonstrate the ability to kill multiple cancer types including ovarian cancer, GBM, CML and AML cell lines along with the potential to generate billions of iPSC-derived Vδ1+ T cells.

Completed dose escalation in the Phase 1 Trial of INB-100 in leukemia patients and will present clinical data at the upcoming ASH (Free ASH Whitepaper) Annual Meeting on December 11, 2023. Enrollment in the dose escalation phase of the Phase 1 clinical trial (NCT03533816) of INB-100 is now closed. The presentation at ASH (Free ASH Whitepaper) will highlight clinical data updating the efficacy results of INB-100 including complete responses (CRs) and durability.

Initiated enrollment for the company-sponsored Phase 2 trial of INB-400 in GBM. The Phase 2 clinical trial of INB-400 (NCT05664243), a genetically engineered gamma-delta T cell therapy, is open for enrollment and plans to enroll approximately 40 patients in "Arm A" of the study, in which autologous gamma delta cells will be used to treat patients with newly diagnosed GBM. The primary endpoint of the study is 12-month overall survival (OS) rate, and key secondary endpoints include tolerability, progression-free survival (PFS), overall response rate (ORR) and time to progression (TTP). The University of Louisville and The Cleveland Clinic are the first clinical sites activated to enroll patients. The company will present a poster at the SNO Annual Meeting.

Hosted R&D Day on October 12, 2023, highlighting IN8bio’s unique Gamma-Delta T cell platform. The event offered the opportunity to gain Key Opinion Leader (KOL) insights into IN8bio’s clinical programs. Featured presentations included those from IN8bio’s management team on gamma-delta T cells, IN8bio’s manufacturing capabilities, an overview of the INB-100, INB-200, and INB-400 clinical programs, as well as presentations from key oncology thought leaders Leo Luznik, M.D., Professor of Oncology at Johns Hopkins Medicine and Michael Bishop, M.D., Director of the David and Etta Jones Center for Cellular Therapy at the University of Chicago, featuring the topics of allogeneic transplantation and the challenges of leukemic relapse. A replay of the webcast event can be found here.

Upcoming Pipeline Milestones and Events

INB-100: Presenting updated Phase 1 trial clinical data from patients with hematological malignancies undergoing HSCT at the ASH (Free ASH Whitepaper) Annual Meeting on December 11, 2023.
INB-200: Complete enrollment of Cohort 3 in the Phase 1 trial; will present updated data at SNO on November 17, 2023 with longer-term follow-up at medical meetings throughout 2024.
INB-300: Present additional preclinical data demonstrating proof-of-concept for the nsCAR platform targeting CD33 and CD123 at a medical meeting in first half of 2024.
INB-400: Present a poster at the SNO Annual Meeting on November 17, 2023; file investigational new drug (IND) application for allogeneic arms (Arms B and C) of the Phase 2 trial in newly diagnosed and relapsed GBM in 2024.

Third Quarter 2023 Financial Highlights

Research and Development expenses: Research and development expenses were $3.8 million for the three months ended September 30, 2023, compared to $4.3 million for the comparable prior year period. The decrease was primarily due to a reduction in contract research organization expenses for INB-400 related to the IND filing in the prior year period, partially offset by increased personnel-related costs, including salaries, benefits, and non-cash stock-based compensation due to increased headcount.

General and administrative expenses: General and administrative expenses were $3.4 million for the three months ended September 30, 2023, compared to $3.1 million for the comparable prior year period. The increase was primarily due to an increase in professional services.

Net Loss: The Company reported a net loss of $7.2 million, or $0.23 per basic and diluted common share, for the three months ended September 30, 2023, compared to $7.4 million, or $0.34 per basic and diluted common share, for the comparable prior year period.

Cash: As of September 30, 2023, the Company had cash of $12.9 million, compared to $17.0 million as of June 30, 2023.

Illumina Reports Financial Results for Third Quarter of Fiscal Year 2023

On November 9, 2023 Illumina, Inc. reported its financial results for the third quarter of fiscal year 2023, which include the consolidated financial results for GRAIL (Press release, Illumina, NOV 9, 2023, View Source [SID1234637371]).

"While the environment remains challenging, I am confident in our ability to navigate it and position the company for long-term success," said Jacob Thaysen, Chief Executive Officer. "I came to Illumina for the opportunity presented by our core business. While I evaluate the company’s strategy, we will remain focused on driving on further placements of the NovaSeq X, which will boost consumables demand. We will also continue optimizing our operations and drive stronger execution."

Third quarter consolidated results
GAAP Non-GAAP (a)
Dollars in millions, except per share amounts Q3 2023 Q3 2022 Q3 2023 Q3 2022
Revenue $ 1,119 $ 1,115 $ 1,119 $ 1,115
Gross margin 61.1 % 64.3 % 65.4 % 68.4 %
Research and development ("R&D") expense $ 315 $ 325 $ 312 $ 324
Selling, general and administrative ("SG&A") expense $ 303 $ 146 $ 328 $ 336
Goodwill and intangible impairment
$ 821 $ 3,914 $ — $ —
Legal contingency and settlement $ (1) $ (11) $ — $ —
Operating (loss) profit $ (754) $ (3,657) $ 93 $ 102
Operating margin (67.3) % (327.9) % 8.3 % 9.2 %
Tax (benefit) provision
$ (28) $ 144 $ 35 $ 40
Tax rate 3.6 % (4.0) % 39.7 % 43.2 %
Net (loss) income $ (754) $ (3,816) $ 52 $ 54
Diluted (loss) earnings per share $ (4.77) $ (24.26) $ 0.33 $ 0.34

(a) See the tables included in the "Results of Operations – Non-GAAP" section below for reconciliations of these GAAP and non-GAAP financial measures.
During the third quarter of 2023, the company recognized $712 million in goodwill and $109 million in intangible asset (IPR&D) impairment related to the GRAIL segment. The goodwill impairment was primarily due to a decrease in the company’s consolidated market capitalization and a higher discount rate selected for the fair value calculation of the GRAIL reporting unit. The IPR&D impairment was primarily due to a decrease in projected cash flows and a higher discount rate selected for the fair value calculation of the GRAIL IPR&D asset. During the third quarter of 2022, the company recognized $3.91 billion in goodwill impairment related to the GRAIL segment.

Capital expenditures for free cash flow purposes were $45 million for Q3 2023. Cash flow provided by operations was $139 million, compared to cash flow used in operations of $(52) million in the prior year period, which included a one-time payment related to the litigation settlement with BGI. Free cash flow (cash flow provided by (used in) operations less capital expenditures) was $94 million for the quarter, compared to $(119) million in the prior year period. Depreciation and amortization expenses were $108 million for Q3 2023. At the close of the quarter, the company held $933 million in cash, cash equivalents and short-term investments. During the third quarter of 2023, the company used $750 million in cash to repay the outstanding principal of convertible notes that matured in August 2023.

Third quarter segment results
Illumina has two reportable segments, Core Illumina and GRAIL.

Core Illumina
GAAP Non-GAAP (a)
Dollars in millions Q3 2023 Q3 2022 Q3 2023 Q3 2022
Revenue (b)
$ 1,106 $ 1,110 $ 1,106 $ 1,110
Gross margin (c)
64.7 % 67.9 % 66.0 % 68.9 %
R&D expense $ 238 $ 253 $ 235 $ 252
SG&A expense $ 216 $ 66 $ 246 $ 262
Legal contingency and settlement $ (1) $ (11) $ — $ —
Operating profit
$ 262 $ 445 $ 249 $ 251
Operating margin 23.7 % 40.1 % 22.5 % 22.6 %

(a) See Table 3 included in the "Results of Operations – Non-GAAP" section below for reconciliations of these GAAP and non-GAAP financial measures.

(b) Core Illumina revenue for Q3 2023 was flat as compared to Q3 2022, and flat on a constant currency basis. Amounts for Q3 2023 and Q3 2022 included intercompany revenue of $8 million and $5 million, respectively, which is eliminated in consolidation.
(c) The year-over-year decrease in gross margin was primarily driven by less fixed cost leverage on lower manufacturing volumes, product mix, as well as lower instrument margins and higher field service and installation costs due to the NovaSeq X launch, which is typical in a launch year.

GRAIL
GAAP Non-GAAP (a)
In millions Q3 2023 Q3 2022 Q3 2023 Q3 2022
Revenue $ 21 $ 10 $ 21 $ 10
Gross (loss) profit $ (27) $ (32) $ 6 $ 1
R&D expense $ 79 $ 74 $ 79 $ 74
SG&A expense $ 87 $ 81 $ 82 $ 75
Goodwill and intangible impairment
$ 821 $ 3,914 $ — $ —
Operating loss $ (1,015) $ (4,101) $ (155) $ (148)

(a) See Table 3 included in the "Results of Operations – Non-GAAP" section below for reconciliations of these GAAP and non-GAAP financial measures.

As previously stated, Illumina is committed to moving as quickly as possible through the legal and regulatory processes associated with its acquisition of GRAIL. At this point, Illumina expects decisions on its appeals from the US Court of Appeals for the Fifth Circuit by the end of 2023 and from the European Court of Justice (ECJ) in mid-2024.

Key announcements by Illumina since Illumina’s last earnings release
•Received order from the European Commission to divest GRAIL; Illumina is committed to resolving all issues in a timely manner, with the objective of achieving the maximum value for shareholders and the best outcome for GRAIL
•Launched TruSight Oncology 500 (TSO 500) ctDNA Version 2, a liquid biopsy assay that enables comprehensive genomic profiling of circulating tumor DNA; key improvements include a faster turnaround time of less than four days, higher sensitivity with lower input requirements, and a more streamlined workflow
•Opened new office and state-of-the-art Illumina Solutions Center in Bengaluru, India to grow the genomics market in the most populous country in the world, unlocking opportunities for advancing health care and combating the effects of climate change in South Asia
•Appointed Jacob Thaysen, Ph.D. as Chief Executive Officer and Dr. Steve Barnard as Chief Technology Officer
•Launched the 25B flow cell (300-cycle kit) for the NovaSeq X, enabling customers to generate tens of thousands of whole genomes per year at the lowest cost per sample of any Illumina platform

A full list of recent Illumina announcements can be found in the company’s News Center.

Key announcements by GRAIL since Illumina’s last earnings release
•Collaboration with HCA Healthcare, Inc. to make GRAIL’s Galleri multi-cancer early detection (MCED) available to patients who meet screening criteria at select HCA Healthcare physician practices
•Published final results from PATHFINDER Study, which demonstrated that an earlier version of Galleri identified many cancer types that do not currently have recommended screening tests, enabled targeted cancer diagnostic evaluations, and supported diagnostic resolution for the majority of participants in less than three months
•Expanded pilot with Point32Health to offer Galleri to members meeting eligibility requirements, making Point32Health the first commercial health plan in the U.S. to offer Galleri in addition to recommended cancer screenings

A full list of recent GRAIL announcements can be found in GRAIL’s Newsroom.

Financial outlook and guidance
The non-GAAP financial guidance discussed below reflects certain pro forma adjustments to assist in analyzing and assessing our core operational performance, including the company’s Core Illumina and GRAIL segments. Please see our Reconciliation of Consolidated Non-GAAP Financial Guidance included in this release for a reconciliation of these GAAP and non-GAAP financial measures.

For fiscal year 2023, the company now expects consolidated revenue to decrease 2% to 3% compared to fiscal year 2022. The company now expects Core Illumina revenue to decrease 3% to 4% compared to fiscal year 2022. GRAIL revenue is now expected to be at the low end of the $90 million to $110 million range.

The company now expects GAAP diluted loss per share of $(6.67) to $(6.57) and non-GAAP diluted earnings per share of $0.60 to $0.70.

Conference call information
The conference call will begin at 2 p.m. Pacific Time (5 p.m. Eastern Time) on Thursday, November 9, 2023. Interested parties may access the live teleconference through the Investor Info section of Illumina’s website at investor.illumina.com. Alternatively, individuals can access the call by dialing 866.400.0049 or +1.323.794.2149 outside North America, both using conference ID 1991305. To ensure timely connection, please dial in at least ten minutes before the scheduled start of the call.

A replay of the conference call will be posted on Illumina’s website after the event and will be available for at least 30 days following.

Ikena Oncology Shares Initial Positive and Differentiated Dose Escalation Data from IK-930 Phase I Trial and Reports Third Quarter 2023 Financial Results

On November 9, 2023 Ikena Oncology, Inc. (Nasdaq: IKNA, "Ikena," "Company"), a targeted oncology company forging new territory in patient-directed cancer treatment, reported financial results for the quarter ended September 30, 2023, and provided a corporate update (Press release, Ikena Oncology, NOV 9, 2023, View Source [SID1234637370]). The Company also shared initial data from twenty-six (26) patients treated in the ongoing dose escalation portion of the Phase I clinical trial of IK-930, a novel, oral, potent, and highly selective Hippo pathway inhibitor.

"This early look at the IK-930 dose escalation data strongly supports our differentiated approach to targeting the Hippo pathway. Importantly, following the target biology and initially focusing on EHE has allowed us to observe clinical activity of IK-930 early in our dose escalation. Even in the projected efficacious exposure range and at doses with clinical activity, IK-930 has thus far circumvented the renal toxicity observed with pan-TEAD inhibitors," commented Mark Manfredi, Ph.D., Chief Executive Officer of Ikena. "Now, with IK-930’s safety profile allowing us to potentially dose patients to their optimal benefit, combined with sufficient capital to drive us through multiple data readouts, we are looking ahead to a series of rapid next steps with the program. We are increasing our focus on our targeted monotherapy indications, such as EHE and mesothelioma, and have growing confidence that as we continue the program IK-930 may be able provide the therapeutic window and clinical benefit these patient populations need."

IK-930 Dose Escalation Summary and Emerging Proof of Concept in EHE

IK-930 selectively binds TEAD1 and broadly represses oncogenic TEAD signaling as a potent Hippo-pathway inhibitor, a known suppressor pathway in cancers such as epithelioid hemangioendothelioma (EHE), mesothelioma, meningioma, and others. IK-930’s differentiated paralog selectivity and robust repressor activity in complex with VGLL4 are key characteristics supporting anti-tumor effect in preclinical models. IK-930 is designed to circumvent renal toxicity, potentially resulting in an optimized therapeutic index. Twenty-six patients with a range of solid tumors were treated in the dose escalation portion of the study as of October 31, 2023. The most common tumor type enrolled was EHE.

Differentiated Safety Profile

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26 patients have been treated with IK-930 in dose escalation as of October 31, 2023
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IK-930 is in the final stages of dose optimization; the tolerability profile observed thus far supports the hypothesis that IK-930’s selectivity could provide a wider therapeutic index for this new class of compounds
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Proteinuria is an adverse effect of special interest as it may be an on-target effect of broad TEAD inhibition
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Treatment-related proteinuria was recorded in 3 out of 26 dose escalation patients and was limited to grade 1-2
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The observed proteinuria did not result in dose reduction or treatment interruption; no proteinuria events were considered dose-limiting and in all cases was fully reversible
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Other safety observations include:
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Frequent adverse events to date have been low-grade nausea, fatigue, and diarrhea, and have not required any dose reduction
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Two EHE patients with significant liver metastases experienced reversible liver enzyme elevation
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One of these patients developed treatment-related grade 3 elevation, deemed dose limiting (the only DLT observed), and the patient remains on study after dose adjustment
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The other patient experienced grade 3-4 elevation that was deemed possibly treatment related;
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Dose escalation is currently ongoing
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15 patients were treated with doses within the projected efficacious exposure range and pharmacokinetic data showed some variability
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7 out of 15 patients were determined to reach efficacious exposure
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Target engagement in tumor, as determined by decreased TEAD gene signature, has been demonstrated in the efficacious dose range
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To minimize IK-930 exposure variability, a next generation formulation is now being evaluated in the dose escalation
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Recommended dosing for the next stage of the IK-930 program is expected to be determined in the near-term

Emerging Proof of Concept in EHE

Epithelioid hemangioendothelioma is a rare vascular sarcoma defined by gene fusions of either YAP or TAZ genes in the Hippo pathway with other transcriptional regulators. EHE is a slow-growing, invasive tumor with no approved treatment options and is challenging to measure due to diffuse infiltration of multiple organs. It can occur in multiple areas of the body, including the liver, lungs, bones, and blood vessels. People with EHE suffer symptoms that relentlessly affect their quality of life and are consistent with the site of the EHE growth, including liver failure, respiratory issues, and gastrointestinal symptoms, which are frequently accompanied by severe pain across the body. With no approved standard of care, there is substantial need for innovative treatments that can provide clinical benefit and symptom relief and slow or limit the progression of disease.

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Seven patients with EHE have been treated with IK-930 in the dose escalation portion of the trial
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7 out of 7 EHE patients reached stable disease as a best response so far as measured by RECIST
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3 out of the 7 patients experienced tumor shrinkage in multiple target and non-target lesions
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4 out of 7 highly symptomatic EHE patients enrolled across multiple dose levels reported symptomatic improvement and subjective improvement of quality of life such as improved energy, weight gain, and pain control
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3 out of the 7 patients continue on treatment with time on treatment ranging from 18 to 26 weeks and ongoing
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As a result of these initial tolerability and antitumor activity findings, enrollment in the dose escalation phase continues to progress in targeted populations including mesothelioma and meningioma, in addition to EHE
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Based on preclinical data indicating IK-930 synergy with EGFR inhibitors to combat therapeutic resistance, a combination cohort for IK-930 and osimertinib in patients with EGFR-mutant non-small cell lung cancer (NSCLC) is planned to initiate in 2024
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An additional data update from the IK-930 clinical program is planned for the second half of 2024
"EHE is a rare soft tissue sarcoma for which there is no known treatment. This tumor is 100% driven by the Hippo pathway which has motivated our initial development of IK-930 in EHE, despite the challenge of assessing the disease burden and treatment effects. The EHE patient community is one of the strongest I have worked with. The physicians, patients, and supportive community are deeply committed to finding innovative solutions in EHE, and we are immensely grateful for their partnership in these early days of the IK-930 clinical program," commented Sergio Santillana, M.D., Chief Medical Officer of Ikena.

"The EHE community is excited by this early data from IK-930, the first targeted agent for patients with EHE, and we eagerly await more data. Rare cancers, like EHE, present significant challenges for drug developers, and we are encouraged by Ikena’s commitment to this program. We are grateful for the participation of EHE patients, caregivers, and physicians in the trial, and we look forward to continuing our partnership with Ikena," commented Tammy Silverthorne, Executive Director of The EHE Foundation.

Summary of Additional Recent Pipeline Progress and Corporate Updates

IK-595: MEK-RAF Molecular Glue

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IK-595 clinical trial anticipated to initiate by year end 2023
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Additional preclinical updates were presented at the 5th Annual RAS-Targeted Drug Development Conference in September and AACR (Free AACR Whitepaper)-NCI-EORTC AACR-NCI-EORTC (Free AACR-NCI-EORTC Whitepaper) International Conference on Molecular Targets and Cancer Therapeutics (EORTC-NCI-AACR) (Free ASGCT Whitepaper) (Free EORTC-NCI-AACR Whitepaper) in October

IK-175: AHR Inhibitor in Collaboration with Bristol Myers Squibb

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The Phase 1 clinical trial in urothelial carcinoma has completed enrollment and the program is eligible for opt-in from Bristol Myers Squibb through early 2024

Corporate Updates

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In August 2023, the Company acquired Pionyr Immunotherapeutics, Inc. ("Pionyr"), a privately held biotech company, in an all-stock transaction
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Ikena acquired all of Pionyr assets, including approximately $43 million in net cash in exchange for shares of Ikena stock at price of $7.15 per share
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The valuation for the transaction was determined solely by net cash available at closing
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The Company believes that cash at hand will be sufficient to meet its operating requirements into 2026 through multiple data events for both IK-930 and IK-595

Financial Results for the Quarter Ended September 30, 2023

As of September 30, 2023, Ikena had $196.9 million in cash, cash equivalents and marketable securities. Net cash used in operating activities was $19.9 million for the three months ended September 30, 2023, as compared to $17.2 million of cash used in operating activities for the same period in 2022.

Collaboration revenue was $1.2 million and $6.4 million for the three months ended September 30, 2023 and 2022, respectively. The decrease in revenue of $5.2 million was primarily due to an increase in manufacturing activities as a result of the substantial completion of manufacturing efforts related to the IK-412 program during the three months ended September 30, 2022.

Research and development expenses were $14.7 million and $18.9 million for the three months ended September 30, 2023 and 2022, respectively. The decrease in research and development expenses of $4.2 million was primarily due to decreases in clinical trial costs related to IK-175 and decreases in other discovery stage programs as a result of the Company prioritizing its focus on advancing its clinical stage programs, partially offset by costs incurred to wind down Pionyr clinical trials.

General and administrative expenses were $6.0 million and $5.4 million for the three months ended September 30, 2023 and 2022, respectively. The increase in general and administrative expenses of $0.6 million was primarily attributable to an increase in legal expenses.