On May 10, 2018 Pfenex Inc. (NYSE American: PFNX), a clinical-stage development and licensing biotechnology company focused on leveraging its Pfēnex Expression Technology to improve protein therapies for unmet patient needs, reported financial results for the first quarter ended March 31, 2018 and provided a business update (Press release, Pfenex, MAY 10, 2018, View Source [SID1234526490]).

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"We are on track to report topline results from our PF708-301 Phase 3 trial in the second quarter. This study compares PF708, a therapeutic equivalent to Forteo, to Forteo after 24 weeks of daily treatment in osteoporosis patients. If the data from the trial are in line with our expectations, this will be a significant milestone for our lead program. Assuming sufficiently positive results from our PF708-301 Phase 3 trial, we plan to submit the NDA for PF708-301 to the FDA in the third quarter," stated Eef Schimmelpennink, chief executive officer of Pfenex. "I am a strong believer in the value of leveraging key competencies different parties may have, and to that extent we continue to evaluate commercial partnership opportunities for PF708, in parallel to planning and preparing to potentially bring the product to the market ourselves. Importantly, we will always focus on the pathway that creates the most value for our stockholders. To that end, we recently entered into a development and license agreement with NT Pharma for our PF708 product, through which they will oversee the regulatory and commercialization activities for the product in Mainland China, Hong Kong, Singapore, Malaysia and Thailand. NT Pharma’s demonstrated experience in the orthopedic space makes them a valuable partner in this territory."

"Beyond advancing our current pipeline, our development partnerships with Jazz, NT Pharma, BARDA and CRM197, our long-term strategy is to fill out our pre-clinical and clinical pipelines with new programs created through our Pfēnex Expression Technology Platform. We look forward to leveraging the platform’s high rate of success in developing complex therapeutic proteins, our experienced clinical research team and our network of development and commercialization partners. This strategy strengthens the business through a more diversified pipeline to build stockholder value," concluded Schimmelpennink.

Business Review and Update

PF708 therapeutic equivalent to Forteo (teriparatide)

In April, Pfenex entered an agreement under which Pfenex granted NT Pharma non-exclusive development and exclusive commercialization rights to PF708 in Mainland China, Hong Kong, Singapore, Malaysia and Thailand. In accordance with the agreement, Pfenex may be eligible to receive up to $25 million in payments based on the achievement of certain development, regulatory and sales-related milestones. In addition, Pfenex is eligible to receive double-digit royalties on any future net product sales. NT Pharma will be responsible for any further development required to achieve regulatory approval as well as commercialization activities in the applicable territories.

In February 2018, Pfenex completed the last patient visit for its on-going PF708-301 trial. The trial compares PF708 and Forteo after 24 weeks of daily treatment in osteoporosis patients. Pfenex expects top-line immunogenicity data results in the second quarter of 2018. Pfenex believes that results from its PF708-301 trial, if sufficiently positive, along with the previously-announced bioequivalence findings from its Study PF708-101 in healthy subjects will support submitting a New Drug Application (NDA) for PF708 in the United States. Assuming sufficiently positive results from its PF708-301 trial, Pfenex expects to submit an NDA to the U.S. Food and Drug Administration (FDA) in the third quarter of 2018, with a potential commercial launch possible in the United States as early as the third quarter of 2019, subject to receipt of FDA marketing authorization.

Jazz Collaboration Agreement

Pfenex and Jazz Pharmaceuticals are collaboratively developing certain hematology/oncology products, including PF743, a recombinant crisantaspase, and PF745, a recombinant crisantaspase with half-life extension technology. Jazz will have the exclusive right to manufacture and commercialize such products throughout the world. Under the agreement with Jazz, Pfenex will be eligible to receive up to $224.5 million in total value of payments and potential payments associated with the collaboration. To date, Pfenex has received $35.2 million through this agreement. Pfenex may also be eligible to receive tiered royalties on worldwide sales of any products resulting from the collaboration.

Px563L and RPA563

The development of Pfenex’s novel anthrax vaccine candidates is funded through an advanced development contract with the Department of Health and Human Services through the Biomedical Advanced Research and Development Authority (BARDA) valued at up to approximately $143.5 million. Potential next milestones in 2018 are triggering of analytical and non-clinical animal study options leading to a potential Phase 2 study in 2019, subject in each case to continued funding by BARDA.

CRM197

Pfenex provided an update on a legacy program, CRM197, for which Pfenex has several development and commercial partnerships in place. CRM197 is a non-toxic mutant of diphtheria toxin. It is a well characterized protein and functions as a carrier for polysaccharides and haptens making them immunogenic. In the early days of its existence, Pfenex developed a unique CRM197 based on its Pfēnex Expression Technology platform and sells non-GMP and cGMP CRM197 to mostly vaccine development focused pharmaceutical partners. As a result of those efforts, Pfenex previously entered into commercial licenses for production strains capable of producing CRM197 with both Merck and Serum Institute of India. Pfenex’s CRM197 is currently being used or planned to be used in multiple late-stage clinical trials for such diseases as pneumococcal and meningitis bacterial infections.

Financial Highlights for the First Quarter 2018

Total Revenue increased to $3.7 million in the three-month period ended March 31, 2018, compared to $2.8 million in the same period in 2017. The increase in revenue was due to additional activity related to development of Pfenex’s Px563L product candidate under its government contract, as two options were exercised by the government in 2017. Minimal activity related to planning and start-up activities for the new options occurred in early 2017, progressing to increased development activities later in the year and into 2018. Reagent protein product sales also increased. In addition, as a result of an amended license agreement with Jazz signed in December 2017, license revenue increased in the first quarter of 2018.

Cost of revenue increased to $1.5 million in the three-month period ended March 31, 2018, compared to $0.8 million in the same period in 2017. The increase was primarily due to greater costs for Pfenex’s Px563L product candidate under its government contract, resulting from increased activity under this contract during the first quarter of 2018, as well as additional sales of reagent protein product.

Research and development expenses increased to $8.8 million in the three-month period ended March 31, 2018, compared to $6.4 million in same period in 2017. This was primarily due to increased activity for PF708 to satisfy the clinical filing requirements for an NDA, which Pfenex expects to submit to the FDA in the third quarter of 2018, assuming sufficiently positive results from its Study PF708-301. These costs were offset by a decrease in expenses due to Pfenex’s decision to pause its development activities on certain product candidates in 2017.

Selling, general and administrative expenses decreased to $4.5 million in the three-month period ended March 31, 2018, compared to $5.7 million in the same period in 2017. The decrease was primarily due to costs incurred in the first quarter of 2017 for the change in senior management.

Cash and cash equivalents as of March 31, 2018 was $47.1 million. Pfenex believes it has sufficient cash to meet its anticipated cash needs for at least the next 12 months. Assuming sufficiently positive results from its PF708-301 study, Pfenex also believes it has sufficient cash resources to fund all necessary activities leading up to and including the expected submission of an NDA for PF708 to the FDA