On August 1, 2023 Portage Biotech Inc. (NASDAQ: PRTG), a clinical-stage immuno-oncology company advancing novel multi-targeted therapies for use as monotherapy and in combination, reported financial results for the fiscal year ended March 31, 2023 (Press release, Portage Biotech, JUL 31, 2023, View Source [SID1234633594]).
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"We continue to advance our clinical programs with important progress made recently in both our iNKT engager and adenosine programs and are pleased to see the trials generating interest from the academic community," said Dr. Ian Walters, Chief Executive Officer and Chairman of Portage Biotech. "At ASCO (Free ASCO Whitepaper) we presented favorable interim data from the Phase 1/2 trial of our lead program, PORT-2 for the treatment of patients with advanced melanoma and metastatic non-small cell lung cancer. The presented data showed early evidence of monotherapy activity and meaningful reduction of several target lesions with minimal toxicity. This has led to our expansion of the trial globally and transition of sponsorship from the academic sponsor to Portage."
"We also recently announced the dosing of the first patient in our adaptive Phase 1a/1b trial, ADPORT-601 (NCT04969315), evaluating PORT-6, our adenosine 2A receptor (A2AR) antagonist candidate, in patients with biomarker selected solid tumors including prostate cancer, renal and non-small cell lung cancer (NSCLC)," continued Dr. Walters. "The ADPORT-601 trial includes plans to also evaluate PORT-7, our adenosine 2B receptor (A2BR) antagonist, and is designed to adapt over time, including safety and efficacy cohorts for both candidates as monotherapy and in combination with checkpoint inhibitors as well as other immune activating agents from Portage’s pipeline. Recently, having chaired a new conference focused on the adenosine pathway, we were encouraged to see the work many companies are doing in this space. We remain confident in our highly differentiated assets and development strategy as clinical trial sites continue to open in the U.S., to accelerate patient accrual in our clinical programs."
Company Highlights
Entered into a clinical collaboration agreement with Merck for the evaluation of PORT-2, in combination with KEYTRUDA (pembrolizumab), Merck’s anti-PD-1 therapy, for patients with first-line as well as PD-1 refractory NSCLC.
The Company hosted a Key Opinion Leader webinar highlighting the potential of targeting the adenosine pathway, featuring Lawrence Fong, M.D., from The University of California, San Francisco (UCSF) Helen Diller Family Comprehensive Cancer Center, and Sumit Subudhi, M.D., Ph.D., from MD Anderson Cancer Center. The event covered the immunologic rationale and current clinical landscape that set the foundation for Portage’s development approach. A replay of the event is available here.
Financial Results from Year Ended March 31, 2023
The Company generated a net loss of approximately $104.7 million and other comprehensive loss of approximately $109.9 million during the year ended March 31, 2023 ("Fiscal 2023"), which includes approximately $88.0 million of net non-cash expenses compared to a net loss and comprehensive loss of approximately $19.2 million during the year ended March 31, 2022 ("Fiscal 2022"), an increase in net loss of $85.5 million and an increase in other comprehensive loss of $90.7 million, year-over-year. The increase was primarily due to non-cash losses on impairment relating to the Company’s identifiable intangible assets, goodwill, and certain investments and convertible note receivable.
Operating expenses, which include research and development ("R&D") costs and general and administrative ("G&A") expenses, were $16.6 million in Fiscal 2023, compared to $15.6 million in Fiscal 2022, an increase of $1.0 million due primarily to the addition and start of the PORT-6 clinical trial and the iNKT clinical trial for PORT-2, which is discussed more fully below.
R&D costs increased by approximately $1.4 million, or approximately 21%, from approximately $6.8 million in Fiscal 2022, to approximately $8.2 million in Fiscal 2023. The increase was primarily attributable to the start-up and manufacturing costs associated with the adenosine assets (PORT-6 and PORT-7) acquired in the Tarus acquisition of $1.9 million and the clinical trial costs of $1.5 million associated with the iNKT clinical trial for PORT-2. There were no such costs incurred in Fiscal 2022. Additionally, the Company incurred additional R&D service costs totaling $0.4 million in Fiscal 2023. These increases were partially offset by a reduction in non-cash share-based compensation expense of $2.4 million with respect to stock options to purchase ordinary shares granted to employees, which was attributable to (a) the vesting over time of a portion of prior year grants; and (b) the decrease in the fair value of grants of stock options made in Fiscal 2023, as well as the timing of the grants.
G&A expenses decreased by approximately $0.4 million, or approximately 5%, from approximately $8.8 million in Fiscal 2022, to approximately $8.4 million in Fiscal 2023. Professional fees increased by $1.3 million, of which $0.8 million was attributable to legal fees associated with the Tarus acquisition and $0.5 million was attributable to audit and accounting related expenses and filing fees in Fiscal 2023 associated with the updating of public filings, as well as costs associated with the Tarus acquisition review and to the iOx purchase of the then existing non-controlling interest. Payroll-related and board expenses increased by $1.1 million due to the adoption of a compensation program in Fiscal 2023 designed to attract and retain management and board members, which was partially offset by a decrease in non-cash share-based compensation expense of $2.4 million attributable to the vesting of certain stock options granted in prior years and lower fair value associated with more recent grants and the decrease of $0.4 million associated with D&O insurance, which was attributable to a decrease in the D&O premium market year-over-year.
The Company’s other items of income and expense were substantially non-cash in nature and aggregated approximately $105.9 million net expense in Fiscal 2023, compared to approximately $0.8 million net income in Fiscal 2022. The primary reason for the year-over-year difference in other items of income and expense were the non-cash losses on impairment relating to the carrying value of in-process research and development ("IPR&D") for iOx and Tarus of $59.320 million and $4.585 million, respectively, the impairment of goodwill totaling $43.862 million, and the loss on impairment relating to our investment in Stimunity and the Stimunity convertible note of $0.607 million and $0.211 million, respectively. The impairment analysis was undertaken as a result of indications of impairment from the overall life sciences market and our market capitalization. We considered a number of factors relating to the fair value analysis of the assets as of March 31, 2023, including the cost of capital, discount rates, and the impact of timing delays of obtaining data. These losses were slightly offset by non-cash gains from the change (decrease) in fair value of the deferred purchase price payable to the former Tarus shareholders and the deferred obligation – iOx milestone totaling $2.711 million and net interest income, net from investments in short-term investments in Fiscal 2023.
Additionally, the Company recognized a non-cash net deferred income tax benefit of $17.9 million in Fiscal 2023, compared to the prior year, primarily attributable to the tax effect of the non-cash loss on impairment on the IPR&D in iOx , as well as changes related to the future U.K. tax rates and the effect of the change in exchange rates on the liability settleable in British pound sterling.
Finally, in Fiscal 2023, the Company also performed a fair value analysis on its investment in Intensity Therapeutics, Inc. ("Intensity") (NASDAQ: INTS), and determined a fair value of $2.087 million, as compared to its original carrying value of $7.409 million, resulting in a non-cash unrealized loss in value in Intensity of $5.322 million recorded as other comprehensive income (loss) in Fiscal 2023.
As of March 31, 2023, the Company had cash and cash equivalents of approximately $10.5 million and total current liabilities of approximately $1.9 million.
KEYTRUDA is a registered trademark of Merck Sharp & Dohme Corp., a subsidiary of Merck & Co. LLC., Rahway, N.J., USA.