NewLink Genetics Corporation (NASDAQ:NLNK) today announced
financial results for the fourth quarter and full year ended
December 31, 2019, and provided an update on corporate activities.
“We continue to focus our work toward the
anticipated completion of our proposed merger with Lumos Pharma,”
stated Carl Langren, Chief Financial Officer, and member of
NewLink’s Office of the CEO. “We believe that the newly combined
company will be well positioned to increase stockholder value
through the continued efforts to offer improved therapeutic options
for patients suffering from PGHD and other rare diseases. We look
forward to the close of the merger transaction, which we expect
later this quarter.”
Eugene Kennedy, MD, Chief Medical Officer and
member of NewLink’s Office of the CEO added, “We are also delighted
by the FDA’s approval on December 19, 2019 of ERVEBO®, which we
licensed to Merck in 2014. We applaud the FDA, as well as Merck and
all those involved in achieving approval.”
Proposed Merger and Related Milestones
On February 13, 2020, NewLink filed a definitive
proxy statement with the Securities and Exchange Committee (SEC)
announcing the Special Meeting of Stockholders to be held on
Tuesday, March 17, 2020, for a stockholder vote on the issuance of
shares in connection with the proposed merger of NewLink Genetics
and Lumos Pharma, as well as other related proposals.
As previously reported, on September 30, 2019,
NewLink announced its intent to merge with Lumos Pharma, a private
clinical-stage biopharmaceutical company targeting rare and
neglected diseases. Under the terms of the merger agreement, Lumos
and NewLink stockholders will each own approximately 50% of the
combined company, which will be renamed “Lumos Pharma, Inc.” at the
close of the transaction. Rick Hawkins, current CEO of Lumos
Pharma, is expected to become CEO of the combined company. The
proposed merger has been approved by the boards of directors of
both companies and by the stockholders of Lumos Pharma and
NewLink’s largest stockholder have entered into a support agreement
with NewLink to vote in favor of various proposals relating to the
proposed merger.
The combined company expects to focus initially
on the development of Lumos Pharma’s product candidate, LUM-201
(ibutamoren), an oral growth hormone (GH) secretagogue targeting
pediatric growth hormone deficiency (PGHD) and other rare endocrine
disorders. If approved, LUM-201 has the potential to be the first
orally administered growth hormone stimulating therapy for a subset
of PGHD patients, an established sizable market where daily
recombinant human growth hormone injections represent current
standard-of-care therapy.
The initiation of a Phase 2b trial for LUM-201
in a subset of PGHD patients meeting certain predictive enrichment
markers (PEMs) is anticipated in mid-2020. The combined company is
expected to have resources sufficient to support clinical
development through this planned Phase 2b trial. Other target
indications are being evaluated for LUM-201 clinical development,
including Turner Syndrome and children born small for gestational
age (SGA).
Additional Updates for 2019
- Entered into an exclusive worldwide
license agreement with Ellipses Pharma Limited (Ellipses),
effective December 17, 2020, for the development of and rights to
commercialize NLG207 (formerly CRLX101), a nanoparticle formulation
of the topoisomerase 1 inhibitor camptothecin, and the rights to
develop and commercialize CRLX-301, a nanoparticle formulation of
docetaxel.
- On December 19, 2019, the U.S. Food
and Drug Administration (FDA) announced that the agency had granted
approval of ERVEBO®. A priority review voucher (PRV) was
issued in conjunction with that approval and NewLink is entitled to
60% of the value of the PRV obtained through its sale, transfer or
other disposition.
Financial Results for the Fourth Quarter and
Full Year Ended December 31, 2019
Cash Position: NewLink Genetics ended
the year on December 31, 2019, with cash and cash
equivalents totaling $90.5 million compared
to $120.7 million for the year
ending December 31, 2018.
R&D Expenses: Research and development
expenses for the fourth quarter of 2019 were $4.7 million, a
decrease of $1.0 million from $5.7 million for the same period in
2018. The decrease was primarily due to reductions of $2.2 million
in personnel-related and stock compensation expense and $100,000 in
contract research and manufacturing spend offset by increases of
$700,000 in restructuring costs and $600,000 in clinical trial and
licensing expense. For the year ended December 31, 2019,
R&D expenses were $22.2 million compared to $45.7 million in
the year ended December 31, 2018.
G&A Expenses: General and administrative
expenses in the fourth quarter of December 31,
2019 were $4.4 million, a decrease of $1.0 million from
$5.4 million for the same period in 2018. The decrease
was due primarily to decreases of $1.5 million in personnel-related
and stock compensation expense and a decrease of $600,000 in
supplies, travel and other expenses, offset by an increase of
$600,000 in legal and consulting fees and a $500,000 increase in
restructuring and severance expense. For the year ended
December 31, 2019, G&A expenses were $23.9 million
compared to $29.2 million in the year ended December 31,
2018.
Net Loss: NewLink Genetics reported a
net loss of $8.3 million or a net loss of $0.22 per
diluted share for the fourth quarter of 2019 and a net loss
of $43.0 million or a net loss of $1.15 per
diluted share for the year ended December 31, 2019,
compared to a net loss of $10.6 million or a net loss
of $0.28 per diluted share for the fourth quarter of 2018
and a net loss of $53.6 million or a net loss of $1.44 per
diluted share for the year ended December 31, 2018.
NewLink Genetics ended 2019 with 37,325,091
shares outstanding.
ERVEBO® is a registered trademark of Merck Sharp
& Dohme Corp ("Merck").
About NewLink Genetics
Corporation
NewLink Genetics is a clinical-stage
biopharmaceutical company that has historically focused on
developing novel immunotherapeutic products for the treatment of
patients with cancer. On September 30, 2019, NewLink announced its
intent to merge with Lumos Pharma, a private clinical-stage
biopharmaceutical company targeting rare and neglected diseases. At
the close of the proposed merger, the combined company will operate
as Lumos Pharma, which is expected to focus initially on Lumos
Pharma's product candidate, LUM-201 (ibutamoren), an oral growth
hormone (GH) secretagogue targeting pediatric growth hormone
deficiency (PGHD) and other rare endocrine disorders. If approved,
LUM-201 has the potential to become the first orally administered
growth hormone stimulating therapy for PGHD, an established market
where daily recombinant human growth hormone injections represent
the current standard-of-care treatment regimen. For more
information, please visit www.NewLinkGenetics.com.
Additional Information and Where to Find
It
In connection with the proposed merger, NewLink
filed the Definitive Proxy Statement with the SEC on February 10,
2020 and amended on February 13, 2020. The Definitive Proxy
Statement was first mailed on or about February 10, 2020 to
NewLink’s stockholders of record as of the close of business on
February 7, 2020. Stockholders of NewLink are urged to read these
materials carefully because they contain important information
about NewLink, Lumos, and the proposed merger and related
transactions. The Definitive Proxy Statement and any amendments or
supplements thereto (when such amendments or supplements become
available) and other documents filed by NewLink with the SEC may be
obtained free of charge through the SEC website at www.sec.gov.
They may also be obtained free of charge either on NewLink’s
website by contacting the Corporate Secretary by written request to
NewLink Genetics Corporation, 2503 South Loop Drive, Ames, Iowa
50010 or by phone at (515) 598-2561.
This communication shall not constitute an offer
to sell or the solicitation of an offer to sell or the solicitation
of an offer to buy any securities, nor shall there be any sale of
securities in any jurisdiction in which such offer, solicitation or
sale would be unlawful prior to registration or qualification under
or applicable exemption from the securities laws of any such
jurisdiction.
Participants in the
Solicitation
NewLink and its directors and executive officers
and Lumos and its directors and executive officers may be deemed to
be participants in the solicitation of proxies from the
stockholders of NewLink in connection with the proposed merger.
Information regarding the special interests of these directors and
executive officers in the proposed merger are included in the
Definitive Proxy Statement referred to above. Additional
information regarding the directors and executive officers of
NewLink is also included in NewLink’s Annual Report on Form 10-K
for the year ended December 31, 2018 and the proxy statement for
NewLink’s 2019 Annual Meeting of Stockholders. These documents are
available free of charge at the SEC web site (www.sec.gov) and from
NewLink at the address described above.
Cautionary Note Regarding
Forward-Looking Statements
This press release contains forward-looking
statements of NewLink Genetics that involve substantial
risks and uncertainties. All statements contained in this press
release are forward-looking statements within the meaning of The
Private Securities Litigation Reform Act of 1995. The words
“forecast,” “projected,” "guidance," "upcoming," "will," "plan,"
“intend,” "anticipate," "approximate," "expect," “potential,” or
the negative of these terms or other similar expressions are
intended to identify forward-looking statements, although not all
forward-looking statements contain these identifying words. These
forward-looking statements include, among others, statements
about NewLink’s expectation regarding the strategy and
development focus of the combined company post consummation of the
proposed merger; NewLink’s and the combined company’s plans related
to execution of clinical trials; plans related to moving additional
indications into clinical development; NewLink’s expectations
regarding the capitalization, resources, ownership structure,
management structure and operations of the combined company; the
potential benefits of the transaction; the expected economic
benefit from the issuance of the PRV; the expected completion and
timing of the transaction and other information relating to the
transaction; and any other statements other than statements of
historical fact. Actual results or events could differ materially
from the plans, intentions and expectations disclosed in the
forward-looking statements that NewLink Genetics makes
due to a number of important factors, including (i) the risk that
the transaction may not be completed in a timely manner or at all,
which may adversely affect the NewLink Genetics’ business and the
price of the common stock of NewLink Genetics, (ii) the failure to
satisfy the conditions to the consummation of the transaction,
including approval of the issuance of shares of NewLink Genetics
common stock in the transaction or the contemplated reverse stock
split, (iii) the occurrence of any event, change or other
circumstance that could give rise to the termination of the merger
agreement, (iv) the risk that the definitive merger agreement may
be terminated in circumstances that require NewLink Genetics to pay
a termination fee to Lumos Pharma; (v) risks related to the ability
to realize the anticipated benefits of the transaction, including
the risk that the businesses will not be integrated successfully,
(vi) the effect of the announcement or pendency of the transaction
on NewLink Genetics’ business relationships, operating results and
business generally, (vii) risks that the proposed transaction
disrupts current plans and operations, (viii) risks related to
diverting management’s attention from NewLink Genetics’ ongoing
business operations, (ix) other business effects, including the
effects of industry, market, economic, political or regulatory
conditions, future exchange and interest rates, and changes in tax
and other laws, regulations, rates and policies, (x) the
uncertainties inherent in research and development, including the
ability to meet anticipated clinical endpoints, commencement and/or
completion dates for clinical trials, regulatory submission dates,
regulatory approval dates and/or launch dates, as well as the
possibility of unfavorable new clinical data and further analyses
of existing clinical data, (xi) the risk that clinical trial data
are subject to differing interpretations and assessments by
regulatory authorities; (xii) risks related to cost reduction
efforts; and (xiii) the outcome of any legal proceedings that may
be instituted against NewLink Genetics related to the merger
agreement or the transaction. Further risks that could cause
actual results to differ materially from those matters expressed in
or implied by such forward-looking statements are discussed in
"Risk Factors" and elsewhere in NewLink Genetics' Definitive
Proxy Statement Filed on February 13, 2020, Quarterly
Report on Form 10-Q for the quarter ended September 30,
2019 and other reports filed with the SEC. The
forward-looking statements in this press release
represent NewLink Genetics’ views as of the date of this
press release. NewLink Genetics anticipates that
subsequent events and developments will cause its views to change.
However, while it may elect to update these forward-looking
statements at some point in the future, it specifically disclaims
any obligation to do so. You should, therefore, not rely on these
forward-looking statements as representing NewLink
Genetics' views as of any date subsequent to the date of this
press release.
Investor & Media Contact:
Lisa MillerDirector of Investor RelationsNewLink
Genetics515-598-2555lmiller@linkp.com
NewLink Genetics Corporation |
Consolidated Statements of Operations |
(unaudited) |
(In thousands, except share and per share
amounts) |
|
|
|
|
|
|
|
|
|
Three Months
Ended December 31, |
|
Year Ended December 31, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Grant revenue |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
11,268 |
|
Licensing and collaboration
revenue |
433 |
|
|
202 |
|
|
936 |
|
|
1,206 |
|
Total operating revenues |
433 |
|
|
202 |
|
|
936 |
|
|
12,474 |
|
Operating expenses: |
|
|
|
|
|
|
|
Research and development |
4,741 |
|
|
5,722 |
|
|
22,205 |
|
|
45,694 |
|
General and administrative |
4,381 |
|
|
5,426 |
|
|
23,865 |
|
|
29,218 |
|
Total operating expenses |
9,122 |
|
|
11,148 |
|
|
46,070 |
|
|
74,912 |
|
Loss from operations |
(8,689 |
) |
|
(10,946 |
) |
|
(45,134 |
) |
|
(62,438 |
) |
Other income and expense: |
|
|
|
|
|
|
|
Miscellaneous expense |
19 |
|
|
(118 |
) |
|
(19 |
) |
|
(102 |
) |
Interest income |
411 |
|
|
519 |
|
|
2,226 |
|
|
2,029 |
|
Interest expense |
— |
|
|
(1 |
) |
|
(50 |
) |
|
(52 |
) |
Other income, net |
430 |
|
|
400 |
|
|
2,157 |
|
|
1,875 |
|
Net loss before taxes |
(8,259 |
) |
|
(10,546 |
) |
|
(42,977 |
) |
|
(60,563 |
) |
Income tax (expense)
benefit |
(12 |
) |
|
(23 |
) |
|
(12 |
) |
|
6,968 |
|
Net loss |
$ |
(8,271 |
) |
|
$ |
(10,569 |
) |
|
$ |
(42,989 |
) |
|
$ |
(53,595 |
) |
Basic and diluted loss per
share |
$ |
(0.22 |
) |
|
$ |
(0.28 |
) |
|
$ |
(1.15 |
) |
|
$ |
(1.44 |
) |
Basic and diluted average
shares outstanding |
37,316,983 |
|
|
37,229,006 |
|
|
37,294,505 |
|
|
37,191,262 |
|
NewLink Genetics Corporation |
Condensed Consolidated Balance Sheets |
(unaudited) |
(In thousands, except share and per share amounts)
|
|
December 31, |
|
December 31, |
|
2019 |
|
2018 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
90,549 |
|
|
$ |
120,738 |
|
Prepaid expenses and other current assets |
3,046 |
|
|
5,536 |
|
Income tax receivable |
69 |
|
|
339 |
|
Other receivables |
755 |
|
|
459 |
|
Total current assets |
94,419 |
|
|
127,072 |
|
Property and equipment, net |
1,633 |
|
|
3,727 |
|
Right-of-use asset |
735 |
|
|
— |
|
Income tax receivable |
— |
|
|
140 |
|
Total non-current assets |
2,368 |
|
|
3,867 |
|
Total
assets |
$ |
96,787 |
|
|
$ |
130,939 |
|
Liabilities and
Stockholders' Equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
475 |
|
|
$ |
555 |
|
Accrued expenses |
10,198 |
|
|
8,139 |
|
Income taxes payable |
11 |
|
|
— |
|
Current portion of deferred rent |
— |
|
|
92 |
|
Current portion of lease liability |
1,100 |
|
|
— |
|
Current portion of notes payable and obligations under capital
leases |
43 |
|
|
61 |
|
Total current liabilities |
11,827 |
|
|
8,847 |
|
Long-term liabilities: |
|
|
|
Royalty obligation payable to Iowa Economic Development
Authority |
6,000 |
|
|
6,000 |
|
Notes payable and obligations under capital leases |
— |
|
|
43 |
|
Lease liability |
82 |
|
|
— |
|
Deferred rent |
— |
|
|
906 |
|
Total long-term liabilities |
6,082 |
|
|
6,949 |
|
Total liabilities |
17,909 |
|
|
15,796 |
|
Stockholders' equity: |
|
|
|
Blank check preferred stock, $0.01 par value: Authorized
shares — 5,000,000 at December 31, 2019 and 2018; issued and
outstanding shares — 0 at December 31, 2019 and 2018 |
— |
|
|
— |
|
Common stock, $0.01 par value: Authorized shares — 75,000,000
at December 31, 2019 and 2018; issued 37,440,094 and 37,343,547 at
December 31, 2019 and 2018 and outstanding 37,325,091 and
37,251,220 at December 31, 2019 and December 31, 2018 |
374 |
|
|
373 |
|
Additional paid-in capital |
413,959 |
|
|
407,199 |
|
Treasury stock, at cost: 115,003 and 92,327 shares at December 31,
2019 and 2018 |
(1,454 |
) |
|
(1,417 |
) |
Accumulated deficit |
(334,001 |
) |
|
(291,012 |
) |
Total stockholders' equity |
78,878 |
|
|
115,143 |
|
Total liabilities and
stockholders' equity |
$ |
96,787 |
|
|
$ |
130,939 |
|
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