- New Product Launches Continue to Make Progress Setting the Stage for Growth in 2019
- Entered Commercial Agreement with
Menarini Group to market Vabomere®, Orbactiv® and Minocin® for Injection in 68 Countries Outside the U.S. - Positive opinion for Vabomere from the CHMP of the
European Medicines Agency (EMA), Recommending Approval for Five Indications - Implemented Cost Reduction Initiatives to Reduce Operating Expenses by more than
$50 million in 2019 - Commitment Received from
Vatera Healthcare Partners for up to$75 million in Equity, Drawable at Company’s Option1
Q3 2018 and Recent Business Highlights
- Sales of heavily promoted products increased, with additional signs of recent acceleration
- Baxdela® continued to grow in the retail market, driven by dedicated sales force effort
- Entered into a commercial agreement with
Menarini Group to commercialize Vabomere®, Orbactiv® and Minocin® for injection in 68 countries outside of the U.S. - Published complete results from Phase III TANGO 2 descriptive study of Vabomere, which showed Vabomere was associated with increased clinical cure, and decreased mortality compared to best available therapy
- Received a positive opinion for Vabomere from The Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA), recommending approval for five indications:
- complicated intra-abdominal infections (cIAI)
- complicated urinary tract infections (cUTI)
- hospital-acquired pneumonia including ventilator associated pneumonia (HAP/VAP)
- bacteraemia that occurs in association with any of these infections
- infections due to aerobic Gram-negative organisms where treatment options are limited
- Announced positive topline results for Baxdela Phase III label expansion study in adult patients with community-acquired bacterial pneumonia (CABP), meeting all key primary and secondary endpoints
- Identified operating cost reductions of greater than
$50 million with implementation underway for 2019 impact
________________________
1 Subject to shareholder approval and customary closing conditions
“We are taking deliberate and decisive steps to accelerate sales, lower costs and optimize cash,” said
“At the same time, we are making progress on our initiatives to drive growth with product sales demonstrating signs of recent acceleration that we are working hard to build upon especially in the outpatient setting. Importantly, we achieved several key milestones, including the agreement with
“From a financial perspective, we have received a funding commitment from
Upcoming Potential Catalysts
Vabomere European Commission marketing authorization approval decision- sNDA submission to
FDA for Baxdela for treatment of CABP - Quofenix (Baxdela) European Marketing Authorization approval decision
- Country approvals for Baxdela in
South America andCentral America - Execute
Latin America commercialization agreement for Vabomere, Orbactiv and Minocin - Additional accretive business development opportunities
Q3 2018 Financial Results
Melinta reported revenue of
in USD millions | Q3 2018 | Q3 2017 |
Product sales, net | $11.0 | $ – |
License revenue | $20.0 | $ – |
Contract revenue | 3.0 | 3.2 |
Total net revenue * | $34.1* | $3.2 |
* Excludes BARDA grant funding included in Other Income of $0.5 million in Q3 2018 |
Cost of goods sold (“COGS”) was
Research and development (“R&D”) expenses were
Net loss was
Conference Call and Webcast
Melinta’s earnings conference call for the quarter ended
Investors wishing to participate in the call should dial: 877-377-7553 and international investors should dial: 253-237-1151. The conference ID is 2096564. Investors can also access the call at http://ir.melinta.com/events/event-details/melinta-therapeutics-q3-2018-earnings-call.
A live webcast of the call will be available online from the Investor Relations section of the company website at www.melinta.com and will be archived there for 30 days. A telephone replay of the call will be available by dialing 855-859-2056 for domestic callers or 404-537-3406 for international callers and entering the conference ID # 2096564.
About Melinta Therapeutics
As more fully described in our Annual Report on Form 10-K for the year ended
Non-GAAP Financial Measures
To supplement our financial results presented on a U.S. generally accepted accounting principles, or GAAP, basis, we have included information about non-GAAP adjusted EBITDA, a non‑GAAP financial measure, as a useful operating metric. We believe that the presentation of this non‑GAAP financial measure, when viewed with our results under GAAP and the accompanying reconciliation, provides supplementary information to analysts, investors, lenders, and our management in assessing the Company’s performance and results from period to period. This non‑GAAP measure closely aligns with the way management measures and evaluates the Company’s performance. This non‑GAAP financial measure should be considered in addition to, and not a substitute for, or superior to, net income or other financial measures calculated in accordance with GAAP. Non‑GAAP Adjusted EBITDA is not based on any standardized methodology prescribed by GAAP and represents GAAP net income (loss), which the Company believes is the most directly comparable GAAP measure, adjusted to exclude interest income, interest expense, depreciation and amortization, stock‑based compensation expense, changes in the fair value of our warrant liability, gain or loss on extinguishment of debt, acquisition-related costs, and other adjustments, including severance, lease exit costs and gain on the reversal of a loss contract. Non‑GAAP financial measures used by us may be calculated differently from, and therefore may not be comparable to, non‑GAAP measures used by other companies.
Cautionary Note Regarding Forward-Looking Statements
Certain statements in this communication constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act and are usually identified by the use of words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “seeks,” “should,” “will,” and variations of such words or similar expressions. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of the Securities Exchange Act and are making this statement for purposes of complying with those safe harbor provisions. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that the plans, intentions, expectations, strategies or prospects will be attained or achieved. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond our control.
Risks and uncertainties for Melinta include, but are not limited to, the fact that we have incurred significant operating losses since inception and will incur continued losses for the foreseeable future; our limited operating history; our need for future capital and risks related to our ability to obtain additional capital to fund future operations; risks related to the satisfaction of the closing conditions under the Vatera equity commitment letter, to the extent drawn by the Company, including receipt of stockholder approval; uncertainties of cash flows and inability to meet working capital needs as well as other milestone, royalty and payment obligations; the fact that our independent registered public accounting firm’s report on the Company’s 2016 and 2017 financial statements contains an explanatory paragraph that states that our recurring losses from operations and our need to obtain additional capital raises substantial doubt about our ability to continue as a going concern; our substantial indebtedness; risks related to our commercial launches of our products and our inexperience as a company in marketing drug products; the degree of market acceptance of our products among physicians, patients, health care payors and the medical community; the pricing we are able to achieve for our products; and the other risks referenced in the paragraph below. Many of these factors that will determine actual results are beyond Melinta’s ability to control or predict.
Other risks and uncertainties are more fully described in our Annual Report on Form 10-K for the year ended December 31, 2017, and in other filings that Melinta makes and will make with the SEC. Existing and prospective investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The statements made in this press release speak only as of the date stated herein, and subsequent events and developments may cause our expectations and beliefs to change. While we may elect to update these forward-looking statements publicly at some point in the future, we specifically disclaim any obligation to do so, whether as a result of new information, future events or otherwise, except as required by law. These forward-looking statements should not be relied upon as representing our views as of any date after the date stated herein.
Condensed Consolidated Balance Sheets
September 30, | December 31, | |||
2018 | 2017 | |||
(in 000s) | ||||
Assets | ||||
Cash and cash equivalents | $ 83,795 | $ 128,387 | ||
Trade receivables | 8,073 | – | ||
Other receivables | 30,831 | 7,564 | ||
Inventory | 36,028 | 10,825 | ||
Prepaid expenses and other current assets | 6,343 | 2,988 | ||
Total current assets | 165,070 | 149,764 | ||
Property and equipment, net | 2,312 | 1,596 | ||
In-process research and development | 19,859 | – | ||
Other intangible assets | 217,616 | 7,500 | ||
Goodwill | 17,757 | – | ||
Other assets | 59,688 | 1,413 | ||
Total assets | $ 482,302 | $ 160,273 | ||
Liabilities and Stockholders’ Equity | ||||
Accounts payable and accrued expenses | $ 42,050 | $ 31,446 | ||
Warrant liability | 2,617 | – | ||
Current deferred purchase price and contingent consideration | 46,103 | – | ||
Contingent milestone paymentss | 28,500 | – | ||
Accrued interest on notes payable | 4,389 | 284 | ||
Total current liabilities | 123,659 | 31,730 | ||
Notes payable, net of debt discount | 108,976 | 39,555 | ||
Deferred revenues | – | 10,008 | ||
Contingent consideration | 12,626 | – | ||
Other long-term liabilities | 2,261 | 6,644 | ||
Total liabilities | 247,522 | 87,937 | ||
Stockholders’ equity | ||||
Common stock | 56 | 22 | ||
Additional paid-in capital | 910,447 | 644,973 | ||
Accumulated deficit | (675,723) | (572,659) | ||
Total stockholders’ equity | 234,780 | 72,336 | ||
Total liabilities and stockholders’ equity | $ 482,302 | $ 160,273 |
The Company has recorded goodwill and intangible assets, as well as deferred and contingent consideration, in connection with the acquisition of the infectious disease business from The
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||
(in 000s) | (in 000s) | |||||||||||
Revenue | ||||||||||||
Product sales, net | $ | 11,028 | $ – | $ | 32,026 | $ – | ||||||
License revenue | 20,014 | – | 20,014 | 19,905 | ||||||||
Contract revenue | 3,036 | 3,191 | 8,901 | 9,728 | ||||||||
Total revenue | 34,078 | 3,191 | 60,941 | 29,633 | ||||||||
Operating expenses | ||||||||||||
Cost of goods sold | 13,393 | – | 32,068 | – | ||||||||
Research and development | 13,065 | 10,884 | 45,007 | 37,876 | ||||||||
Selling, general and administrative | 34,287 | 10,304 | 103,857 | 25,976 | ||||||||
Total operating expenses | 60,745 | 21,188 | 180,932 | 63,852 | ||||||||
Loss from operations | (26,667) | (17,997) | (119,991) | (34,219) | ||||||||
Other income (expense): | ||||||||||||
Interest income | 248 | 7 | 521 | 25 | ||||||||
Interest expense | (11,477) | (2,381) | (32,332) | (5,765) | ||||||||
Change in fair value of warrant liability | 4,172 | 701 | 30,646 | 335 | ||||||||
Loss on extinguishment of debt | – | – | (2,595) | (607) | ||||||||
Other income | 62 | 34 | 98 | 95 | ||||||||
Reversal of loss contract | 5,330 | – | 5,330 | – | ||||||||
Grant income | 472 | – | 5,251 | – | ||||||||
Total other income (expense), net | (1,193) | (1,639) | 6,919 | (5,917) | ||||||||
Net loss | $ | (27,860) | $ | (19,636) | $ | (113,072) | $ | (40,136) | ||||
Accretion of convertible preferred stock dividends | – | (5,720) | – | (17,161) | ||||||||
Net loss available to common shareholders | $ | (27,860) | $ | (25,356) | $ | (113,072) | $ | (57,297) | ||||
Basic and diluted net loss per share | $ | (0.50) | $ | (857.35) | $ | (2.66) | $ | (1,975.69) | ||||
Basic and diluted weighted-average shares outstanding | 56,012,537 | 29,575 | 42,501,123 | 29,001 |
Condensed Consolidated Statement of Cash Flows
Nine Months Ended September 30, | ||||||
2018 | 2017 | |||||
(in 000s) | ||||||
Net loss | $ | (113,072) | $ | (40,136) | ||
Adjustments to reconcile net loss to net cash used in operations: | ||||||
Depreciation and amortization | 12,887 | 368 | ||||
Non-cash interest expense | 19,312 | 4,174 | ||||
Share-based compensation | 4,041 | 1,628 | ||||
Change in fair value of warrants | (30,646) | (335) | ||||
Loss on disposal of assets | – | 14 | ||||
Loss on extinguishment of debt | 2,595 | 607 | ||||
Reversal of loss contract | (5,330) | – | ||||
Provision for inventory obsolescence | 7,056 | – | ||||
Asset impairment | 381 | – | ||||
Changes in operating assets and liabilities: | ||||||
Receivables | (21,463) | (7,071) | ||||
Inventory | (10,872) | (5,997) | ||||
Deposits on inventory | (40,622) | – | ||||
Prepaids and other assets/liabilities | 148 | 1,463 | ||||
Accounts payable and accrued expenses | 4,875 | 11,682 | ||||
Net cash used in operating activities | (170,710) | (33,603) | ||||
Cash flows from investing activities: | ||||||
IDB acquisition | (166,383) | – | ||||
Purchases of intangible assets | (2,000) | (3,500) | ||||
Purchases of property, plant and equipment | (1,443) | (791) | ||||
Net cash used in investing activities | (169,826) | (4,291) | ||||
Cash flows from financing activities: | ||||||
Proceeds from the issuance of common stock, net | 206,728 | 95 | ||||
Proceeds from the issuance of debt instruments | 111,421 | 40,000 | ||||
Proceeds from issuance of convertible notes payable | – | 24,526 | ||||
Principal payments on notes payable | (40,000) | (24,503) | ||||
IDB acquisition deferred payments | (727) | – | ||||
Proceeds from issuance of warrants | 33,263 | – | ||||
Proceeds from upfront royalty agreement | 1,473 | – | ||||
Prepaid notes payable disbursement put option | (7,609) | – | ||||
Debt extinguishment costs | (2,150) | (1,240) | ||||
Debt issuance costs | (6,455) | – | ||||
Net cash provided by financing activities | 295,944 | 38,878 | ||||
Net change in cash and cash equivalents | (44,592) | 984 | ||||
Cash and cash equivalents and restricted cash at beginning of period | 128,587 | 11,409 | ||||
Cash and cash equivalents and restricted cash at end of period | $ 83,995 | $ 12,393 | ||||
200 |
GAAP to Non-GAAP Adjustments
for the Three and Nine Months Ended
Three Months Ended September 30, 2018 | Revenue | Cost of Product Sales | R&D | SG&A | Other Income (Expense), Net | Total | |||||||
As reported under GAAP | $ | 34,078 | $ | (13,393) | $ | (13,065) | $ | (34,287) | $ | (1,193) | $ | (27,860) | |
EBITDA adjustments: | |||||||||||||
Interest expense | – | – | – | – | 11,477 | 11,477 | |||||||
Interest income | – | – | – | – | (248) | (248) | |||||||
Depreciation and amortization | – | 6,048 | 46 | 92 | – | 6,186 | |||||||
Total EBITDA adjustments | – | 6,048 | 46 | 92 | 11,229 | 17,415 | |||||||
EBITDA | 34,078 | (7,345) | (13,019) | (34,195) | 10,036 | (10,445) | |||||||
Other adjustments: | |||||||||||||
Stock-based compensation | – | 22 | 231 | 1,324 | – | 1,577 | |||||||
Change in fair value of warrant liability | – | – | – | – | (4,172) | (4,172) | |||||||
Gain on loss contract reversal | – | – | – | – | (5,330) | (5,330) | |||||||
Acquisition-related costs | – | – | – | 172 | – | 172 | |||||||
Other * | – | 4,334 | – | – | – | 4,334 | |||||||
Total other adjustments | – | 4,356 | 231 | 1,496 | (9,502) | (3,419) | |||||||
Adjusted EBITDA | $ | 34,078 | $ | (2,989) | $ | (12,788) | $ | (32,699) | $ | 534 | $ | (13,864) | |
Three Months Ended September 30, 2017 | |||||||||||||
As reported under GAAP | $ 3,191 | $(10,884) | $ (10,304) | $ (1,639) | $ (19,636) | ||||||||
EBITDA adjustments: | |||||||||||||
Interest expense | – | – | – | 2,381 | 2,381 | ||||||||
Interest income | – | – | – | (7) | (7) | ||||||||
Depreciation and amortization | – | 56 | 57 | – | 113 | ||||||||
Total EBITDA adjustments | – | 56 | 57 | 2,374 | 2,487 | ||||||||
EBITDA | 3,191 | (10,828) | (10,247) | 735 | (17,149) | ||||||||
Other adjustments: | |||||||||||||
Stock-based compensation | – | 146 | 372 | – | 518 | ||||||||
Change in fair value of warrant liability | – | – | – | (701) | (701) | ||||||||
Loss on extinguishment of debt | – | – | – | – | – | ||||||||
Total other adjustments | $ – | $ 146 | $ 372 | $ (701) | $ (183) | ||||||||
Adjusted EBITDA | $ 3,191 | $ – | $(10,682) | $ (9,875) | $ 34 | $ (17,332) | |||||||
Nine Months Ended September 30, 2018 | |||||||||||||
As reported under GAAP | $60,941 | $ (32,068) | $(45,007) | $ (103,857) | $ 6,919 | $(113,072) | |||||||
EBITDA adjustments: | |||||||||||||
Interest expense | – | – | – | – | 32,332 | 32,332 | |||||||
Interest income | – | – | – | – | (521) | (521) | |||||||
Depreciation and amortization | – | 17,406 | 153 | 246 | – | 17,805 | |||||||
Total EBITDA adjustments | – | 17,406 | 153 | 246 | 31,811 | 49,616 | |||||||
EBITDA | 60,941 | (14,662) | (44,854) | (103,611) | 38,730 | (63,456) | |||||||
Other adjustments: | |||||||||||||
Stock-based compensation | – | 39 | 608 | 3,394 | – | 4,041 | |||||||
Change in fair value of warrant liability | – | – | – | – | (30,646) | (30,646) | |||||||
Loss on extinguishment of debt | – | – | – | – | 2,595 | 2,595 | |||||||
Gain on loss contract reversal | – | – | – | – | (5,330) | (5,330) | |||||||
Acquisition-related costs | – | – | – | 1,260 | – | 1,260 | |||||||
Other * | – | 6,687 | – | 555 | – | 7,242 | |||||||
Total adjustments | $ – | $ 6,726 | $ 608 | $ 5,209 | $ (33,381) | $ (20,838) | |||||||
Adjusted EBITDA | $60,941 | $ (7,936) | $(44,246) | $ (98,402) | $ 5,349 | $ (84,294) | |||||||
Nine Months Ended September 30, 2017 | |||||||||||||
As reported under GAAP | $29,633 | $(37,876) | $ (25,976) | $ (5,917) | $ (40,136) | ||||||||
EBITDA adjustments: | |||||||||||||
Interest expense | – | – | – | 5,765 | 5,765 | ||||||||
Interest income | – | – | – | (25) | (25) | ||||||||
Depreciation and amortization | – | 233 | 135 | – | 368 | ||||||||
Total EBITDA adjustments | – | 233 | 135 | 5,740 | 6,108 | ||||||||
EBITDA | 29,633 | (37,643) | (25,841) | (177) | (34,028) | ||||||||
Other adjustments: | |||||||||||||
Stock-based compensation | – | 271 | 809 | – | 1,080 | ||||||||
Change in fair value of warrant liability | – | – | – | (335) | (335) | ||||||||
Loss on extinguishment of debt | – | – | – | 607 | 607 | ||||||||
Total adjustments | $ – | $ 271 | $ 809 | $ 272 | $ 1,352 | ||||||||
Adjusted EBITDA | $29,633 | $(37,372) | $ (25,032) | $ 95 | $ (32,676) |
* “Other” reflects charges that we recorded for certain inventory approaching shelf life as well as lease exit charges for one of our vacated facilities.
For More Information: | ||
Media Inquiries: David Belian (203) 848-6276 |
Investor Inquiries: Lisa DeFrancesco (908) 617-1358 |
Source: Melinta Therapeutics