Sesen Bio Reports Fourth Quarter and Full-Year 2022 Financial Results
Sesen Bio (NASDAQ: SESN) reported fourth quarter and full year 2022 results, highlighting a net loss of $19.9 million, or $0.10 per share, compared to a net loss of $0.3 million in 2021. Cash position improved with $166.9 million as of December 31, 2022. The company has amended its merger agreement with Carisma Therapeutics, increasing the special cash dividend to $75 million, or $0.36 per share, while extending payment periods related to potential proceeds from legacy assets until March 31, 2027. Independent proxy advisors ISS and Glass Lewis urged stockholders to vote 'FOR' the merger at the March 2, 2023 meeting.
- Increased special cash dividend to $75 million, or $0.36 per share.
- Strong cash position of $166.9 million as of December 31, 2022.
- Support from major shareholders and positive recommendations from proxy advisors for the merger with Carisma.
- Net loss increased to $19.9 million for 2022, up from $0.3 million in 2021.
- Research and development expenses rose to $38.6 million in 2022, primarily due to the decision to pause Vicineum's U.S. development.
- Intangible impairment charge of $27.8 million due to halting Vicineum development.
Sesen Bio Board Believes the Pending Merger with
Reiterates Support from Several of Sesen Bio’s
Sesen Bio Board Unanimously Recommends All Stockholders Vote “FOR” Transaction Ahead of
Business Update
-
On
February 13, 2023 , following extensive engagement withSesen Bio stockholders,Sesen Bio andCarisma Therapeutics, Inc. (“Carisma”) further amended the previously amended merger agreement announced onDecember 29, 2022 . The terms of the amended merger agreement include:-
An increase of the one-time special cash dividend expected to be paid to
Sesen Bio stockholders to , or approximately$75.0 million per share1. This represents an increase from the expected special cash dividend of approximately$0.36 , or approximately$70.0 million per share1, under the first amendment to the merger agreement, and an increase from the up to$0.34 special cash dividend under the terms of the original merger agreement dated$25.0 million September 20, 2022 . -
An extension of the period of time for payments under the Contingent Value Rights related to any potential proceeds from the sale of Vicineum and Sesen Bio’s other legacy assets to
March 31, 2027 , fromDecember 31, 2023 under the previous terms. This is in addition to any potential proceeds from the milestone payment under the Roche Asset Purchase Agreement. -
Michael Torok , one of Sesen Bio’s largest stockholders, will join the Carisma Board of Directors upon closing of the merger as the soleSesen Bio representative.
-
An increase of the one-time special cash dividend expected to be paid to
The go-forward company will focus on the development of Carisma’s chimeric antigen receptor macrophage (CAR-M) therapies, which are believed to be the only therapies of their kind with demonstrated proof of mechanism and safety data in clinical trials. The combined company is expected to operate under the name “Carisma Therapeutics, Inc.” and trade on Nasdaq under the ticker symbol “CARM”.
-
On
February 16, 2023 andFebruary 17, 2023 , leading independent proxy advisorsInstitutional Shareholder Services (“ISS”) andGlass, Lewis & Co. (“Glass Lewis”), respectively, recommendedSesen Bio stockholders vote “FOR” all proposals at theMarch 2, 2023 Special Meeting of Stockholders. The positive recommendations from ISS and Glass Lewis build on the support received from several of Sesen Bio’s largest stockholders for the merger withCarisma , includingBradley L. Radoff ,Michael Torok and their affiliates, as well asBML Investment Partners, L.P. , who together beneficially own approximately12.8% of Sesen Bio’s outstanding common stock.
-
On
January 31, 2023 , theUnited States District Court for the Southern District of New York issued an order granting final approval of the settlement of the consolidated shareholder class action captioned In reSesen Bio, Inc. Securities Litigation,Master File No. 1:21-cv-07025-AKH (the “Securities Litigation”). This follows theNovember 8, 2022 grant of final approval by theUnited States District Court for the District of Massachusetts of the settlement of the previously disclosed consolidated derivative lawsuits captioned In reSesen Bio, Inc. Derivative Litigation, Lead Case No. 1:21-cv-11538, the derivative lawsuit captioned Tang v.Sesen Bio, Inc. , et al., Case No. 2281-cv-00135 and other potential related derivative claims (collectively, the “Derivative Litigation”).
-
On
February 24, 2023 ,Sesen Bio received a determination from Nasdaq’sOffice of General Counsel that theNasdaq Hearings Panel (the “Panel”) had granted the Company an exception from the Company’s non-compliance with the bid price requirement to complete the proposed merger with$1.00 Carisma byMarch 10, 2023 . Pursuant to Nasdaq Listing Rule 5110(a), the Company must demonstrate compliance with all initial listing requirements of Nasdaq upon closing of the proposed merger withCarisma .Sesen Bio was scheduled for a hearing with the Panel onMarch 16, 2023 , following receipt of notice from Nasdaq’sListing Qualifications Department onJanuary 25, 2023 that the Company’s common stock is subject to delisting based upon non-compliance with the bid price requirement. In the event the Company fails to establish compliance with the initial listing standards by$1.00 March 10, 2023 , its common stock will be delisted from Nasdaq, unless granted an additional exception by the Panel.
1: Based on basic outstanding shares including unvested restricted stock units
Fourth Quarter 2022 Financial Results
-
Cash Position: Cash, cash equivalents and marketable securities were
as of$166.9 million December 31, 2022 , compared to cash and cash equivalents of as of$162.6 million December 31, 2021 . -
R&D Expenses: Research and development expenses were
for the three months ended$1.0 million December 31, 2022 , compared to for the three months ended$7.0 million December 31, 2021 . Research and development expenses were for the year ended$38.6 million December 31, 2022 , compared to for the year ended$25.3 million December 31, 2021 . The increase of was primarily driven by the expense of prepaid balances related to consumables and manufacturing reservations, as the balances were deemed to have no future value due to the strategic decision to voluntarily pause further development of Vicineum in$13.3 million the United States ( ). Additionally, employee-related compensation increased, primarily due to the retention programs implemented in the fourth quarter of 2021 and third quarter of 2022 ($25.2 million ). The increase was partially offset by decreased costs associated with manufacturing ($1.0 million ), clinical and manufacturing related consulting fees ($8.9 million ) and other individually immaterial research and development costs ($2.3 million ), driven by the strategic decision to voluntarily pause further development of Vicineum in$0.2 million the United States in the third quarter of 2022. Additionally, one-time regulatory milestone payments ( ) related to the filing of the biologics license application (BLA) to the$1.5 million United States Food and Drug Administration (the “FDA”) for Vicineum and a marketing authorization application (MAA) to theEuropean Medicines Agency (EMA) for Vysyneum were made in 2021. -
G&A Expenses: General and administrative expenses were
for the three months ended$7.1 million December 31, 2022 , compared to for the three months ended$8.6 million December 31, 2021 . General and administrative expenses were for the year ended$39.8 million December 31, 2022 , compared to for the year ended$29.4 million December 31, 2021 . The increase of was primarily due to an increase in legal expense ($10.4 million ) driven by the settlements of the Securities Litigation and Derivative Litigation net of expected insurance recovery ($13.1 million ) and the Company’s assessment of strategic alternatives ($8.2 million ). Additionally, there were increases in legal fees for the Securities Litigation and Derivative Litigation counseling ($3.8 million ), general business counseling ($0.6 million ), and other legal expenses ($0.3 million ). The Company also incurred$0.2 million in connection with the fairness opinions related to the proposed merger with$1.2 million Carisma and increases in other individually immaterial expenses ( ). This was partially offset by decreases in marketing and commercial expenses ($0.2 million ), driven by preparation for the commercial launch of Vicineum prior to the receipt of the complete response letter (the “CRL”) from the FDA in$4.1 million August 2021 . -
Restructuring Charges: Restructuring charges were
for the three months ended$0.8 million December 31, 2022 , compared to a de minimis amount for the three months endedDecember 31, 2021 . Restructuring expenses were for the year ended$11.8 million December 31, 2022 , compared to for the year ended$5.5 million December 31, 2021 . The expenses for the year endedDecember 31, 2022 consisted of severance and other employee-related costs ( ) and termination of certain contracts and other associated costs ($7.0 million ) following the decision to pause further development of Vicineum in$4.8 million the United States . The expenses for the year endedDecember 31, 2021 , consisted of severance and other employee-related costs ( ) and termination of certain contracts ($2.8 million ) following the receipt of the CRL in$2.7 million August 2021 . -
Non-Cash Related Expenses:
-
The intangibles impairment charge for the year ended
December 31, 2022 was . Due to the strategic decision to voluntarily pause further development of Vicineum in$27.8 million the United States during the second quarter of 2022, the Company completed its impairment testing and concluded that the carrying value of its intangible asset ofVicineum European Union rights of and$14.7 million Goodwill of were fully impaired and written off during the second quarter of 2022. The intangible impairment charge for the year ended$13.1 million December 31, 2021 was . In light of the CRL, the Company performed an interim impairment test, which concluded that the carrying value of its intangible asset of Vicineum United States rights of$31.7 million was fully impaired during the third quarter of 2021.$31.7 million -
The non-cash change in fair value of contingent consideration of
for the year ended$52.0 million December 31, 2022 was driven by the Company’s strategic decision to voluntarily pause further development of Vicineum inthe United States and the Company’s conclusion that it no longer expects to owe any related future earnout and milestone payments. The decision was based on a thorough reassessment of Vicineum following discussions with the FDA, which had implications for the size, timeline and costs for an additional Phase 3 clinical trial of Vicineum for the treatment of non-muscle invasive bladder cancer. The change in fair value of contingent consideration was for the year ended$56.8 million December 31, 2021 . This was primarily due to management's assessment of a lower probability of regulatory approval following the receipt of a CRL inAugust 2021 , in which the FDA determined that it could not approve the BLA for Vicineum in its present form.
-
The intangibles impairment charge for the year ended
-
Income Tax Benefit: For the year ended
December 31, 2022 , the Company recorded a benefit from income taxes of . In the second quarter of 2022, the Company determined that the fair value of the$3.9 million Vicineum European Union in-process research and development asset was zero, which resulted in an impairment charge of . In connection with this impairment charge, in the second quarter of 2022, the Company wrote-down the associated deferred tax liability by$14.7 million as a benefit. For the year ended$3.9 million December 31, 2021 , the Company recorded a benefit from income taxes of . In the third quarter of 2021, the Company determined that the fair value of the Vicineum United States in-process research and development asset was zero, which resulted in an impairment charge of$8.3 million . In connection with this impairment charge, in the third quarter of 2021, the Company wrote-down the associated deferred tax liability by$31.7 million as a benefit. This was partially offset by$8.6 million in taxes paid related to the Qilu License Agreement.$0.3 million -
Net (Loss) Income: Net loss was
, or$7.6 million per basic and diluted share, for the fourth quarter of 2022, compared to net income of$0.04 , or$8.9 million per basic and diluted share, for the same period in 2021. Net loss was$0.04 , or$19.9 million per basic and diluted share, for the year ended$0.10 December 31, 2022 , compared to , or$0.3 million per basic and per diluted share, for the year ended$0.00 December 31, 2021 . The increase in net loss was primarily due to an increase in operating expense ( ) and a decrease in income tax benefit ($30.8 million ), which were offset by an increase in license and related revenue ($4.4 million ). The revenue increase was primarily driven by the execution of the asset purchase agreement with$13.5 million F. Hoffmann-La Roche Ltd andHoffmann-La Roche Inc. (collectively, “Roche”) for EBI-031 and all other IL-6 antagonist monoclonal antibody technology in 2022 ( ), partially offset by the milestones achieved by Roche ($40.0 million ),$20.0 million Qilu Pharmaceutical Co., Ltd. , the Company’s former partner in theGreater China region ( ), and$5.0 million Hikma Pharmaceuticals LLC , the Company’s former partner in theMiddle East andNorth Africa region ( ) in 2021. Additionally, interest income increased ($1.5 million ) primarily due to higher yield earned on the Company’s investment account during 2022.$1.8 million
About
Cautionary Note on Forward-Looking Statements
Any statements in this press release about future expectations, plans and prospects for
Important Additional Information
In connection with the proposed transaction between
No Offer or Solicitation
This press release shall not constitute 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 the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended. Subject to certain exceptions to be approved by the relevant regulators or certain facts to be ascertained, a public offer will not be made directly or indirectly, in or into any jurisdiction where to do so would constitute a violation of the laws of such jurisdiction, or by use of the mails or by any means or instrumentality (including without limitation, facsimile transmission, telephone or internet) of interstate or foreign commerce, or any facility of a national securities exchange, of any such jurisdiction.
Participants in the Solicitation
CONSOLIDATED BALANCE SHEETS | |||||||
(In thousands, except share and per share data) | |||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ |
112,553 |
|
$ |
162,636 |
|
|
Short term marketable securities |
|
54,366 |
|
|
- |
|
|
Restricted cash |
|
21,000 |
|
|
- |
|
|
Accounts receivable |
|
- |
|
|
21,011 |
|
|
Other receivables |
|
825 |
|
|
3,482 |
|
|
Prepaid expenses and other current assets |
|
400 |
|
|
18,476 |
|
|
Total current assets |
|
189,144 |
|
|
205,605 |
|
|
Non-current assets: | |||||||
Restricted cash |
|
30 |
|
|
20 |
|
|
Property and equipment, net |
|
- |
|
|
43 |
|
|
Intangible assets |
|
- |
|
|
14,700 |
|
|
|
- |
|
|
13,064 |
|
||
Long term prepaid expenses |
|
- |
|
|
7,192 |
|
|
Other assets |
|
- |
|
|
123 |
|
|
Total non-current assets |
|
30 |
|
|
35,142 |
|
|
Total Assets | $ |
189,174 |
|
$ |
240,747 |
|
|
Liabilities and Stockholders’ Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ |
1,233 |
|
$ |
2,853 |
|
|
Accrued expenses |
|
29,636 |
|
|
8,255 |
|
|
Other current liabilities |
|
115 |
|
|
460 |
|
|
Total current liabilities |
|
30,984 |
|
|
11,568 |
|
|
Non-current liabilities: | |||||||
Contingent consideration |
|
- |
|
|
52,000 |
|
|
Deferred tax liability |
|
- |
|
|
3,969 |
|
|
Deferred revenue |
|
- |
|
|
1,500 |
|
|
Total non-current liabilities |
|
- |
|
|
57,469 |
|
|
Total Liabilities |
|
30,984 |
|
|
69,037 |
|
|
Stockholders’ Equity: | |||||||
Preferred stock, |
|
- |
|
|
- |
|
|
Common stock, |
|
202 |
|
|
199 |
|
|
Additional paid-in capital |
|
494,675 |
|
|
487,768 |
|
|
Other comprehensive loss |
|
(546 |
) |
|
- |
|
|
Accumulated deficit |
|
(336,141 |
) |
|
(316,257 |
) |
|
Total Stockholders’ Equity |
|
158,190 |
|
|
171,710 |
|
|
Total Liabilities and Stockholders’ Equity | $ |
189,174 |
|
$ |
240,747 |
|
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||
(In thousands, except per share data) | |||||||||||||
Three Months Ended |
Twelve Months Ended |
||||||||||||
2022 |
2021 |
2022 |
2021 |
||||||||||
Revenue: | |||||||||||||
License and related revenue | $ |
- |
|
$ |
20,000 |
|
$ |
40,000 |
|
$ |
26,544 |
|
|
Total revenue | $ |
- |
|
$ |
20,000 |
|
$ |
40,000 |
|
$ |
26,544 |
|
|
Operating expenses: | |||||||||||||
Research and development | $ |
958 |
|
$ |
7,039 |
|
$ |
38,594 |
|
$ |
25,312 |
|
|
General and administrative |
|
7,082 |
|
|
8,597 |
|
|
39,787 |
|
|
29,393 |
|
|
Restructuring charge |
|
817 |
|
|
6 |
|
|
11,764 |
|
|
5,528 |
|
|
Intangibles impairment charge |
|
- |
|
|
- |
|
|
27,764 |
|
|
31,700 |
|
|
Change in fair value of contingent consideration |
|
- |
|
|
(4,600 |
) |
|
(52,000 |
) |
|
(56,840 |
) |
|
Total operating expenses | $ |
8,857 |
|
$ |
11,042 |
|
$ |
65,909 |
|
$ |
35,093 |
|
|
(Loss) Income from Operations | $ |
(8,857 |
) |
$ |
8,958 |
|
$ |
(25,909 |
) |
$ |
(8,549 |
) |
|
Interest income |
|
1,384 |
|
|
3 |
|
|
1,854 |
|
|
17 |
|
|
Other income (expense), net |
|
(100 |
) |
|
(18 |
) |
|
296 |
|
|
(77 |
) |
|
(Loss) Income Before Taxes | $ |
(7,573 |
) |
$ |
8,944 |
|
$ |
(23,759 |
) |
$ |
(8,609 |
) |
|
Benefit from income taxes |
|
- |
|
|
- |
|
|
3,875 |
|
|
8,273 |
|
|
Net (Loss) Income After Taxes | $ |
(7,573 |
) |
$ |
8,944 |
|
$ |
(19,884 |
) |
$ |
(336 |
) |
|
Deemed Dividend | $ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
|
Net (loss) income attributable to common stockholders - basic and diluted | $ |
(7,573 |
) |
$ |
8,944 |
|
$ |
(19,884 |
) |
$ |
(336 |
) |
|
Net (loss) income per common share - basic and diluted | $ |
(0.04 |
) |
$ |
0.04 |
|
$ |
(0.10 |
) |
$ |
(0.00 |
) |
|
Weighted-average common shares outstanding - basic and diluted |
|
202,758 |
|
|
199,464 |
|
|
200,546 |
|
|
182,323 |
|
|
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME | |||||||||||||
(In thousands, except per share data) | |||||||||||||
Three Months Ended |
Twelve Months Ended |
||||||||||||
2022 |
2021 |
2022 |
2021 |
||||||||||
Net (loss) income | $ |
(7,573 |
) |
$ |
8,944 |
$ |
(19,884 |
) |
$ |
(336 |
) |
||
Unrealized loss on marketable securities |
|
311 |
|
|
- |
|
546 |
|
|
- |
|
||
Total comprehensive (loss) income | $ |
(7,884 |
) |
$ |
8,944 |
$ |
(20,430 |
) |
$ |
(336 |
) |
View source version on businesswire.com: https://www.businesswire.com/news/home/20230228005287/en/
Investors:
ir@sesenbio.com
Source:
FAQ
What were Sesen Bio's fourth quarter 2022 financial results?
What is the new special cash dividend amount for Sesen Bio stockholders?
What are the implications of the merger with Carisma for Sesen Bio stockholders?