Sesen Bio Reports Second Quarter 2022 Financial Results and Business Update
Sesen Bio (SESN) announced Q2 2022 results, reporting a net loss of $32 million or $0.16 per share. The company has paused clinical development of its lead asset, Vicineum™, and is focusing on assessing strategic alternatives to maximize shareholder value. As of June 30, 2022, Sesen Bio has a strong cash position of $161.2 million. R&D expenses surged to $29.9 million compared to $7.2 million in Q2 2021, primarily due to the write-off of unutilized resources. General and administrative expenses also rose significantly, driven by legal settlements.
- Strong cash position of $161.2 million as of June 30, 2022.
- Successful asset purchase agreement with Roche for up to $70 million.
- Net loss increased to $32 million in Q2 2022, up from $25.4 million in Q2 2021.
- R&D expenses soared to $29.9 million due to write-offs and halted development of Vicineum.
- General and administrative expenses grew significantly, mainly from legal expenses.
Company continues to assess potential strategic alternatives with the goal of maximizing shareholder value
Strong balance sheet of
Business Updates
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On
July 11, 2022 ,Sesen Bio participated in a Type B Meeting with theUS Food and Drug Administration (FDA). During the meeting, the Company and the FDA discussed outstanding items related to the Company’s proposed protocol and statistical analysis plan design elements for an additional Phase 3 clinical trial for Vicineum for the treatment of NMIBC, which the Company had been evaluating for potential resubmission of a Biologics License Application for Vicineum.
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On
July 15, 2022 , the Company executed an asset purchase agreement (the “Roche Asset Purchase Agreement”) with Roche for legacy Interleukin-6 (IL-6) antagonist antibody technology owned bySesen Bio . Pursuant to the Roche Asset Purchase Agreement, Roche purchased all patent rights and know-how related to the monoclonal antibody EBI-031 and all other IL-6 antagonist monoclonal antibody technology owned bySesen Bio for up to . This includes a$70 million payment made by Roche to the Company upon execution of the Roche Asset Purchase Agreement, and an additional$40 million payable to$30 million Sesen Bio upon Roche’s initiation of a Phase 3 clinical trial with EBI-031 for a defined indication if initiated prior toDecember 31, 2026 .
As a result of the Roche Asset Purchase Agreement, the Company’s previous license agreement with Roche datedJune 10, 2016 (the “Roche License Agreement”) was terminated. Prior to the termination of the Roche License Agreement, the Company had received in upfront and milestone payments from Roche.$50 million
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On
July 18, 2022 ,Sesen Bio announced that it had made the strategic decision to voluntarily pause further development of Vicineum in the US. The decision was based on a thorough reassessment of Vicineum following recent discussions with the FDA, which included feedback that had implications on the size, timeline, and costs of the required additional Phase 3 clinical trial for the treatment of NMIBC. The Company continues to believe that Vicineum has benefits for patients and healthcare providers that can be maximized through a company with a larger infrastructure, and as such, intends to seek a partner that can execute further development to realize the full potential of Vicineum.
As a result of this decision, the Company has turned its primary focus to the careful assessment of strategic alternatives with the goal of maximizing shareholder value. As previously disclosed, the Company is actively working with an investment bank in the assessment process, and believes it will be complete by the end of 2022.
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On
July 20, 2022 ,Sesen Bio announced the approval of a restructuring plan to reduce operating expenses and to better align its workforce with the needs of its business following the decision to pause further development of Vicineum in the US. Execution of the restructuring plan is expected to be substantially complete by the end of the fourth quarter of 2022.
Second Quarter 2022 Financial Results
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Cash Position: Cash, cash equivalents and marketable securities were
as of$161.2 million June 30, 2022 , compared to as of$151.1 million June 30, 2021 . -
R&D Expenses: Research and development expenses for the second quarter of 2022 were
compared to$29.9 million for the same period in 2021. The increase of$7.2 million was primarily due to the expense of prepaid balances related to consumables and manufacturing reservations, as the balances were evaluated and deemed to have no future value ($22.7 million ). This increase was partially offset by lower costs associated with manufacturing ($25.2 million ).$2.5 million -
G&A Expenses: General and administrative expenses for the second quarter of 2022 were
compared to$15.6 million for the same period in 2021. The increase of$6.8 million was primarily due to an increase in legal expense ($8.8 million ). This increase was driven by the preliminary settlement of the securities and derivative litigation, net of expected insurance recovery ($10.3 million ), related legal fees ($8.6 million ), legal fees related to the internal review ($0.9 million ), and other legal expenses ($0.3 million ). This increase was partially offset by a decrease in marketing and commercial expenses, which were incurred in the second quarter of 2021 in preparation for potential commercial launch of Vicineum but were discontinued as a result of the Complete Response Letter from the FDA received in$0.5 million August 2021 ( ).$1.5 million -
Non-Cash Related Expenses:
-
Intangibles impairment charge for the second quarter of 2022 was
. In light of assumption changes in market share for Vicineum and the Company’s strategic decision to voluntarily pause further development of Vicineum in the US, the Company performed an interim impairment test for$27.8 million In-Process Research and Development (IPR&D) assets and goodwill. This resulted in the full impairment of IPR&D assets ( ) and goodwill ($14.7 million ).$13.1 million -
The change in the fair value of contingent consideration was a decrease of
for the second quarter of 2022, compared to an increase of$37.3 million for the same period in 2021. This decrease was due to a change in projected net sales for Vicineum subject to contingent consideration liability, which was based upon projected net sales in the$13.6 million Greater China region in the second quarter of 2022 compared to projected net sales worldwide in the second quarter of 2021.
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Intangibles impairment charge for the second quarter of 2022 was
-
Income Tax Benefit: Benefit from income tax was
for the second quarter of 2022. In connection with the intangibles impairment charge for the second quarter of 2022, the Company wrote-down the associated deferred tax liability by$3.9 million as a benefit. This was partially offset by$4.0 million in income tax paid to foreign jurisdictions pursuant to the Company's license agreement with$0.1 million Qilu Pharmaceutical . There was no tax benefit or provision in the second
quarter of 2021. -
Net Loss: Net loss was
, or$32.0 million per basic and per diluted share, for the second quarter of 2022, compared to net loss of$0.16 , or$25.4 million per basic and diluted share, for the same period in 2021. The change was primarily attributable to increases in R&D and G&A expenses ($0.15 ), primarily driven by the reduction of prepaid balances related to consumables and manufacturing reservations and the preliminary settlements of the securities and derivative litigation. Additionally, license and related revenue recognized decreased ($31.5 million ). This was partially offset by favorable changes in non-cash related expenses of$2.2 million (including tax benefit).$27.0 million
About Vicineum™
Vicineum, a locally administered fusion protein, is comprised of a recombinant fusion protein that targets epithelial cell adhesion molecule (EpCAM) antigens on the surface of tumor cells to deliver a potent protein payload, Pseudomonas Exotoxin A. Vicineum is constructed with a stable, genetically engineered peptide tether to ensure the payload remains attached to the antibody binding fragment until it is internalized by the cancer cell. This fusion protein design is believed to decrease the risk of toxicity to healthy tissues, thereby improving its safety. In prior clinical trials conducted by
About
COVID-19 Pandemic Potential Impact
Cautionary Note on Forward-Looking Statements
Any statements in this press release about future expectations, plans and prospects for the Company, the Company’s strategy, future operations, and other statements containing the words “anticipate,” “believe,” “expect,” “intend,” “may,” “plan,” “predict,” “target,” “potential,” “will,” “would,” “should,” “continue,” and similar expressions, constitute forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. For example, statements regarding the Company’s plans to continue to assess potential strategic alternatives with the goal of maximizing shareholder value, the Company’s belief that such process will be complete by the end of 2022, the Company’s intentions to seek a partner for the further development of Vicineum, any future payments from Roche to the Company pursuant to the Roche Asset Purchase Agreement, the Company’s belief that Vicineum has benefits for patients and healthcare providers that can be maximized through a company with larger infrastructure, the expected timing for incurring costs associated with the restructuring plan, and the impact of COVID-19 on the Company, including its ability to identify and assess potential strategic alternatives and seek a partner for the further development of Vicineum. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including: the risk that the Company may not be successful in identifying one or more strategic alternatives or a partner for the further development of Vicineum, the risk that the Company may not ultimately be successful in seeking such a partner or pursuing a strategic alternative that delivers the anticipated benefits or enhances shareholder value within the anticipated timeframe or at all, the risk that the Company’s assessment of strategic alternatives or its intentions to seek a partner for the further development of Vicineum may cause the Company’s stock price to fluctuate significantly, the risk that the Company’s assessment of strategic alternatives or its intentions to seek a partner for the further development of Vicineum may be time consuming and involve the dedication of significant resources and may require the Company to incur significant costs and expenses, the risk that the Company’s assessment of strategic alternatives or its intentions to seek a partner for the further development of Vicineum could negatively impact the Company’s ability to attract, retain and motivate key employees and expose the Company to potential litigation in connection with such intentions to seek a partner or the process of assessing strategic alternatives or any resulting transaction, the risk that the Company may not be entitled to or receive any future payments from Roche pursuant to the Roche Asset Purchase Agreement, the risk that the Company may not be able to implement the restructuring plan as currently anticipated or within the timing currently anticipated, unanticipated difficulties with preserving capital, unanticipated difficulties in terminating certain contracts and arrangements pursuant to the restructuring plan, unanticipated charges not currently contemplated that may occur as a result of the restructuring plan, and other factors discussed in the “Risk Factors” section of the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other reports filed with the
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
(Unaudited; In thousands, except share and per share data) | |||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ |
72,090 |
|
$ |
162,636 |
|
|
Short term marketable securities |
|
69,454 |
|
||||
Accounts receivable |
|
73 |
|
|
21,011 |
|
|
Other receivables |
|
14,046 |
|
|
3,482 |
|
|
Prepaid expenses and other current assets |
|
757 |
|
|
18,476 |
|
|
Total current assets |
|
156,420 |
|
|
205,605 |
|
|
Non-current assets: | |||||||
Restricted cash |
|
30 |
|
|
20 |
|
|
Marketable securities |
|
19,641 |
|
|
- |
|
|
Property and equipment, net |
|
30 |
|
|
43 |
|
|
Intangible assets |
|
- |
|
|
14,700 |
|
|
|
- |
|
|
13,064 |
|
||
Long term prepaid expenses |
|
- |
|
|
7,192 |
|
|
Other assets |
|
42 |
|
|
123 |
|
|
Total non-current assets |
|
19,743 |
|
|
35,142 |
|
|
Total Assets | $ |
176,163 |
|
$ |
240,747 |
|
|
Liabilities and Stockholders’ Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ |
1,667 |
|
$ |
2,853 |
|
|
Accrued expenses |
|
29,851 |
|
|
8,255 |
|
|
Other current liabilities |
|
487 |
|
|
460 |
|
|
Total current liabilities |
|
32,005 |
|
|
11,568 |
|
|
Non-current liabilities: | |||||||
Contingent consideration |
|
1,800 |
|
|
52,000 |
|
|
Deferred tax liability |
|
- |
|
|
3,969 |
|
|
Deferred revenue |
|
- |
|
|
1,500 |
|
|
Total non-current liabilities |
|
1,800 |
|
|
57,469 |
|
|
Total liabilities |
|
33,805 |
|
|
69,037 |
|
|
Stockholders’ Equity: | |||||||
Preferred stock, |
|
- |
|
|
- |
|
|
Common stock, |
|
199 |
|
|
199 |
|
|
Additional paid-in capital |
|
491,464 |
|
|
487,768 |
|
|
Other comprehensive loss |
|
(281 |
) |
|
- |
|
|
Accumulated deficit |
|
(349,024 |
) |
|
(316,257 |
) |
|
Total Stockholders’ Equity |
|
142,358 |
|
|
171,710 |
|
|
Total Liabilities and Stockholders’ Equity | $ |
176,163 |
|
$ |
240,747 |
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||
(Unaudited; In thousands, except per share data) | |||||||||||||
Three Months Ended |
Six Months Ended |
||||||||||||
2022 |
2021 |
2022 |
2021 |
||||||||||
Revenue: | |||||||||||||
License and related revenue | $ |
- |
|
$ |
2,234 |
|
$ |
- |
|
$ |
6,544 |
|
|
Total revenue | $ |
- |
|
$ |
2,234 |
|
$ |
- |
|
$ |
6,544 |
|
|
Operating expenses: | |||||||||||||
Research and development | $ |
29,944 |
|
$ |
7,228 |
|
$ |
34,705 |
|
$ |
13,306 |
|
|
General and administrative |
|
15,589 |
|
|
6,805 |
|
|
24,564 |
|
|
12,098 |
|
|
Intangibles impairment charge |
|
27,764 |
|
|
- |
|
|
27,764 |
|
|
- |
|
|
Change in fair value of contingent consideration |
|
(37,300 |
) |
|
13,600 |
|
|
(50,200 |
) |
|
61,760 |
|
|
Total operating expenses | $ |
35,997 |
|
$ |
27,633 |
|
$ |
36,833 |
|
$ |
87,164 |
|
|
Loss from Operations | $ |
(35,997 |
) |
$ |
(25,399 |
) |
$ |
(36,833 |
) |
$ |
(80,620 |
) |
|
Other income (expense), net |
|
162 |
|
|
(43 |
) |
|
191 |
|
|
(46 |
) |
|
Loss Before Taxes | $ |
(35,835 |
) |
$ |
(25,442 |
) |
$ |
(36,642 |
) |
$ |
(80,666 |
) |
|
Benefit for income taxes |
|
3,875 |
|
|
- |
|
|
3,875 |
|
|
(288 |
) |
|
Net Loss After Taxes | $ |
(31,960 |
) |
$ |
(25,442 |
) |
$ |
(32,767 |
) |
$ |
(80,954 |
) |
|
Net loss attributable to common stockholders - basic and diluted | $ |
(31,960 |
) |
$ |
(25,442 |
) |
$ |
(32,767 |
) |
$ |
(80,954 |
) |
|
Net loss per common share - basic and diluted | $ |
(0.16 |
) |
$ |
(0.15 |
) |
$ |
(0.16 |
) |
$ |
(0.49 |
) |
|
Weighted-average common shares outstanding - basic and diluted |
|
199,464 |
|
|
175,393 |
|
|
199,464 |
|
|
166,264 |
|
|
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS | |||||||||||||
(Unaudited; In thousands, except per share data) | |||||||||||||
Three Months Ended |
Six Months Ended |
||||||||||||
2022 |
2021 |
2022 |
2021 |
||||||||||
Net loss | $ |
31,960 |
|
$ |
25,442 |
|
$ |
32,767 |
|
$ |
80,954 |
|
|
Unrealized loss on marketable securities |
|
(281 |
) |
|
- |
|
|
(281 |
) |
|
- |
|
|
Total comprehensive loss | $ |
32,241 |
|
$ |
25,442 |
|
$ |
33,048 |
|
$ |
80,954 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20220808005070/en/
Investors:
ir@sesenbio.com
Source:
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