Stealth BioTherapeutics Reports First Quarter 2020 Financial Results and Recent Business Highlights
BOSTON, May 7, 2020 /PRNewswire/ -- Stealth BioTherapeutics Corp (Nasdaq: MITO), a clinical-stage biotechnology company focused on the discovery, development and commercialization of novel therapies for diseases involving mitochondrial dysfunction, today reported financial results for the first quarter ended March 31, 2020 and provided a corporate update.
"Our industry - and our global community - is facing unprecedented challenges due to the COVID-19 pandemic. In these trying times, Stealth is fortunate to have strong shareholder support, leaving us well-capitalized into 2021, with enthusiastic and focused employees, who have shown tremendous dedication to developing mitochondrial medicines for patients suffering from cardiomyopathic, ophthalmic, neurological and neuropathic disorders," said Reenie McCarthy, chief executive officer of Stealth. "Our team has rallied remarkably to work to ensure the continued progress of our ongoing clinical and regulatory efforts and the safety of our patients. We look forward to additional regulatory interactions regarding our Barth program, hopefully, over the summer and hope to see an uptick in enrollment in our Phase 2b study in dry AMD as various regions of the country reopen in the coming weeks. We are also continuing our efforts to expand our rare metabolic cardiomyopathy franchise and advance our pipeline of novel mitochondrial medicines."
COVID-19 Business Update:
Ongoing Clinical Trials
Stealth is committed to advancing its ongoing clinical programs in Barth and dry AMD. As previously announced, the Company anticipates completing enrollment for its Phase 2b trial in dry AMD by year-end and hopes to see an uptick in enrollment as various regions of the country reopen in the coming weeks. The Company is continually monitoring additional risks and potential delays in its clinical study sites and contract research organizations and will provide any further updates as appropriate.
Drug Supply
The Company believes that it has sufficient drug supply to complete its ongoing clinical studies and does not expect delays to its ongoing clinical trials due to manufacturing or supply-chain issues as a result of COVID-19.
First Quarter 2019 and Recent Highlights
-- Announced $20 million financing. In April 2020, the Company closed a $20
million private placement with Morningside Venture (I) Investments
Limited, extending its expected financial runway into 2021.
-- Type C meeting. In March 2020, the Company had a productive Type C
meeting with the Division of Rare Disease and Medical Genetics (DRDMG)
of the U.S. Food and Drug Administration (FDA) to discuss its data in
Barth syndrome. The Company has requested a follow-up Type C meeting
with DRDMG, expected this summer, to present and discuss additional data
requested by the DRDMG and to further clarify a potential path to NDA.
-- Announced improvement in cardiac function in Barth. In March 2020, data
presented at the American College of Cardiology (ACC) 2020 Virtual
Annual Meeting showed that treatment through week 36 of the open-label
extension study with elamipretide was associated with significant
improvement in the slope of change from baseline for left ventricular
stroke volume (p=0.0001), as well as significant improvements from
baseline in left ventricular end diastolic (p=0.0004) and end systolic
(p=0.0098) volumes, as well as trends toward improvement in other
echocardiographic parameters. Together, the data suggest that prolonged
treatment with elamipretide may lead to cardiac reverse remodeling.
-- Announced Barth rare pediatric designation. In March 2020, the Company
announced receipt of Rare Pediatric Disease (RPD) designation from the
FDA for elamipretide for the treatment of Barth syndrome. Under this
program, upon FDA priority review and approval of elamipretide for Barth
syndrome, if any, the Company would be eligible for a voucher that could
be used to obtain priority review for a subsequent human drug
application.
-- Announced positive Barth data from efficacy study. In February 2020, the
Company announced positive results from its SPIBA-001 natural history
comparative control efficacy study in Barth patients, demonstrating a
greater than 80 meter improvement in the primary endpoint of 6 Minute
Walk Test at one year compared to natural history controls (p=0.0005).
-- Expanded clinical pipeline. In January 2020, the Company initiated a
first-in-human Phase 1 trial evaluating its second-generation pipeline
compound, SBT-272, in healthy subjects. The Company anticipates that
preclinical data expected later this year in models of amyotrophic
lateral sclerosis (ALS) and multiple system atrophy (MSA) will help
inform SBT-272's clinical development pathway for rare neurodegenerative
diseases.
-- Implemented strategic repositioning. In January 2020, the Company
implemented strategic actions to reduce costs and reposition its focus
on Barth and other rare metabolic cardiomyopathies, in addition to its
ophthalmic and pipeline neurology programs following the 2019 year-end
announcement of its MMPOWER-3 clinical study results.
Key Upcoming Milestones
-- Requesting follow-up Type C meeting with FDA to discuss additional data
and regulatory path in Barth syndrome.
-- Complete enrollment of Phase 2 clinical trial in dry AMD expected by
year-end 2020.
-- Pre-clinical data for SBT-272 in ALS and MSA and for SBT-259 in
Charcot-Marie-Tooth disease expected by year-end 2020.
Financial Results for the Three Months Ended March 31, 2020
Cash Position: Cash and cash equivalents were $31.2 million at March 31, 2020, compared to $50.8 million at December 31, 2019. An additional $20.0 million was received in April 2020, pursuant to a private placement transaction with Morningside Venture (I) Investments Limited.
Research and Development (R&D) Expenses:
R&D expenses were $9.8 million for the three months ended March 31, 2020, compared to $14.3 million for the same period in 2019. The decrease was primarily due to a $1.7 million decrease in employee and consultant costs, offset by a net $0.5 million increase attributable to the strategic repositioning, a $1.5 million net decrease in clinical trial costs due to timing of trials, a $1.3 million decrease in contract manufacturing, a $0.3 million decrease in discovery related expenses due to timing of activities and a $0.2 million decrease in regulatory costs.
General and Administrative (G&A) Expenses:
G&A expenses were $5.2 million for the three months ended March 31, 2020, compared to $4.2 million for the same period in 2019. The increase in administrative expenses was attributed to a $0.8 million increase in professional services and activities attributable to operating as a public company, a $0.7 million increase in employee and consultant related costs primarily driven by share based compensation expense, and a net $0.4 million increase in employee costs attributable to its strategic repositioning, offset in part by a decrease of $0.9 million in pre-commercial activities attributable to the strategic repositioning.
Other Expense, Net:
Other expense was $0.5 million for the three months ended March 31, 2020, compared to $24.7 million for the same period in 2019. The decrease in other expense is primarily attributed to a non-cash $22.7 million loss on extinguishment of debt associated with the conversion of convertible notes into ordinary shares in connection with our 2019 IPO, a $4.0 million decrease in interest expense related to the convertible debt, a $0.3 million change in fair value of warrant liability. These decreases were offset in part by a $2.7 million change in fair value gain on the derivative liability associated with the convertible debt and a $0.1 million decrease in interest income.
Net Loss:
Net loss was $15.5 million, or $0.04 basic and diluted net loss per ordinary share, for the three months ended March 31, 2020, as compared to $43.2 million, or $0.20 basic and diluted net loss per ordinary share, for the same period in 2019. The decreased loss was primarily attributable to the $22.7 million non-cash loss associated with the conversion of convertible notes in connection with our 2019 IPO, decreased operating costs of $3.5 million and a net decrease in other expenses of $1.5 million.
Conference Call
Management will host a conference call today at 8:30 am ET to discuss the financial results and provide a general business update. The call can be accessed by dialing 1 (866) 939-3921 or 1 (678) 302-3550 (international) and referencing conference ID 49677344. A live audio webcast of the event can be accessed by visiting the Investors & News section of Stealth's Investor website, https://investor.stealthbt.com/. A replay of the webcast will be archived on Stealth's website for 30 days following the event.
About Stealth
We are a clinical-stage biotechnology company focused on the discovery, development and commercialization of novel therapies for diseases involving mitochondrial dysfunction. Mitochondria, found in nearly every cell in the body, are the body's main source of energy production and are critical for normal organ function. Dysfunctional mitochondria characterize a number of rare genetic diseases and are involved in many common age-related diseases, typically involving organ systems with high energy demands such as the heart, the eye, and the brain. We believe our lead product candidate, elamipretide, has the potential to treat both rare metabolic cardiomyopathies, such as Barth, Duchenne and Becker muscular dystrophies and Friedreich's ataxia, as well as ophthalmic diseases entailing mitochondrial dysfunction, such as dry age-related macular degeneration and Leber's hereditary optic neuropathy. We are evaluating our second-generation clinical stage candidate, SBT-272, for rare neurodegenerative disease indications following promising preclinical data in amyotrophic lateral sclerosis, or ALS. We have optimized our discovery platform to identify novel mitochondria-targeted compounds, including SBT-259, the SBT-550 series of compounds, and other compounds which may be nominated as therapeutic product candidates or utilized as scaffolds to deliver other compounds to mitochondria.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. Such forward-looking statements include those regarding Stealth BioTherapeutics' plans, strategies and expectations for its preclinical and clinical advancement of its drug development programs, including its ongoing clinical trials of elamipretide and SBT-272; the potential benefits of Stealth BioTherapeutics' product candidates; its key milestones for 2020; its plans regarding future data presentations; its anticipated interactions with regulatory agencies; and its financial guidance regarding the period in which it will have capital available to fund its operations. Statements that are not historical facts, including statements about Stealth BioTherapeutics' beliefs, plans and expectations, are forward-looking statements. The words "anticipate," "expect," "hope," "plan," "potential," "possible," "will," "believe," "estimate," "intend," "may," "predict," "project," "would" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Stealth BioTherapeutics may not actually achieve the plans, intentions or expectations disclosed in these forward-looking statements, and you should not place undue reliance on these forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements as a result of known and unknown risks, uncertainties and other important factors, including: Stealth BioTherapeutics' ability to obtain additional funding and to continue as a going concern; the impact of the COVID-19 pandemic; the ability to successfully demonstrate the efficacy and safety of Stealth BioTherapeutics' product candidates and future product candidates; the preclinical and clinical results for Stealth BioTherapeutics' product candidates, which may not support further development and marketing approval; the potential advantages of Stealth BioTherapeutics' product candidates; the content and timing of decisions made by the U.S. FDA, the EMA or other regulatory authorities, investigational review boards at clinical trial sites and publication review bodies, which may affect the initiation, timing and progress of preclinical studies and clinical trials of Stealth BioTherapeutics product candidates; Stealth BioTherapeutics' ability to obtain and maintain requisite regulatory approvals and to enroll patients in its planned clinical trials; unplanned cash requirements and expenditures; competitive factors; Stealth BioTherapeutics' ability to obtain, maintain and enforce patent and other intellectual property protection for any product candidates it is developing; and general economic and market conditions. These and other risks are described in greater detail under the caption "Risk Factors" included in the Stealth BioTherapeutics' most recent Annual Report on Form 20-F filed with the Securities and Exchange Commission ("SEC"), as well as in any future filings with the SEC. Forward-looking statements represent management's current expectations and are inherently uncertain. Except as required by law, Stealth BioTherapeutics does not undertake any obligation to update forward-looking statements made by us to reflect subsequent events or circumstances.
Investor Relations
Stern Investor Relations
Lauren Stival, 212-362-1200
IR@StealthBT.com
STEALTH BIOTHERAPEUTICS CORP
Condensed Consolidated Statements of Operations
(in thousands, except share and per share data)
(unaudited)
Three months ending March 31,
2020 2019
Operating expenses:
Research and development $9,847 $14,328
General and administrative 5,180 4,157
Total operating expenses 15,027 18,485
Loss from operations (15,027) (18,485)
Other income (expense):
Loss on extinguishment of debt (22,700)
Change in fair value of derivative liability 2,782
Change in fair value of warrant liability (300)
Interest income 123 208
Interest expense and other (636) (4,683)
Total other expense (513) (24,693)
Net loss attributable to ordinary shareholders $(15,540) $(43,178)
Net loss per share attributable to ordinary shareholders - $(0.04) $(0.20)
basic and diluted
Weighted average ordinary shares used in net loss per share 436,720,810 220,035,294
attributable to ordinary shareholders - basic and diluted
STEALTH BIOTHERAPEUTICS CORP
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
March 31,
December 31,
2020 2019
Assets
Current assets:
Cash and cash equivalents (a) $31,242 $50,768
Prepaid expenses and other current assets 620 1,630
Total current assets 31,862 52,398
Property and equipment, net 285 345
Total assets $32,147 $52,743
Liabilities and shareholders' equity
Current liabilities:
Accounts payable $6,513 $9,520
Accrued expenses and other current liabilities 7,270 8,495
Accrued interest payable 1,303 1,219
Current portion of long-term debt 14,634 14,716
Total current liabilities 29,720 33,950
Long-term debt, less current portion 1,526
Total liabilities 29,720 35,476
Total shareholders' equity 2,427 17,267
Total liabilities and shareholders' equity $32,147 $52,743
(a) An additional $20.0 million was
received in April 2020,
pursuant to a private
placement
transaction with Morningside
Venture (I) Investments
Limited
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SOURCE Stealth BioTherapeutics Inc.
