CYTODYN INC. This filing, contains forward-looking statements. The words "anticipate," "believe," "expect," "intend," "predict," "plan," "seek," "estimate," "project," "continue," "could," "may," and similar terms and expressions are intended to identify forward-looking statements. These statements include, among others, information regarding future operations, future capital expenditures and future net cash flows. Such statements reflect current views with respect to future events and financial performance and involve risks and uncertainties, including, without limitation, regulatory initiatives and compliance with governmental regulations, the sufficiency of the Company's cash position and the ability to raise additional capital, clinical priorities, the results of clinical trials for the Company's drug candidate, and various other matters, many of which are beyond our control. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove to be incorrect, actual results may vary materially and adversely from those anticipated, believed, estimated, or otherwise indicated. Consequently, all of the forward-looking statements made in this filing are qualified by these cautionary statements and there can be no assurance of the actual results or developments.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the other sections of this Quarterly Report, including our financial statements and related notes appearing elsewhere herein. To the extent not otherwise defined herein, capitalized terms shall have the same meanings as in such financial statements and related notes. This discussion and analysis contains forward-looking statements including information about possible or assumed results of our financial condition, operations, plans, objectives and performance that involve risk, uncertainties and assumptions. The actual results may differ materially from those anticipated and set forth in such forward-looking statements.
Overview
Our current business strategy is to prioritize the completion our BLA filing for leronlimab as a combination therapy for highly treatment experienced HIV patients, to advance our Phase 1b/2 clinical trial for metastatic triple-negative breast cancer, to continue our Phase 2 trial for graft-versus-host disease ("GvHD"), to finalize with the FDA our submitted protocol for a pivotal Phase 3 clinical trial with leronlimab as a monotherapy for HIV patients and concurrently to explore other cancer and immunologic indications for leronlimab, including Non-Alcoholic SteatoHepatitis ("NASH"). The Company recently received permission from the FDA to proceed with a Phase 2 clinical trial for colorectal cancer. We continue to pursue licensing opportunities and other potential strategic partnerships for leronlimab with pharmaceutical companies and other potential business partners.
Clinical Trials Update for HIV Applications
Phase 2b Extension Study for HIV, as Monotherapy
Currently, there are four patients in this ongoing extension study and each has surpassed five years of suppressed viral load with leronlimab as a single agent therapy. This extension study will be discontinued upon any FDA approval of leronlimab as combination therapy for HIV.
Phase 2b/3 Pivotal Trial for HIV, as Combination Therapy
This trial was successfully completed, and is the basis for our current BLA, for
which the first of three sections was submitted to the FDA in
Rollover Study for HIV as Combination Therapy
This study is designed for patients who successfully completed the pivotal Phase 2b/3 Combination Therapy trial and for whom the treating physicians request a continuation of leronlimab therapy in order to maintain suppressed viral load. This extension study will be discontinued upon any FDA approval of leronlimab.
Phase 2/3 Investigative Trial for HIV, as Long-term Monotherapy
Enrollment for this trial is now closed after reaching 565 patients. This trial assesses the subcutaneous use of leronlimab as a long-acting single agent maintenance therapy for 48 weeks in patients with suppressed viral load with CCR5-tropic HIV-1 infection. The primary endpoint is the proportion of participants with a suppressed viral load to those who experienced virologic failure. The secondary endpoint is the length of time to virologic failure. The trial evaluates three dosage arms, 350 mg, 525 mg and 700 mg. We
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recently reported that interim data suggested that both the 525 mg and the 700 mg dosages are achieving a responder rate of approximately 90% after the initial 10 weeks. Some of the data from this trial is also being used to provide safety data for the BLA filing for leronlimab as a combination therapy. In view of the high responder rate at the increased dosage levels, coupled with the newly developed CCR5 receptor occupancy test, we recently filed a pivotal trial protocol with the FDA for leronlimab as a monotherapy. We are discussing finalization of that protocol with FDA and could initiate the Phase 3 trial in the first quarter of 2020. Upon finalization with the FDA of the pivotal trial protocol for monotherapy, the Phase 2b/3 investigative trial will likely be discontinued.
We will require a significant amount of additional capital to complete the foregoing clinical trials for HIV and complete our BLA submission, as well as to advance our trials in the oncology and immunology space, including, but not limited to triple-negative breast cancer, certain cancer indications, GvHD and NASH. See "Liquidity and Capital Resources" below.
Cancer and Immunological Applications
We are continuing to advance our exploration of opportunities for clinical applications for leronlimab involving the CCR5 co-receptor, other than HIV-related treatments, such as cancer, inflammatory conditions and autoimmune diseases.
The target of leronlimab is the important G protein coupled co-receptor CCR5. CCR5 is more than the pathway to HIV replication; it is also a crucial component of inflammatory responses and is a key mediator in many cancer metastasis. We believe this opens the potential for multiple pipeline opportunities for leronlimab. CCR5 is a protein located on the surface of white blood cells and cancer epithelial cells that serves as a receptor for attractants called chemokines. Chemokines are the key orchestrators of leukocyte trafficking by attracting immune cells to the sites of inflammation.
At the site of an inflammatory reaction, chemokines are released. These chemokines are specific for CCR5 and cause the migration of T-cells to these sites promoting further inflammation. We believe the mechanism of action of leronlimab has the potential to block the movement of T-cells to inflammatory sites, which could be instrumental in diminishing or eliminating inflammatory responses. CCR5 is also expressed on the surface of epithelial cells in certain cancers. Some disease processes that we believe could benefit from CCR5 blockade include many types of common cancers, GvHD (a reaction occurring in some patients after bone marrow transplantation), NASH, autoimmunity and chronic inflammation, such as rheumatoid arthritis and psoriasis. Recent published data has shown that the cancer cells within a tumor consist of two types of cells-one with CCR5 and others without them. The published data indicated that cancer cells that can metastasize express CCR5. Metastases are the cause of death in the vast majority of cancer patients. A prior publication indicates that CCR5 antagonists can turn off certain calcium signaling and reduce the migration of CCR5 positive cancer cells. Inhibition of CCR5 signaling blocks the guided migration and reduces the metastasis. Leronlimab has demonstrated (in an in-vitro study) that it also turns off calcium signaling and blocks breast cancer cellular invasion. Furthermore, published studies showed current chemotherapy induces CCR5, and CCR5 antagonists enhance the effectiveness of current chemotherapies, potentially allowing a reduction in chemotherapy, which may provide an improved quality of life for patients.
Research has demonstrated three potential key properties of CCR5's mechanism of action ("MOA") in cancer. The first is that the CCR5 receptor on cancer cells was responsible for the migration and invasion of cells into the blood stream, which leads to metastasis of breast, prostate, and colon cancer. The second is that blocking CCR5 also turns on anti-tumor fighting properties restoring immune function. The third key finding was that blockage of the CCR5/CCL5 interaction had a synergistic effect with chemotherapeutic therapy and controlled cancer progression. Chemotherapy traditionally increased expression of CCR5 so blocking it is expected to reduce the levels of invasion of metastasis.
Due to its MOA, we believe leronlimab may have significant advantages over other CCR5 antagonists. Prior studies have demonstrated that leronlimab does not cause direct activation of T-cells. We have already reported encouraging human safety data for our clinical trials with leronlimab in HIV-infected patients.
We also previously initiated our first clinical trial with leronlimab in an immunological indication - a Phase 2 clinical trial with leronlimab for GvHD in patients with AML or MDS who are undergoing bone marrow stem cell transplantation. As noted below, enrollment under the amended protocol for the GvHD trial has been delayed subject to increased capital resources.
The following overview provides an update on our immune-oncology pipeline:
Phase 1b/2 Trial for Triple-Negative Breast Cancer
We recently received clearance from the FDA for our IND submission to initiate a
Phase 1b/2 clinical trial for metastatic triple-negative breast cancer patients
and have dosed the first patient in this trial. In
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Pre-clinical Studies for Multiple Cancer Indications
We are initiating multiple pre-clinical studies with leronlimab for melanoma,
pancreatic, breast, prostate colon, lung, liver and stomach cancers. An ongoing
pre-clinical study conducted by us recently reported that leronlimab reduces by
more than 98% human breast cancer metastasis in a murine xenograft model. Based
upon these strong results, we filed for Orphan Drug Designation for leronlimab
for use in triple-negative breast cancer. In addition, pre-clinical results in a
colorectal cancer study were likewise encouraging, and the FDA recently granted
clearance to
Phase 2 Trial for Graft-versus-Host Disease
This Phase 2 multi-center, 100-day study with 60 patients is designed to
evaluate the feasibility of the use of leronlimab as an add-on therapy to
standard GvHD prophylaxis treatment for prevention of acute GvHD in adult
patients with acute myeloid leukemia ("AML") or myelodysplastic syndrome ("MDS")
undergoing allogeneic hematopoietic stem cell transplantation ("HST").
Enrollment of the first patient was announced in May of 2017. On
Phase 2 Trial for Metastatic Colorectal Cancer
The FDA recently granted us clearance to proceed with Phase 2 studies of
leronlimab and regorafenib as a combination therapy for metastatic colorectal
cancer in early
Phase 2 Trial and IND for NASH
The FDA recently granted clearance to
Results of Operations
Results of Operations for the three months ended
For the three months ended
For the three months ended
For the three months ended
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G&A expenses totaled approximately
R&D expenses, which totaled approximately
We expect future R&D expenses to be dependent on the timing of FDA approval of our BLA filing, the timing of FDA clearance of our pivotal trial protocol for leronlimab as a monotherapy for HIV patients, the clinical progression of our oncology trials, along with the outcome of the pre-clinical studies for several other cancer indications. R&D expenses are also expected to increase due to CMC activities in preparation for approval and commercialization of leronlimab. Until we meet the criteria under general accepted accounting principles ("GAAP") to capitalize CMC activities associated with commercial product manufacturing, all CMC manufacturing costs will continue to be expensed as R&D.
Amortization and depreciation expenses totaled approximately
For the three months ended
Interest expense for the three months ended
The future trends in all expenses will be driven, in large part, by the future
outcomes of pre-clinical studies and clinical trials and their related effect on
research and development expenses, general and administrative expenses, the
manufacturing of new commercial leronlimab, and the increasing activities
associated with the filing of a BLA. We require a significant amount of
additional capital, and our ability to continue to fund operations will continue
to depend on its ability to raise such capital. See in particular, "Liquidity
and Capital Resources" below and Item 1A Risk Factors in our Annual Report on
Form 10-K for the year ended
Results of Operations for the six months ended
For the six months ended
For the six months ended
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connection with the acquisition of assets in the
For the six months ended
General and administrative expenses, which totaled approximately
Research and development ("R&D") expenses, which totaled approximately
We expect R&D expenses in future periods to level off modestly to reflect completion of manufacturing activities preparation for an anticipated BLA filing in the first half of 2020 followed by a potential strategic advancement in clinical priorities for cancer indications, all of which are subject to the availability of sufficient additional capital. Any acceleration in clinical activities would increase R&D expenses.
For the six months ended
Interest expense for the six months ended
The future trends in all expenses will be driven, in large part, by the future
outcomes of pre-clinical studies and clinical trials and their related effect on
research and development expenses, general and administrative expenses,
manufacturing of new commercial leronlimab, and the increasing activities
associated with the filing of the BLA. The Company requires a significant amount
of additional capital and its ability to continue to fund operations will
continue to depend on its ability to raise such capital. See in particular,
"Liquidity and Capital Resources" below and Item 1A Risk Factors in our Annual
Report on Form 10-K for the year ended
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Liquidity and Capital Resources
Our cash position at
As of
Cash Flows
Net cash used in operating activities totaled approximately
Net cash used in investing activities was immaterial during the six months ended
Net cash provided by financing activities of approximately
Capital Requirements
We have not generated revenue to date, and we do not expect to generate product revenue until FDA approval of leronlimab. We expect that we will continue to incur operating losses as expenses continue to increase as we proceed with completion of our BLA, prepare for commercialization of leronlimab and continue our pre-clinical and clinical trial programs. The future trends of all expenses will be driven, in large part, by the timing of the anticipated approval of our BLA, the magnitude of our commercialization readiness, future clinical trial strategy and timing of the commencement of our future revenue stream. We will require a significant amount of additional capital in the future in anticipation of a fully commercialized leronlimab product.
Contract Manufacturing
During the fourth quarter of fiscal 2019, we entered into a Master Services
Agreement and Product Specific Agreement (collectively, the "Samsung Agreement")
with Samsung BioLogics Co., Ltd. ("Samsung"), pursuant to which Samsung will
perform technology transfer, process validation, manufacturing and supply
services for the commercial supply of leronlimab. In
Under the terms of the Samsung Agreement, we are obligated to make specified
minimum purchases of leronlimab from Samsung pursuant to forecasted requirements
which we will provide to Samsung. The first forecast will be delivered to
Samsung by
The Samsung Agreement has an initial term ending in
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Management believes that two contract manufacturers may best serve our strategic objectives for the anticipated BLA filing and, if approved, the long-term commercial manufacturing capabilities for leronlimab. Management will continue to assess manufacturing capacity requirements as new market information becomes available regarding anticipated demand, subject to FDA approval.
Commercialization Activities
During the third quarter of fiscal 2020, we entered into a Commercialization and
License Agreement (the "Vyera License Agreement") and a Supply Agreement (the
"Vyera Supply Agreement") with
Pursuant to the Vyera License Agreement, we granted Vyera an exclusive
royalty-bearing license to commercialize pharmaceutical preparations containing
leronlimab (PRO 140) for treatment of HIV in humans in the
The Vyera License Agreement will expire upon the expiration of the Royalty Term. The "Royalty Term" means the period beginning on the date of the first commercial sale of the Product and ends on the latest of (i) the expiration of the last valid claim of the patents covering the Product, (ii) ten years after the first commercial sale of the Product, (iii) the expiration of regulatory exclusivity for the Product and (iv) the Biosimilar Entry Date (as defined in the Vyera License Agreement). The Vyera License Agreement may be terminated by either party for material breach, upon a party's insolvency or bankruptcy, or for a safety concern or clinical failure.
Pursuant to the Vyera Supply Agreement, Vyera has agreed to purchase from us its
requirements of leronlimab (PRO 140) for commercialization under the Vyera
License Agreement. The price that Vyera will pay for purchases of leronlimab
(PRO 140) is capped at an agreed upon amount that will rise over time in
accordance with the Producer Price Index for Pharmaceutical Preparation
Manufacturing published by the
The Vyera Supply Agreement will expire at the expiration of the Royalty Term, provided that Vyera shall have the right, in its sole discretion, to extend the term of the Vyera Supply Agreement for so long as Vyera agrees to continue to pay us an agreed-upon royalty payment. The Vyera Supply Agreement will automatically terminate upon the termination of the Vyera License Agreement in the event that the termination of the Vyera License Agreement occurs prior to the expiration of the Royalty Term. The Vyera Supply Agreement may be terminated by either party for material breach or upon a party's insolvency or bankruptcy.
We have entered into project work orders for each of our clinical trials with
our CRO and related laboratory vendors. Under the terms of these agreements, we
have prepaid certain execution fees for direct services costs. In connection
with our clinical trials, we have entered into separate project work orders for
each trial with our CRO. In the event that we terminate any trial, we may incur
certain financial penalties which would become payable to the CRO. Conditioned
upon the form of termination of any one trial, the financial penalties may range
up to
Licensing
Under the Progenics Purchase Agreement, we are required to pay Progenics the
following ongoing milestone payments and royalties: (i)
Going Concern
As reported in the accompanying consolidated financial statements, for the six
months ended
We currently require and will continue to require a significant amount of additional capital to fund operations, pay our accounts payables, and our ability to continue as a going concern is dependent upon our ability to raise such additional capital, commercialize our product and achieve profitability. If we are not able to raise such additional capital on a timely basis or on favorable terms, we may need to scale back our operations or slow down or cease certain clinical trials or CMO activities, which could materially delay the timeframe to BLA submission. Our failure to raise additional capital could also affect our relationships with key vendors, disrupting our ability to timely execute our business plan. In extreme cases, we could be forced to file for bankruptcy protection, discontinue our operations or liquidate our assets.
Since inception, we have financed our activities principally from the sale of
public and private equity securities and proceeds from convertible notes payable
and related party notes payable. We intend to finance our future operating
activities and our working capital needs largely from the sale of equity and
debt securities, combined with additional funding from other traditional
financing sources. As of the date of this filing, we have approximately
11 million shares of common stock authorized, unreserved and available for
issuance under our certificate of incorporation, as amended, and approximately
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The sale of equity and convertible debt securities to raise additional capital
may result in dilution to stockholders and those securities may have rights
senior to those of common shares. If we raise additional funds through the
issuance of preferred stock, convertible debt securities or other debt
financing, these activities or other debt could contain covenants that would
restrict our operations. On
The accompanying consolidated financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. We have incurred losses for all
periods presented and have a substantial accumulated deficit. As of
The consolidated financial statements do not include any adjustments relating to the recoverability and classification of liabilities that might be necessary should we be unable to continue as a going concern. Our continuation as a going concern is dependent upon our ability to obtain a significant amount of additional operating capital, complete development of our product candidate, obtain FDA approval, outsource manufacturing of our product, and ultimately to attain profitability. We intend to seek additional funding through equity or debt offerings, licensing agreements or strategic alliances to implement our business plan. There are no assurances, however, that we will be successful in these endeavors.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
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