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Solid Performance from New Product Launches
VabomereTM Granted NTAP Status by CMS
Strengthened Financial Position Supports Continued Growth
Completed Expansion and Cross-Training of Experienced Anti-infective Sales Force
NEW HAVEN, Conn., Aug. 07, 2018 (GLOBE NEWSWIRE) -- Melinta Therapeutics, Inc. (NASDAQ: MLNT), a commercial-stage company discovering, developing and commercializing novel antibiotics to treat serious bacterial infections, today reported financial results and provided an update on commercial activities for the quarter ended June 30, 2018. Melinta continued to make progress this quarter in its mission to save lives threatened by the global public health crisis of bacterial infections through the development and commercialization of novel antibiotics that provide new therapeutic solutions.
Q2 2018 and Recent Business Highlights
“Melinta took important steps forward during the second quarter, with solid sales performance from our new launches of Baxdela and Vabomere and the completion of a public follow-on offering of common shares that significantly strengthened our long-term financial position,” said Dan Wechsler, President and CEO of Melinta. “Product sales remained steady during the quarter and we continued to make excellent progress on our recent launches. We expect our sales trajectory to increase in the second half of the year, powered by our significantly increased presence in the marketplace and our expanded and now fully cross-trained sales force of 170 highly experienced sales representatives, with average hospital expertise of 15 years.”
“We also continued to make advancements within our pipeline during the quarter. Our Phase III trial of Baxdela for the treatment of adults with CABP completed enrollment ahead of schedule and is on track for top-line data by the end of 2018. Our discovery organization also continued to advance their important work following the announcement of our agreement with CARB-X that will provide us funding to advance the development of a novel antimicrobial from our ESKAPE pathogen program.”
“With the completion of our public offering, we are now in a strong financial position to support our continued growth.”
2018 Upcoming Potential Catalysts
Q2 2018 Financial Results
Melinta reported revenue of $12.0 million for the quarter ended June 30, 2018. In addition, the company earned $2.1 million in funding from the Biomedical Advanced Research and Development Authority (BARDA), which it recorded as other income.
During the quarter, as part of the final stages of the integration of the Infectious Disease business acquired from The Medicines Company, Melinta implemented a new, direct-to-wholesaler distribution process that will shorten the Company’s overall supply chain cycle, reduce inventory levels at wholesalers and save fees paid to wholesalers. The change resulted in a one-time negative impact on second quarter revenues of $2.7 million, primarily impacting Orbactiv.
Second quarter of 2018 total net revenue of $12.0 million compares to total net revenue of $4.0 million for the same period in 2017, prior to the acquisition of The Medicines Company ID business and the launch of Baxdela. In the second quarters of 2018 and 2017, we recognized contract research revenue totaling $2.8 million and $4.0 million, respectively. In the second quarter of 2018, net product sales were $9.2 million. The net product sales reflect solid performance of new launches and include the impact described above of the implementation of the new, direct-to-wholesaler distribution process, which occurred during the quarter and resulted in a one-time negative impact of $2.7 million, primarily impacting Orbactiv.
|in USD millions||Q2 2018||Q2 2017|
|Product sales, net||$||9.2||$||-|
|Total net revenue *||$||12.0*||$||4.0|
|* Excludes BARDA grant funding included in Other Income of $2.1 million|
Cost of goods sold (“COGS”) was $11.0 million for the quarter ended June 30, 2018, of which $6.7 million was comprised of non-cash amortization of intangible assets and the step-up basis in inventory acquired from The Medicines Company in January 2018. Cost of goods sold also included charges of $2.4 million for Baxdela and Vabomere inventory that is approaching shelf life. Adjusted COGS was $2.0 million, excluding these non-cash charges, resulting in an Adjusted Gross Margin of 84% for the second quarter. There were no product sales and therefore no costs of goods sold in the prior year period.
Research and development (“R&D”) expenses were $15.8 million for the quarter ended June 30, 2018, compared to $14.1 million for the same period in 2017. The increase was driven by additional headcount and development activities resulting from the acquisition of the infectious disease business from The Medicines Company and the recent merger with Cempra. Adjusted R&D expenses were $15.6 million, which reflects the adjustment for non-cash expenses of $0.2 million.
Selling, general and administrative (“SG&A”) expenses were $34.9 million for the quarter ended June 30, 2018, compared to $7.7 million for the same period in 2017. The increase was driven by additional expenses associated with being a larger, public, commercial organization, including the operational impact of both the acquisition of the infectious disease business from The Medicines Company and the Cempra merger, consisting of additional headcount, facilities and commercial infrastructure. Approximately $1.7 million of SG&A expenses were a result of acquisition-related costs and lease exit costs, resulting in Adjusted SG&A expenses of $32.7 million.
Net loss was $55.8 million, or $1.38 per share, for the quarter ended June 30, 2018 compared to a net loss of $20.4 million for the same period in 2017. Net loss per share is impacted by changes in our share count as a result of the Cempra merger and financing related to the acquisition of the infectious disease business from The Medicines Company.
On May 29, 2018, Melinta completed a follow-on public offering of 21.9 million shares of its common stock. The underwriters of the public offering also exercised in full their option to purchase an additional 2.6 million shares of Melinta’s common stock. Net proceeds from the offering were approximately $115.1 million after deducting underwriting discounts and commissions and expenses paid. As of June 30, 2018, Melinta had cash and cash equivalents of $150.1 million.
Q2 2018 and Recent Pipeline and Publication Highlights
||20 presentations at ASM Microbe 2018, including pharmacoeconomic analyses of Vabomere and Orbactiv® (oritavancin), and analyses showing the rising incidence of Gram-negative pathogens in skin and skin structure infections (SSSIs) and the changes to empiric therapy that may be considered to improve outcomes|
||12 presentations at the MAD-ID 2018 Annual Meeting, including detailed safety and efficacy findings from the Phase 3 PROCEED studies of Baxdela in patients with Acute Bacterial Skin and Skin Structure Infections (ABSSSI)|
||Findings from the Orbactiv real-world registry demonstrating efficacy and safety consistent with the Phase 3 SOLO program published in Open Forum Infectious Diseases|
||12 Presentations at the European Congress of Clinical Microbiology and Infectious Diseases (ECCMID) 2018 including six from Vabomere TANGO-2 trial, as well as new in vitro and in vivo findings for Baxdela and a pyrrolocytosine lead molecule|
Conference Call and Webcast
Melinta’s earnings conference call for the quarter ended June 30, 2018 will be broadcast at 8:30 a.m. ET on August 7, 2018. The live webcast can be accessed under "Events and Presentations" in the Investor Relations section of Melinta’s website at www.melinta.com.
Investors wishing to participate in the call should dial: 877-377-7553 and international investors should dial: 253-237-1151. The conference ID is 9594878. Investors can also access the call at http://ir.melinta.com/events/event-details/melinta-therapeutics-q2-2018-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 # 9594878.
About Melinta Therapeutics
Melinta Therapeutics, Inc. is the largest pure-play antibiotics company, dedicated to saving lives threatened by the global public health crisis of bacterial infections through the development and commercialization of novel antibiotics that provide new therapeutic solutions. Its four marketed products include Baxdela™ (delafloxacin), Vabomere™ (meropenem and vaborbactam), Orbactiv® (oritavancin), and Minocin® (minocycline) for Injection. It also has an extensive pipeline of preclinical and clinical-stage products representing many important classes of antibiotics, each targeted at a different segment of the anti-infective market. Together, this portfolio provides Melinta with the unique ability to provide providers and patients with a range of solutions that can meet the tremendous need for novel antibiotics treating serious infections. Visit www.melinta.com for more information.
As more fully described in our Annual Report on Form 10-K for the year ended December 31, 2017, the former private company Melinta was determined to be the accounting acquirer in our November 2017 reverse merger with Cempra and, accordingly, historical financial information for the second quarter of 2017 presented in this press release reflects the standalone former private company Melinta and, therefore, period-over-period comparisons may not be meaningful.
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 one-time, extraordinary inventory charges. 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; 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; failure to obtain and sustain an adequate level of reimbursement for our products by third-party payors; inaccuracies in our estimates of the market for and commercialization potential of our products; failure to maintain optimal inventory levels to meet commercial demand for any of our products; risks that our competitors are able to develop and market products that are preferred over our products; our dependence upon third parties for the manufacture and supply of our marketed products; failure to achieve the benefits of our recently completed transactions with Cempra and The Medicines Company; failure to establish and maintain development and commercialization collaborations; uncertainty in the outcome or timing of clinical trials and/or receipt of regulatory approvals for our product candidates; undesirable side effects of our products; failure of third parties to conduct clinical trials in accordance with their contractual obligations; our ability to identify, develop, acquire or in-license products; difficulties in managing the growth of our company; the effects of recent comprehensive tax reform; risks related to failure to comply with extensive laws and regulations; product liability risks related to our products; failure to retain key personnel; inability to obtain, maintain and enforce patents and other intellectual property rights or the unexpected costs associated with such enforcement or litigation; risks relating to third party infringement of intellectual property rights; our ability to maintain effective internal control over financial reporting; unfavorable outcomes in any of the class action and shareholder derivative lawsuits currently pending against the Company; and the fact that a substantial number of shares of common stock may be sold into the public markets by one or more of our large shareholders in the near future. 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
|June 30,||December 31,|
|Cash and cash equivalents||$||150,087||$||128,387|
|Prepaid expenses and other current assets||5,510||2,988|
|Total current assets||210,167||149,764|
|Property and equipment, net||2,459||1,596|
|In-process research and development||19,859||-|
|Other intangible assets||221,877||7,500|
|Liabilities and Stockholders' Equity|
|Accounts payable and accrued expenses||$||44,738||$||31,446|
|Current deferred purchase price and contingent consideration||23,925||-|
|Contingent milestone payments||27,052||-|
|Accrued interest on notes payable||4,389||284|
|Total current liabilities||106,894||31,730|
|Notes payable, net of debt discount||107,463||39,555|
|Deferred purchase price and contingent consideration||31,289||-|
|Other long-term liabilities||8,027||6,644|
|Additional paid-in capital||908,781||644,973|
|Total stockholders' equity||260,974||72,336|
|Total liabilities and stockholders' equity||$||514,647||$||160,273|
The Company has recorded goodwill and intangible assets, as well as deferred and contingent consideration, in connection with the acquisition of the infectious disease business from The Medicines Company on a preliminary basis and based on its best estimates. The Company will record adjustments as necessary as it completes the valuation process, which may impact the value of intangible assets and related amortization expense included in our financial statements. Under GAAP, the Company has one year to finalize the purchase accounting for the acquisition.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
|Three Months Ended June 30,|
|Product sales, net||$||9,152||$||-|
|Cost of goods sold||10,989||-|
|Research and development||15,813||14,073|
|Selling, general and administrative||34,946||7,698|
|Total operating expenses||61,748||21,771|
|Loss from operations||(49,726||)||(17,793||)|
|Other income (expense):|
|Change in fair value of warrant liability||2,389||(311||)|
|Loss on extinguishment of debt||-||(607||)|
|Total other income (expense), net||(6,054||)||(2,632||)|
|Accretion of convertible preferred stock dividends||-||(5,721||)|
|Net loss available to common shareholders||$||(55,780||)||$||(26,146||)|
|Basic and diluted net loss per share||$||(1.38||)||$||(884.06||)|
|Basic and diluted weighted-average shares outstanding||40,297,364||29,575|
Condensed Consolidated Statement of Cash Flows
Three Months Ended June 30,
|Adjustments to reconcile net loss to net cash used in operations:|
|Depreciation and amortization||3,689||107|
|Non-cash interest expense||6,271||1,335|
|Change in fair value of warrants||(2,390||)||311|
|Loss on disposal of assets||-||33|
|Loss on extinguishment of debt||-||607|
|Changes in operating assets and liabilities:|
|Prepaids and other assets/liabilities||(18,675||)||(879||)|
|Accounts payable and accrued expenses||8,531||3,656|
|Net cash used in operating activities||(54,331||)||(16,500||)|
|Cash flows from investing activities:|
|Purchases of intangible assets||(2,000||)||(3,500||)|
|Purchases of property, plant and equipment||(423||)||(484||)|
|Net cash used in investing activities||(2,423||)||(3,984||)|
|Cash flows from financing activities:|
|Proceeds from the issuance of common stock, net||115,759||-|
|Proceeds from the issuance of debt instruments||-||21,990|
|Proceeds from issuance of convertible notes payable||-||24,526|
|Principal payments on notes payable||-||(21,659||)|
|IDB acquisition deferred payments||(398||)||-|
|Debt extinguishment costs||-||(1,240||)|
|Net cash provided by financing activities||115,361||23,617|
|Net change in cash and cash equivalents||58,607||3,133|
|Cash and cash equivalents and restricted cash at beginning of period||91,680||20,126|
|Cash and cash equivalents and restricted cash at end of period||$||150,287||$||23,259|
Reconciliation of Reported Net Loss to Adjusted EBITDA
|Three Months Ended June 30,|
|Depreciation and amortization||6,814||135|
|Total EBITDA adjustments||17,410||1,885|
|Changes in fair value of warrant liability||(2,389||)||311|
|Loss on extinguishment of debt||-||607|
|Total other adjustments||2,292||1,426|
* “Other” reflects charges that we recorded for certain inventory approaching shelf life as well as lease exit charges for one of our vacated facilities.
Reconciliation of Reported Gross Margin to Adjusted Gross Margin
|Three Months Ended June 30, 2018||(in 000s)|
|As reported under GAAP:|
|Cost of products sold (COGS)||(10,989||)|
|Gross Margin (% of revenue)||9||%|
|Adjustments to COGS:|
|Depreciation and amortization||$||6,675|
|Adjusted Gross Margin||$||10,060|
|Adjusted Gross Margin (% of revenue)||84||%|
* “Other” reflects charges that we recorded for certain inventory approaching shelf life.
GAAP to Non-GAAP Adjustments
for the Three Months Ended June 30, 2018 and June 30, 2017
|Three Months Ended June 30, 2018||Revenue||
|As reported under GAAP||$||12,022||$||(10,989||)||$||(15,813||)||$||(34,946||)||$||(6,054||)||$||(55,780||)|
|Depreciation and amortization||-||6,675||54||85||-||6,814|
|Change in fair value of warrant liability||-||-||-||-||(2,389||)||(2,389||)|
|Three Months Ended June 30, 2017||Revenue||R&D||SG&A||
|As reported under GAAP||$||3,978||$||(14,073||)||$||(7,698||)||$||(2,632||)||$||(20,425||)|
|Depreciation and amortization||-||95||40||-||135|
|Change in fair value of warrant liability||-||-||-||311||311|
|Loss on extinguishment of debt||-||-||-||607||607|
* “Other” reflects charges that we recorded for certain inventory approaching shelf life as well as lease exit charges for one of our vacated facilities.
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