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Aptevo Therapeutics Reports 2019 Financial Results and Provides Business Update

Advances Dose-Escalation Phase 1/1b Study of APVO436 for Treatment of
Acute Myeloid Leukemia and High-Grade Myelodysplastic Syndrome

Reports Preliminary Evidence of Clinical Activity of APVO436;
Dosing in Cohort 6 to Begin Shortly

Achieves Record Annual IXINITY® Net Revenue of $32.4 Million
Representing 41% Increase Over 2018

Sells Worldwide Commercial Rights to IXINITY to Medexus Pharmaceuticals
for Estimated Proceeds in Excess of $100 Million; Positions Aptevo as a ‘Pure Play' Biotechnology Company

SEATTLE, WA / ACCESSWIRE / March 25, 2020 / Aptevo Therapeutics Inc. (Nasdaq:APVO), a biotechnology company focused on developing novel immuno-oncology therapeutics based on its proprietary ADAPTIR™ bispecific technology platform, today reported its financial results for the year ended December 31, 2019 and provided an update on its ADAPTIR pipeline.

"2019 was a transformative year for Aptevo as we executed on our strategy to divest a non-core commercial asset - our IXINITY hemophilia B treatment, positioning Aptevo as a ‘pure play' biotechnology organization with a productive and novel technology platform," said Marvin L. White, President and Chief Executive Officer. "The transaction, which we completed in February 2020, provided non-dilutive funding for Aptevo, strengthening our balance sheet, and most importantly, streamlining our focus on our ADAPTIR bispecific antibody platform, which we believe holds the greatest promise for long-term value creation.

We anticipate that 2020 will be an especially important year for Aptevo, as multiple ADAPTIR programs continue to advance through and towards clinical development. APVO436, our lead ADAPTIR candidate, is being investigated for the treatment of acute myeloid leukemia (AML) and myelodysplastic syndrome (MDS.)

Our progress in 2020 will mark a pivotal stage in the development program for APVO436 as we continue enrollment in dose cohorts 6 through 8 during the year in our ongoing Phase 1/1b clinical study. Pharmacokinetic modeling suggests that this is the dose range in which clinical activity could become apparent. Preliminary data from a patient in cohort 4 showed a "marrow complete response" suggesting evidence of early clinical activity of APVO436, so we are very encouraged and excited to monitor and report accumulating data from this study throughout the year.

Also, earlier this year we announced that the Leukemia & Lymphoma Society (LLS) had selected APVO436 for inclusion in their groundbreaking Beat AML® master clinical trial, which will evaluate APVO436 in a front-line AML treatment setting, bringing increased exposure and recognition of APVO436 among leading national cancer research centers.

With APVO436 reading out important data in 2020, we are also advancing additional ADAPTIR candidates this year. Together with our partner, Alligator Bioscience, we completed CTA/IND-enabling studies in 2019 for ALG.APV-527 and are focused on partnering this asset for future clinical development. Also, last year we announced the selection of a new preclinical ADAPTIR candidate, APVO603, which is a potentially first-in-class bispecific antibody featuring a novel mechanism of action designed to amplify the adaptive immune response to cancer through dual targeting of 4-1BB and OX40. Preclinical data show that APVO603 synergistically co-stimulates T cells, amplifying the cytotoxic function of activated T cells and NK cells, potentially stimulating a more robust anti-tumor response. Also, later this year we will be announcing a new ADAPTIR pipeline candidate.

In summary, from a data perspective, 2020 will be an important year for Aptevo as we continue to advance APVO436 through critical dosing cohorts, which, if promising, will validate our platform. With a stronger balance sheet and the opportunity to potentially raise additional non-dilutive funding, we are optimistic about the prospects for Aptevo and our ADAPTIR candidates in 2020 and beyond," concluded Mr. White.

2019 Highlights

  • Continued enrollment in a dose escalation Phase 1/1b open-label clinical study of APVO436 in patients with Acute Myeloid Leukemia and High-Grade Myelodysplastic Syndrome; completed dosing in cohorts 1-5 (through March 2020); dosing in Cohort 6 to begin shortly
  • Presented new preclinical data for APVO436 at the American Association for Cancer Research (AACR) 2019 annual meeting demonstrating T cell differentiation into effector cells with exposure to APVO436 in preclinical studies, in addition to key data demonstrating potent T-cell cytotoxicity of tumors expressing CD123 with reduced cytokine release, suggesting the potential for increased clinical benefit and an improved safety profile
  • Announced the selection of APVO436 for inclusion in the Leukemia & Lymphoma Society's Beat AML Master Clinical Trial; APVO436 being evaluated in patients newly diagnosed with AML
  • Received orphan drug designation for APVO436
  • Presented new preclinical data for ALG.APV-527 at AACR showing that it was well tolerated in a dose-range finding pilot toxicology study demonstrating an extended half-life of 5-7 days with no major changes in liver enzyme levels, cytokine levels or immune cell populations
  • Made a joint decision with Aptevo's co-development partner, Alligator Bioscience to focus efforts on out-licensing ALG.APV-527 and delay submission of the clinical trial authorization for ALG-APV.527
  • Announced the selection of a new ADAPTIR bispecific candidate, APVO603, a dual agonist bispecific antibody employing a novel mechanism of action to simultaneously target 4-1BB (CD137) and OX40 (CD134), both members of the TNF-receptor family
  • Presented preclinical data at the 10th Annual World Bispecific Summit on APVO603 showing that dual targeting of 4-1BB and OX40 provides synergistic co-stimulation of T cells with the potential to amplify the cytotoxic function of activated T cells and NK cells
  • Discontinued development of APVO210 in October 2019, the Company's investigational targeted cytokine bispecific antibody candidate; the decision to discontinue development was based on data from a multiple ascending dose study of APVO210 in healthy volunteers suggesting that it would not meet the desired target product profile for future commercialization
  • Achieved a 41% increase in year-over-year 2019 IXINITY net revenue through continued expansion of the patient base for IXINITY; achieved record net annual IXINITY revenue of $32.4 million
  • Launched a new, more desirable 3,000 IU assay for IXINITY providing advantages for Hemophilia B patients
  • Completed preparations to begin dosing in a clinical study of IXINITY in pediatric patients (under 12 years of age) for potential label expansion of IXINITY in the United States in a pediatric setting; commenced patient dosing in January 2020
  • Completed the sale of worldwide rights to IXINITY to Medexus Pharmaceuticals for estimated total proceeds in excess of $100 million, including an upfront payment to Aptevo of $30 million; potential milestone payments totaling up to $11 million; and the opportunity to receive deferred payments on future U.S. and Canadian net sales of IXINITY estimated in excess of $60 million based on the most recent Aptevo forecast
  • Fully repaid Aptevo's $20 million term debt facility with MidCap Financial in February 2020 establishing a debt-free balance sheet
  • Completed a public equity offering in March 2019 raising gross proceeds of approximately $22 million
  • Received an accelerated performance-based $4.3 million milestone payment from Saol Therapeutics, part of a purchase agreement between Aptevo and Saol, originally executed in August 2017, under which Saol acquired three hyperimmune products previously marketed by Aptevo: WinRho SDF, HepaGam B, and VARIZIG
  • Implemented an expense reduction plan in October 2019 reducing Aptevo's estimated 2019 annual cash burn rate

2019 Summary Financial Results and 2020 Cash Burn Guidance

Cash Position: Aptevo had cash, cash equivalents, and short-term investments as of December 31, 2019 totaling $19.9 million, including restricted cash of $7.5 million. In February 2020, Aptevo used a portion of the $30 million in upfront proceeds from the sale IXINITY to repay in full Aptevo's obligations to MidCap Financial, relieving Aptevo of its obligation to reserve $5 million of restricted cash.

Product Revenue: Product sales of IXINITY increased by $9.4 million, or 41%, to $32.4 million for the year ended December 31, 2019 from $23.1 million for the year ended December 31, 2018. This increase was primarily related to price increases in 2019 and continuing expansion of Aptevo's Hemophilia B patient base, along with the launch of a new 3000 IU assay size in 2019.

Cost of Product Sales: Cost of product sales increased by $8.7 million, or 78%, to $19.9 million for the year ended December 31, 2019 from $11.2 million for the year ended December 31, 2018.

The increase in cost of product sales is mainly due to higher cost of product in 2019 due to a $3.0 million credit received from Aptevo's supplier and used to purchase product in 2018, and costs for stability and the write-off of costs related to inventory write-offs in the year ended December 31, 2019. In addition, Aptevo recorded a royalty obligation of $1.9 million, which was triggered as a result of year-to-date net product sales of IXINITY in the U.S. exceeding $25 million.

Research and Development Expenses: Research and development expenses decreased by $5.6 million to $29.7 million for the year ended December 31, 2019 compared to $35.4 million for the year ended December 31, 2018. Research and development expenses decreased primarily due to a decrease in expenses for APVO436 related to the timing of manufacturing and clinical trial activities; a decrease in expenses for other clinical programs, including lower costs for programs such as APVO210, which was discontinued in October 2019. This was offset by increased spending for the IXINITY pediatric clinical program, and increased expenses related to the development of new ADAPTIR pipeline candidates.

Selling, General and Administrative Expenses: Selling, general and administrative expenses decreased by $2.8 million, or 10%, for the year ended December 31, 2019 to $25.3 million from $28.1 million for December 31, 2018. This decrease was primarily due to reduced personnel and professional services costs.

Net Loss: Aptevo's net loss for the year ended December 31, 2019 was $40.5 million or $1.09 per share, compared to a net loss of $53.7 million or $2.39 per share for the corresponding period in 2018.

2020 Cash Burn Guidance: Aptevo estimates that its cash burn rate in 2020 will be approximately $28 - $30 million and that its current cash provides runway into the fourth quarter of 2020.

Aptevo Therapeutics Inc.

(in thousands, except share and per share amounts)

As of December 31,
2019 2018
Current assets:
Cash and cash equivalents
$ 12,448 $ 30,635
Accounts receivable
7,022 5,220
6,139 1,785
Prepaid expenses
4,226 6,907
Other current assets
160 4,142
Total current assets
29,995 48,689
Restricted cash, net of current portion
7,498 7,448
Property and equipment, net
3,946 5,202
Intangible assets, net
4,420 5,250
Operating lease right-of-use asset
3,747 -
Other assets
3,802 905
Total assets
$ 53,408 $ 67,494
Current liabilities:
Accounts payable and other accrued liabilities
$ 13,043 $ 11,671
Accrued compensation
3,524 3,898
Sales rebates and discounts payable
726 1,245
Current portion of long-term debt
19,863 -
Other current liabilities
1,083 796
Total current liabilities
38,239 17,610
Long-term debt, net
- 19,278
Other liabilities
- 200
Operating lease liability
3,327 -
Total liabilities
41,566 37,088
Stockholders' equity:
Preferred stock: $0.001 par value; 15,000,000 shares authorized, zero shares issued or outstanding
- -
Common stock: $0.001 par value; 500,000,000 shares authorized; 45,279,244
and 22,808,416 shares issued and outstanding at December 31, 2019 and
December 31, 2018, respectively
45 23
Additional paid-in capital
179,653 157,791
Accumulated deficit
(167,856 ) (127,408 )
Total stockholders' equity
11,842 30,406
Total liabilities and stockholders' equity
$ 53,408 $ 67,494

Aptevo Therapeutics Inc.

(in thousands, except share and per share amounts)

For the Year Ended December 31,
2019 2018
Product sales
$ 32,424 $ 23,067
Costs and expenses:
Cost of product sales
19,927 11,214
Research and development
29,757 35,385
Selling, general and administrative
25,336 28,133
Loss from operations
(42,596 ) (51,665 )
Other expense:
Other expense, net
(2,102 ) (2,024 )
Net loss from continuing operations
(44,698 ) (53,689 )
Discontinued operations (Note 2):
Income from discontinued operations
4,250 -
Income from discontinued operations
4,250 -
Net loss
$ (40,448 ) $ (53,689 )
Basic and diluted net income (loss) per share:
Net loss from continuing operations
$ (1.09 ) $ (2.39 )
Net income from discontinued operations
$ 0.10 $ -
Net loss
$ (0.99 ) $ (2.39 )
Weighted-average shares used to compute per share calculation
40,838,491 22,500,053

About Aptevo Therapeutics Inc.

Aptevo Therapeutics Inc. is a clinical-stage biotechnology company focused on developing novel immunotherapies for the treatment of cancer. The Company's lead clinical candidate, APVO436, and preclinical candidates, ALG.APV-527 and APVO603 were developed based on the Company's versatile and robust ADAPTIR™ modular protein technology platform. The ADAPTIR platform is capable of generating highly differentiated bispecific antibodies with unique mechanisms of action for the treatment of different types of cancer. For more information, please visit www.aptevotherapeutics.com

Safe Harbor Statement

This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements, other than statements of historical fact, including, without limitation, statements regarding potential milestone payments, Aptevo's outlook, financial performance or financial condition, estimated cash burn, Aptevo's technology and related pipeline, collaboration and partnership opportunities, commercial portfolio, milestones, and any other statements containing the words "believes," "expects," "anticipates," "intends," "plans," "forecasts," "estimates," "will" and similar expressions are forward-looking statements. These forward-looking statements are based on Aptevo's current intentions, beliefs and expectations regarding future events. Aptevo cannot guarantee that any forward-looking statement will be accurate. Investors should realize that if underlying assumptions prove inaccurate or unknown risks or uncertainties materialize, actual results could differ materially from Aptevo's expectations. Investors are, therefore, cautioned not to place undue reliance on any forward-looking statement. Any forward-looking statement speaks only as of the date of this press release, and, except as required by law, Aptevo does not undertake to update any forward-looking statement to reflect new information, events or circumstances.

There are a number of important factors that could cause Aptevo's actual results to differ materially from those indicated by such forward-looking statements, including a deterioration in Aptevo's business or prospects; adverse developments in research and development; adverse developments in the U.S. or global capital markets, credit markets or economies generally; and changes in regulatory, social and political conditions. Additional risks and factors that may affect results are set forth in Aptevo's filings with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K, as filed on March 18, 2019 and its subsequent reports on Form 10-Q and current reports on Form 8-K. The foregoing sets forth many, but not all, of the factors that could cause actual results to differ from Aptevo's expectations in any forward-looking statement.


Stacey Jurchison
Senior Director, Investor Relations and Corporate Communications

SOURCE: Aptevo Therapeutics