ATHLONE, Ireland, Aug. 17, 2016 -- Innocoll Holdings plc (Nasdaq:INNL), a global, specialty pharmaceutical company with late stage development programs targeting areas of significant unmet medical needs, today announced financial and operating results for the three months and six months ended June 30, 2016. Using our proprietary collagen-based technology platform, we manufacture and supply a range of biodegradable and fully bioresorbable pharmaceutical products and medical devices that are precision-engineered for targeted use.
“I am pleased that in the second quarter, we continued to make solid progress in advancing our clinical programs, delivering on important key milestones,” said Tony Zook, Chief Executive Officer of Innocoll. “XARACOLL achieved positive pivotal results in Phase 3 trials, and we are now preparing to submit an NDA to the FDA for the treatment of post-operative pain. Our second Phase 3 drug candidate COGENZIA, for the treatment of diabetic foot infections, completed enrollment of its two clinical trials in late June, with top-line data expected in the early fourth quarter of this year. We also advanced COLLAGUARD, for the prevention of surgical adhesions, into pre-IDE studies as planned. The expansion of our manufacturing facility in Saal, Germany, continues to make headway. The Government of Upper Bavaria has approved our new laboratories for use, and we expect to complete the construction phase of the Saal facility’s commercial manufacturing area this quarter. We have started to ramp up our commercial infrastructure as well by hiring additional talent with deep experience in launching successful pharmaceutical products. Our vision is to provide physicians and patients with innovative new therapeutic options developed from our technology platform, thus serving unmet medical needs while simultaneously increasing shareholder value, and we will continue to work hard on those commitments.”
Second Quarter 2016 and Recent Highlights
- Announced positive pivotal data in two Phase 3 clinical trials for XARACOLL, which demonstrated highly statistically significant results as a long-acting anesthetic in the reduction of surgical pain following hernia repair. Full analysis of the data will be submitted for medical publication and to the U.S. Food and Drug Administration (FDA) through an NDA for the treatment of post-operative pain, by early 4Q 2016.
- Completed enrollment in two Phase 3 clinical studies studying COGENZIA in diabetic foot infections. Top line data from these studies are anticipated in the early fourth quarter of this year, followed closely by an NDA submission if the data is positive. COGENZIA’s QIDP designation provides potential eligibility for Fast Track priority review.
- Started non-clinical studies for COLLAGUARD, with data expected later this quarter. Assuming positive results and availability of resources, filing of an IDE package is expected to follow.
- Received approval from Government of Upper Bavaria of new quality-controlled laboratories at Saal facility. On track to complete the construction phase of the commercial manufacturing area in the third quarter of 2016, with qualification / validation activities targeted for the fourth quarter of this year. Activities initiated to prepare for pre-approval inspection by the FDA after submission of the XARACOLL NDA.
- Continued to ramp up on commercial capabilities, including exceptional hires in Suzanne Delaney (formerly of GlaxoSmithKline) as Vice President of Sales and Ken Graham (formerly of Bayer) as Vice President of Managed Markets. Each brings nearly 25 years of pharmaceuticals sales and marketing experience from previous leadership roles, with successful launches of multiple widely recognized pharmaceutical brand drugs.
- Strengthened our financial position through the additions of cash totaling approximately $49 million to the balance sheet in June. The drawdown of the second tranche from the European Investment Bank (EIB) added $11.2 million, following positive Phase 3 data for XARACOLL. In addition, Innocoll’s completion of a public offering of ordinary shares raised gross proceeds of approximately $40 million. At June 30, 2016, cash and equivalents totaled $53.8 million, compared to $22.7 million as of March 31, 2016. The company plans to manage its resources to extend the cash runway for at least a year and until after the anticipated XARACOLL NDA approval, the company’s priority, expected in the third quarter of 2017.
Second Quarter 2016 Financial Results
Net Loss Attributable to Ordinary Shareholders: Innocoll Holdings plc reported a net loss attributable to its ordinary shares of $12.8 million, or $0.53 per share of Innocoll Holdings plc, for the second quarter of 2016, compared to a loss of $27.6 million, or $1.24 per share of Innocoll Holdings plc, for the second quarter of 2015.
Non-GAAP diluted net loss excluding non-cash expense with respect to share-based compensation and fair value gains and losses on investor options was $15.1 million or $0.62 per share of Innocoll Holdings plc, for the second quarter of 2016, compared to a loss of $10.8 million or $0.49 per share of Innocoll Holdings plc, for the second quarter of 2015.
The weighted average number of ordinary shares outstanding increased from 22.3 million in the second quarter of 2015 to 24.4 million in the second quarter of 2016, primarily as a result of Innocoll Holdings plc’s follow-on public offering in the second quarter of 2016. The total number of shares outstanding as at June 30, 2016 was 29.7 million.
Revenues: Revenues were $1.3 million for the second quarter of 2016 as compared to $0.6 million in the second quarter of 2015. This increase was primarily due to an increase in sales to EUSA Pharma of CollatampG, our gentamicin implant for the treatment and prevention of post-surgical infection, following the stabilization of the EUSA Pharma business following the transfer from Jazz Pharmaceuticals.
Research and Development (R&D) Expenses: R&D expenses were $10.6 million for the second quarter of 2016 as compared to $4.9 million for the second quarter of 2015. R&D expenses in the second quarter of 2016 included $9.6 million in external clinical research expenses, which was primarily driven by our Phase 3 COGENZIA efficacy trials and the conclusion of our Phase 3 XARACOLL efficacy trials. R&D expenses are expected to decrease significantly in the future as the company concludes the COGENZIA clinical studies and files the XARACOLL NDA.
General and Administrative (G&A) Expenses: G&A expenses were $6.0 million for the second quarter of 2016 as compared to $4.2 million for the second quarter of 2015. Excluding stock-based compensation charges, G&A expenses for the second quarter of 2016 were $3.9 million as compared to $3.4 million for the second quarter of 2015. The increase in G&A, excluding stock-based compensation, was primarily due to our continued infrastructure build out to support clinical programs and the initiation of our pre-commercialization investment.
Other Operating Income/(Expense): Other income was $4.3 million for the second quarter of 2016 as compared to other expense of $17.8 million for the second quarter of 2015. Other income in the second quarter consisted primarily of non-cash items due to the fair value income of investor options outstanding and foreign exchange gains, partially offset by interest on the company’s existing loan with the European Investment Bank (EIB). Other expense in the second quarter of 2015 consisted primarily of $15.9 million fair value expense of investor options outstanding and foreign exchange losses of $1.9 million.
Six Month 2016 Financial Results
Net Loss Attributable to Ordinary Shareholders: Innocoll Holdings plc reported a net loss attributable to its ordinary shareholders of $35.9 million, or $1.50 per share of Innocoll Holdings plc, for the six months ended June 30, 2016, compared to a loss of $34.0 million, or $1.60 per share of Innocoll Holdings plc for the six months ended June 30, 2015.
Non-GAAP diluted loss excluding non-cash expense with respect to share-based compensation and fair value gains and losses on investor options was $36.3 million or $1.51 per share of Innocoll Holdings plc, for the six months ended June 30, 2016, compared to a loss of $13.1 million, or $0.62 per share of Innocoll Holdings plc, for the six months June 30, 2015.
The weighted average number of Innocoll Holdings plc ordinary shares outstanding increased from 21.2 million during the six months ended June 30, 2015, to 24.0 million during the six months ended June 30, 2016, primarily as a result of Innocoll Holdings plc’s follow-on public offering in the second quarter of 2016. The total number of shares outstanding as at June 30, 2016 was 29.7 million.
Revenues: Revenues were $2.9 million for the six months ended June 30, 2016 as compared to $1.3 million for six months ended June 30, 2015. This increase was primarily due to an increase in sales to EUSA Pharma of CollatampG, our gentamicin implant for the treatment and prevention of post-surgical infection, following the stabilization of the EUSA Pharma business following the transfer from Jazz Pharmaceuticals.
Research and Development (R&D) Expenses: R&D expenses were $25.6 million for the six months ended June 30, 2016 as compared to $10.3 million for the six months ended June 30, 2015. R&D expenses in the six months ended June 30, 2016 included $23.6 million in external clinical research expenses, which was primarily due to ramp-up and completion of our Phase 3 XARACOLL efficacy trials and the ramp-up of our Phase 3 COGENZIA efficacy trials. R&D expenses are expected to decrease significantly in the future as the company concludes the COGENZIA clinical studies and files the XARACOLL NDA.
General and Administrative (G&A) Expenses: G&A expenses were $13.4 million for the six months ended June 30, 2016 as compared to $7.6 million for the six months ended June 30, 2015. Excluding stock-based compensation charges, G&A expenses for the six months ended December 30 2016 were $9.4 million as compared to $5.9 million for the six months ended June 30, 2015. The increase in G&A, excluding stock-based compensation, was primarily due to $2.2 million of one-off expenses related to the re-domiciliation of the company to Ireland, our continued infrastructure build out to support clinical programs, and the initiation of our pre-commercialization investment.
Other Operating Income/(Expense): Other income was $3.5 million for the six months ended June 30, 2016 as compared to an expense of $14.5 million for the six months ended June 30, 2015. Other income in the six months ended June 30, 2016 consisted primarily of non-cash items due to the fair value income of investor options outstanding, partially offset by interest on the company’s existing loan with the European Investment Bank (EIB). Other expense in the six months ended June 30, 2015 consisted primarily of $19.1 million fair value expense of investor options outstanding, partially offset by foreign exchange gains of $4.6 million.
Cash Position
As of June 30, 2016, cash and cash equivalents totaled $53.8 million compared to $22.7 million as of March 31, 2016. The cash and cash equivalents position includes the $37.4 million net proceeds from the public equity follow-on and $11.2 million from the drawdown of the second tranche of the European Investment Bank loan.
We expect that our rate of expenses will decrease significantly following the completion of our pivotal studies for XARACOLL, as our clinical studies for COGENZIA come to a conclusion, and as we complete the expansion of our Saal, Germany manufacturing facility. We plan to manage our resources to extend the cash runway for at least a year and until after the anticipated XARACOLL NDA approval, expected in the third quarter of 2017.
For further financial information for the quarter ended June 30, 2016, please refer to the financial statements appearing at the end of this release.
Conference Call
Innocoll management will host a conference call today at 8:30 a.m. ET to discuss second quarter financial results and provide a business update.
To participate in the conference call, please dial 877-407-4018 (domestic) or 201-689-8471 (international) and ask for the "Innocoll second quarter financial results conference call." A live webcast of the call can be accessed under "Events and Presentations" in the Investors section of the Company's website at www.innocoll.com.
An archived webcast recording and telephone replay will be available on the Innocoll website beginning approximately two hours after the call. To access the telephone replay, please dial 877-870-5176 for domestic callers or 858-384-5517 for international callers and entering the conference code: 89801826. The telephone replay will be available until 11:59 p.m. ET on August 24, 2016.
About Innocoll Holdings plc
Innocoll is a global, specialty pharmaceutical company with late stage development programs that is dedicated to engineering better medicines to help patients get better. Our proprietary, biocompatible, and biodegradable collagen products are precision-engineered for targeted use. Applied locally to wound and/or surgery sites, they are designed to provide a range of benefits. The company's late stage product pipeline is focused on addressing a number of large unmet medical needs, including: XARACOLL for the treatment of postoperative pain; COGENZIA (INL-002), a gentamicin-collagen topical matrix for the adjuvant treatment of diabetic foot infections; and COLLAGUARD (INL-003), a barrier for the prevention of post-surgical adhesions.
Our currently approved products include: COLLAGUARD® (ex-US), COLLATAMP® G, SEPTOCOLL® E, REGENEPRO®, COLLACARE®, COLLEXA®, and ZORPREVA®, some of which are sold globally through strategic partnerships, including those with Takeda, EUSA Pharma, Biomet 3i and Biomet. All of our native collagen products—from extraction/purification of type-1 collagen through final delivery form—are manufactured at our certified, integrated plant in Saal, Germany.
For more information, please visit www.innocoll.com.
CollaRx®, Collatamp®, COLLAGUARD®, Collieva®, CollaCare®, Collexa®, COGENZIA® LidoColl®, LiquiColl®, and XARACOLL® are registered trademarks, and CollaPress™, DermaSil™, Durieva™, and Zorpreva™ are trademarks of the company.
Use of Non-GAAP Financial Measures
This press release includes certain numerical measures that are or may be considered “non-GAAP financial measures” under the SEC’s Regulation G. “GAAP” refers to generally accepted accounting principles in the United States. The reconciliations of such measures to the most comparable GAAP figures, in accordance with Regulation G, are included herein.
To supplement our unaudited consolidated financial statements prepared in accordance with U.S. GAAP, we disclose certain non-GAAP, financial measures. We define adjusted non-GAAP earnings per share as basic and diluted earnings per share excluding share based payments and fair value expense or income on investor options outstanding. We believe adjusted non-GAAP earnings per share is meaningful to our investors to enhance their understanding of our financial condition and results. The items excluded from non-GAAP earnings per share represent significant non-cash expense or income that may be settled through issuance of shares included in our authorized or contingent capital. We believe that non-GAAP earnings per share excluding these non-cash items may provide securities analysts, investors and other interested parties with a useful measure of our operating performance and cash requirements. Disclosure in this press release of non-GAAP earnings per share is intended as a supplemental measure of our performance. Non-GAAP earnings per share should not be considered as an alternative to earnings per share, profit (loss) or any other performance measure derived in accordance with U.S. GAAP. Our presentation of adjusted earnings per share should not be construed to imply that our future results will be unaffected by unusual non-cash or non-recurring items.