SAN FRANCISCO, March 16, 2020 /PRNewswire/ -- Kindred
Biosciences, Inc. (NASDAQ: KIN), a biopharmaceutical company
focused on saving and improving the lives of pets, today
announced that it has entered into a transaction for the sale of
Mirataz® to Dechra Pharmaceuticals PLC (LSE: DPH) for an
upfront payment of $43 million and
royalties on worldwide sales.
In addition, the company announced that it will substantially
reduce its commercial footprint. This, along with partnership
deals, is expected to significantly reduce the amount of additional
dilutive capital the company will require.
"We believe Dechra is an ideal company to deliver results for
Mirataz globally, given their expansive commercial footprint,
proven success selling specialist products, and synergies between
Mirataz and their existing product portfolio targeting diseases
linked to feline weight loss," said KindredBio's Chief Executive
Officer, Richard Chin, M.D.
"Given the amount that partners are willing to pay for our
assets, and the richness of our pipeline, we have recognized that
we can likely achieve better returns for our shareholders while
reducing dilutive financing by relying more on a
partnership-focused business model. This model has been very
successful in the human pharmaceutical industry, and we expect the
same for the veterinary industry."
In addition, the company will further prioritize biologics
programs for dogs and cats, and discontinue development of canine
and feline small molecule programs.
"We have had seven positive pilot programs in a row, which is a
higher success rate than we had expected. Furthermore, we have
additional new programs based on our recently announced half-life
extension technology. We clearly have more attractive opportunities
than we can pursue. While our small molecule programs are very
promising, we have decided to devote our resources to the part of
the business where we can create the most value and where we have
the clearest competitive advantage. We believe monoclonal
antibodies are the future of veterinary medicine, and given
significant market opportunities for our biologics programs,
provide the greatest potential for value creation."
"We have had a very successful 2019, with two product approvals
and multiple positive pilot studies. For 2020 and beyond, we look
forward to executing on the exciting strategy we have laid out
today," Dr. Chin concluded.
Proceeds from the Mirataz transaction, alongside the reduction
in the company's workforce and operations, will extend cash runway
through 2022, while maintaining a focused research engine dedicated
to the development of KindredBio's biologics pipeline. KindredBio
also remains in late-stage discussions with a number of parties
regarding a commercial partnership for its interleukin-31
monoclonal antibody for canine atopic dermatitis.
In addition, the company reported financial results for the
fourth quarter and full year ended December 31, 2019, and
provided updates on its programs.
The major components of the strategic realignment are outlined
below:
- KindredBio becomes a biologics-focused company pursuing canine
and feline markets, while discontinuing small molecule development
for these species. The following publicly disclosed biologics
programs will continue to advance, namely the company's interleukin
(IL)-31, IL-4/13 SINK, IL-4R and IL-17 programs for canine atopic
dermatitis, KIND-030 for parvovirus in dogs, KIND-510a for the
control of non-regenerative anemia in cats, and anti-TNF antibody
for inflammatory bowel disease in dogs, alongside other undisclosed
biologics candidates. In addition, KindredBio has multiple platform
technologies including half-life extension and Fc modification
technologies for manufacturing and other applications. All programs
are advancing well, consistent with previously disclosed
timelines.
- The company signed an agreement to sell Mirataz to Dechra for
an upfront payment of $43 million,
alongside an ongoing royalty on global net sales. As is customary,
10% of the upfront payment shall be held in escrow for up to 18
months. The sale comprises worldwide marketing rights, intellectual
property rights, marketing authorizations and associated regulatory
documentation, third party supply contracts related to raw material
and manufacture of the finished product, and certain product
inventory. Completion is expected before the end of June 2020, following satisfactory completion of
certain deliverables. Dechra, which is based in the United Kingdom, plans to launch Mirataz in the
UK and the European Union, and intends to conduct the necessary
regulatory activities to achieve approvals in other key
international markets. With commercial sales and marketing teams in
25 countries, and distributor relationships in an additional 68
countries, Dechra is strongly positioned to market Mirataz in
the United States, Europe, and globally. KindredBio recorded net
product revenues of $4.1 million for
Mirataz in 2019.
- KindredBio plans to rely more on a partnership-focused
commercialization strategy similar to the traditional human biotech
commercialization strategy whereby pipeline assets are partnered
with larger commercial partners that can maximize product
opportunity in return for upfront payment, contingent milestones,
and royalties on future sales. Accordingly, the companion animal
commercial infrastructure will be substantially reduced.
- In order to fully realize the value of the equine franchise,
the equine assets will be segregated into the KindredBio Equine
subsidiary. A strategic review process will commence for this
subsidiary, including a potential spin-out or divestiture of
assets. The KindredBio Equine asset portfolio will include Zimeta™
(dipyrone injection) for the control of pyrexia in horses, KIND-012
(dipyrone oral gel), KIND-014 for equine gastric ulcers, KIND-015
for metabolic syndrome, and anti-TNF antibody for sick newborn
foals, alongside undisclosed equine product candidates. Equine is
an attractive market, with high willingness to spend and low
commercialization costs.
- In connection with the company's strategic shift, KindredBio is
eliminating approximately 53 positions, representing about
one-third of its current workforce. The eliminated positions
primarily relate to the companion animal sales force and research
and development for small molecule programs. Restructuring expenses
and retirement costs related to severance and health care benefits
are expected to be approximately $1.7
million, exclusive of stock compensation. The workforce
reduction is anticipated to lower compensation and benefits cost by
approximately $7.1 million annually.
In the coming year, KindredBio intends to hire additional staff to
enhance its capabilities in biologics manufacturing, but still
expects a net reduction in headcount. Operating expenses, projected
to range between $58 million and
$61 million in 2020, include the
one-time restructuring charge of $1.7
million and first quarter expenditures that reflect a
complete organizational structure. Excluding first quarter
expenditures, the annualized run rate for 2020 is expected to be
between $54 million and $56 million. KindredBio believes its existing
cash, cash equivalents and investments, the net reduction in the
company's workforce and proceeds from the Mirataz sale will be
sufficient to fund the current operating plan through 2022.
Development and Corporate Updates
Biologics Candidates
- In July 2019, KindredBio reported
positive topline results from its pilot field effectiveness study
of KIND-016, a fully caninized, high-affinity monoclonal antibody
targeting interleukin-31, for the treatment of atopic dermatitis in
dogs. The scale up process is proceeding as planned, and the
pivotal effectiveness study is expected to start in the second half
of 2020.
- The in-life portion of the pilot effectiveness study for the
company's canine IL-4/13 SINK molecule is complete, and the company
is completing development of its PK assays and expects topline
results from the study in the coming weeks. The IL-4 and IL-13
pathways are key drivers of the inflammation that underlies atopic
dermatitis and other allergic diseases. The IL-4/13 SINK molecule
binds to both IL-4 and IL-13 circulating in the blood and inhibits
their interactions with their respective receptors, thereby
modifying the clinical signs associated with atopic dermatitis.
- On December 16, 2019, KindredBio
unveiled positive results from its randomized, placebo-controlled
laboratory pilot study of KIND-032, a fully caninized monoclonal
antibody targeting IL-4R, for the treatment of atopic dermatitis in
dogs. Although the study was a single-dose study designed primarily
to assess safety and pharmacokinetics, evidence of positive
efficacy and dose response was observed at Week 1, as measured by
CADESI-04. A second pilot study to further assess efficacy and
dosing is planned for 2020. The IL-4 pathway is a key driver of the
inflammation that underlies atopic dermatitis. KIND-032 binds to
the IL-4 receptor on the surface of immune cells.
KindredBio is pursuing a multi-pronged approach toward atopic
dermatitis. Atopic dermatitis is an immune-mediated inflammatory
skin condition in dogs. It is the leading reason owners take their
dog to the veterinarian, and the current market size is more than
$700 million annually and
growing.
- In August 2019, KindredBio
announced positive results from its pilot efficacy study of
KIND-030, a monoclonal antibody targeting canine parvovirus (CPV).
Pivotal studies for this molecule are expected to be completed in
2020. Approval is anticipated by late 2020 or early 2021.
CPV is the most significant cause of viral enteritis in dogs,
especially puppies, with over 90% mortality rate if untreated.
There are approximately 250,000 parvo cases in the U.S. each year,
excluding emergency rooms, shelters, or undiagnosed cases.
Currently, there are no approved or unapproved treatments for CPV,
and owners spend up to thousands of dollars for supportive care for
infected dogs.
- The pivotal efficacy study for KindredBio's feline recombinant
erythropoietin was initiated in the fourth quarter and is ongoing.
The product candidate is being developed for the management of
non-regenerative anemia in cats. It has been engineered by the
company to have a prolonged half-life compared to endogenous
erythropoietin, a protein that regulates and stimulates production
of red blood cells.
Anemia is a common condition that is estimated to afflict millions
of older cats. It is often associated with chronic kidney disease,
because kidneys produce erythropoietin and chronic kidney disease
leads to decreased levels of endogenous erythropoietin. Chronic
kidney disease affects approximately half of older cats, making it
a leading cause of feline mortality. Human erythropoietins, which
are multi-billion dollar products in the human market, have been
shown to be immunogenic in many cats.
- The pilot field effectiveness study for KindredBio's anti-TNF
antibody for canine inflammatory bowel disease (IBD) is underway,
with completion expected in the first half of 2020.
The majority of canine IBD cases involve chronic states of
diarrhea, vomiting, gastroenteritis, inappetence, and other
symptoms, certain of which are cited as among the most frequent
disorders impacting dogs. For certain dog breeds, the prevalence of
diarrhea exceeds 5%. Existing treatments can have significant
drawbacks, including limited diets and excessive antibiotic use,
which can lead to owner frustration, lapses in treatment adherence,
or poor quality of life for the affected animal.
Mirataz
- KindredBio recorded Mirataz net product revenues of
$1.3 million in the fourth quarter
and $4.1 million in the full year. On
December 12, 2019, KindredBio
announced European Commission approval of Mirataz for bodyweight
gain in cats experiencing poor appetite and weight loss resulting
from chronic medical conditions. Europe represents the second largest market
for veterinary therapeutics internationally. Royalties on future
global sales of Mirataz by Dechra will be recorded by KindredBio as
revenue.
KindredBio Equine
Pending the strategic review process, development of certain
candidates may be put on hold.
- On November 25, 2019, KindredBio
announced that the U.S. Food and Drug Administration approved
Zimeta for the control of pyrexia in horses. KindredBio recorded
net product revenues of $127,000 in
the fourth quarter. The product became commercially available to
U.S. veterinarians in December, 2019, resulting in a partial
quarter, with initial stocking orders sent to the Company's
distribution partners in the final weeks of the year. An
application for Zimeta was made in Canada in November, with anticipated approval
in the second quarter of 2020.
Dipyrone injection is the first FDA-approved product for the
control of fever in horses. There are eight to nine million horses
in the U.S. and currently more than one million are seen by a
veterinarian for fever annually. Existing off-label treatments can
have serious side effects.
- The pivotal field effectiveness study for dipyrone oral gel, a
proprietary oral gel, has been completed with positive results. The
target animal safety study is also complete, and dipyrone oral gel
was found to be well-tolerated. KindredBio has agreed on a path
forward with the FDA and relative bioequivalency work is currently
ongoing.
Once approved, dipyrone oral gel is intended to build upon the
success of Zimeta and potentially offer another tool to
veterinarians.
- The pivotal field efficacy study for KIND-014 for the treatment
of gastric ulcers in horses initiated in December 2019.
Fourth Quarter and Full Year 2019 Financial Results
For the quarter ended December 31,
2019, KindredBio reported a net loss of $15.7 million, or $0.40 per share, compared to a net loss of
$15.4 million, or $0.46 per share, for the same period in 2018. For
the year ended December 31, 2019, the
net loss was $61.4 million, or
$1.59 per share, as compared to a net
loss of $49.7 million, or
$1.60 per share, in 2018.
The company recorded $1.4 million
of net product revenues for the fourth quarter of 2019, versus
$1.3 million in the year-ago period.
Full year 2019 net product revenues were $4.3 million, compared with $2.0 million for the year ended December 31, 2018. Mirataz became commercially
available in July 2018, while Zimeta
became commercially available in December
2019.
The cost of product sales totaled $0.2
million in the fourth quarter, resulting in a gross margin
of 87%, and $0.6 million for the
year, resulting in a gross margin of 86%.
Research and development expenses totaled $7.1 million for the fourth quarter ended
December 31, 2019 compared to
$7.8 million for the same period in
2018. For the full year 2019, research and development expenses
were $28.3 million, compared to
$26.4 million in 2018. Stock-based
compensation expense related to research and development was
$1.8 million, versus $1.7 million in 2018. The $1.9 million increase in full year research and
development expenses was primarily due to higher headcount and
related expenses as the Company advances its biologics programs,
higher consulting expenses for quality assurance programs, and
increased capital equipment depreciation expense.
Selling, general and administrative expenses totaled
$9.6 million for the fourth quarter
ended December 31, 2019, compared to
$9.2 million for the same period in
2018. For the full year 2019, selling, general and administrative
expenses were $37.9 million, compared
to $26.5 million for 2018. The
$11.4 million increase in full year
expenses is the result of being a commercial company, as well as
increased expenses incurred by the Elwood, Kansas plant in the lead up to its
commissioning. In addition, higher corporate infrastructure costs
and stock-based compensation expense also contributed to the
increase in expenses. Stock-based compensation expense included in
selling, general and administrative was $5.5
million in 2019, versus $4.5
million in 2018.
As of December 31, 2019,
KindredBio had $73.5 million in cash,
cash equivalents and investments, compared to $73.9 million at December
31, 2018. Net cash used in operating activities in 2019 was
approximately $56.3 million. The
company also invested approximately $8.4
million in capital expenditures for the build-out of its
Elwood, Kansas manufacturing
facility, including equipment purchases.
With respect to spending in 2020, the company expects operating
expenses of between $58.0 million and
$61.0 million, excluding the impact
of stock-based compensation expense and the impact of acquisitions,
if any. The 2020 operating expense includes a one-time
restructuring charge of approximately $1.7
million and first quarter expenditures that reflect a full
organizational structure. Excluding first quarter expenditures, the
annualized run rate for 2020 is expected to be between $54 million and $56
million. Additionally, KindredBio plans to invest
$4.0 million to $6.0 million in capital expenditures on lab and
manufacturing equipment for its biologics programs in 2020.
As noted earlier in the press release, KindredBio believes its
existing cash, cash equivalents and investments, the net reduction
in the company's workforce and proceeds from the Mirataz sale will
be sufficient to fund the current operating plan through 2022.
Webcast and Conference Call
KindredBio will host a conference call and webcast today
at 4:30 p.m. Eastern time/1:30 p.m.
Pacific time. Interested parties may access the call by
dialing toll-free (855) 433-0927 from the US, or (484) 756-4262
internationally, and using conference ID 2367136. The call will be
webcast live here, with a replay available at that
link for 30 days.
Important Safety Information
Mirataz® (mirtazapine transdermal ointment) is
for topical use in cats only under veterinary supervision. Do not
use in cats with a known hypersensitivity to mirtazapine or any of
the excipients or in cats treated with monoamine oxidase inhibitors
(MAOIs). Not for human use. Keep out of reach of children. Wear
gloves to apply and wash hands after. Avoid contact with treated
cat for 2 hours following application. The most common
adverse reactions include application site reactions, behavioral
abnormalities (vocalization and hyperactivity) and vomiting. Please
see the full Prescribing Information.
Zimeta™ (dipyrone injection) should
not be used more frequently than every 12 hours. For use in horses
only. Do not use in horses with a hypersensitivity to
dipyrone, horses intended for human consumption or any food
producing animals, including lactating dairy animals. Not for use
in humans, avoid contact with skin and keep out of reach of
children. Take care to avoid accidental self-injection and use
routine precautions when handling and using loaded syringes.
Prior to use, horses should undergo a thorough history and physical
examination by a veterinarian. Monitor for signs of abnormal
bleeding and use caution in horses at risk for
hemorrhage. Concurrent use with other NSAIDs, corticosteroids
and drugs associated with kidney toxicity, should be
avoided. As a class, NSAIDs may be associated with
gastrointestinal, kidney, and liver toxicity. The most common
adverse reactions observed during clinical trials were elevated
glucose conversion enzymes, decreased blood protein, and gastric
ulcers. Please see the full Prescribing Information.
About Kindred Biosciences
Kindred Biosciences is a biopharmaceutical company developing
innovative biologics focused on saving and improving the lives of
pets. Its mission is to bring to pets the same kinds of safe and
effective medicines that human family members enjoy. The company's
strategy is to identify targets that have already demonstrated
safety and efficacy in humans and to develop therapeutics based on
these validated targets for dogs and cats. KindredBio has a deep
pipeline of novel biologics in development across many therapeutic
classes, alongside state-of-the-art biologics manufacturing
capabilities and a broad intellectual property portfolio. The
company has two approved drugs,
namely Mirataz® (mirtazapine transdermal
ointment) and Zimeta™ (dipyrone
injection).
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the U.S. Private Securities Litigation Reform Act of
1995. All statements contained in this press release that do not
relate to matters of historical fact should be considered
forward-looking statements, including, but not limited to,
statements regarding our expectations about the trials, regulatory
approval, manufacturing, distribution and commercialization of our
current and future product candidates, and statements regarding our
anticipated revenues, expenses, margins, profits and use of
cash.
These forward-looking statements are based on our current
expectations. These statements are not promises or guarantees, but
involve known and unknown risks, uncertainties and other important
factors that may cause our actual results to be materially
different from any future results expressed or implied by the
forward-looking statements. These risks include, but are not
limited to, the following: our limited operating history and
expectations of losses for the foreseeable future; the absence of
significant revenue from our products and our product candidates
for the foreseeable future; the likelihood that our revenue will
vary from quarter to quarter; our potential inability to obtain any
necessary additional financing; our substantial dependence on the
success of our products and our lead product candidates which may
not be successfully commercialized even if they are approved for
marketing; the effect of competition; our potential inability to
obtain regulatory approval for our existing or future product
candidates; our dependence on third parties to conduct some of our
development activities; our dependence upon third-party
manufacturers for supplies of our products and our product
candidates and the potential inability of these manufacturers
to deliver a sufficient amount of supplies on a timely basis,
including by reason of the coronavirus disease (COVID-19) currently
impacting multiple jurisdictions worldwide; uncertainties regarding
the outcomes of trials regarding our product candidates; our
potential failure to attract and retain senior management and key
scientific personnel; uncertainty about our ability to enter into
satisfactory agreements with third-party licensees of our biologic
products or to develop a satisfactory sales organization for our
equine small molecule products; our significant costs of operating
as a public company; potential cyber-attacks on our information
technology systems or on our third-party providers' information
technology systems, which could disrupt our operations; our
potential inability to repay the secured indebtedness that we have
incurred from third-party lenders, and the restrictions on our
business activities that are contained in our loan agreement with
these lenders; the risk that our 2020 strategic realignment plan
will result in unanticipated costs or revenue shortfalls; the risk
that our sale of Mirataz® to Dechra Pharmaceuticals PLC
will not be completed because one or more of the closing conditions
described in the sale agreement are not satisfied and uncertainty
about the amount of royalties that we will receive if the sale is
completed; our potential inability to obtain and maintain patent
protection and other intellectual property protection for our
products and our product candidates; potential claims by third
parties alleging our infringement of their patents and other
intellectual property rights; our potential failure to comply with
regulatory requirements, which are subject to change on an ongoing
basis; the potential volatility of our stock price; and the
significant control over our business by our principal stockholders
and management.
For a further description of these risks and other risks that we
face, please see the risk factors described in our filings with
the U.S. Securities and Exchange
Commission (the SEC), including the risk factors
discussed under the caption "Risk Factors" in our Annual Report on
Form 10-K and any subsequent updates that may be contained in our
Quarterly Reports on Form 10-Q filed with the SEC. As a result
of the risks described above and in our filings with the SEC,
actual results may differ materially from those indicated by the
forward-looking statements made in this press release.
Forward-looking statements contained in this press release speak
only as of the date of this press release and we undertake no
obligation to update or revise these statements, except as may be
required by law.
The results stated in this press release have not been reviewed
by the Food and Drug Administration or the United States Department
of Agriculture Center for Veterinary Biologics, as applicable.
Contacts
For investor inquiries:
Katja Buhrer
Katja.buhrer@kindredbio.com
(917) 969-3438
Kindred
Biosciences, Inc.
|
Consolidated
Statements of Operations
|
(In thousands,
except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Years
Ended
|
|
|
|
December
31,
|
|
December
31,
|
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
(Unaudited)
|
|
|
|
|
Net product
revenues
|
$
1,401
|
|
$
1,326
|
|
$
4,256
|
|
$
1,966
|
|
|
|
|
|
|
|
|
|
|
Operating costs and
expenses:
|
|
|
|
|
|
|
|
|
Cost of product
sales
|
187
|
|
214
|
|
587
|
|
324
|
|
Research and
development
|
7,134
|
|
7,756
|
|
28,310
|
|
26,399
|
|
General and
administrative
|
9,578
|
|
9,219
|
|
37,926
|
|
26,499
|
Total operating costs
and expenses
|
16,899
|
|
17,189
|
|
66,823
|
|
53,222
|
|
|
|
|
|
|
|
|
|
|
Loss from
operations
|
(15,498)
|
|
(15,863)
|
|
(62,567)
|
|
(51,256)
|
|
|
|
|
|
|
|
|
|
|
Interest and other
income, net
|
(236)
|
|
422
|
|
1,178
|
|
1,566
|
Net
loss
|
|
$
(15,734)
|
|
$
(15,441)
|
|
$
(61,389)
|
|
$
(49,690)
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net
loss per common share
|
$
(0.40)
|
|
$
(0.46)
|
|
$
(1.59)
|
|
$
(1.60)
|
|
|
|
|
|
|
|
|
|
|
Shares used to
calculate basic and diluted net loss per common share
|
38,999
|
|
33,708
|
|
38,657
|
|
31,001
|
Selected
Consolidated Balance Sheet Data
|
(In
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
December
31,
|
|
|
|
2019
|
|
2018
|
|
|
|
|
|
|
Cash, cash
equivalents and investments
|
$
73,546
|
|
$
73,932
|
|
|
|
|
|
|
Total
assets
|
|
114,024
|
|
106,482
|
|
|
|
|
|
|
Stockholders'
equity
|
81,921
|
|
91,207
|
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SOURCE Kindred Biosciences, Inc.