BOSTON, April 1, 2020 /PRNewswire/ -- Stealth BioTherapeutics Corp (NASDAQ: MITO), a clinical-stage biotechnology company focused on the discovery, development and commercialization of novel therapies for diseases involving mitochondrial dysfunction, today reported financial results for the year ended December 31, 2019 and announced recent business highlights.
"We are off to a strong start in 2020, having honed our focus on Barth and our planned expansion into other rare metabolic cardiomyopathies, while continuing to execute on the significant promise of our ophthalmic and other pipeline programs. By decisively reducing expenses in January, our cash and cash equivalents are sufficient through key Barth regulatory interactions in the second half of 2020, bringing us closer to a potential approval with an opportunity for a rare pediatric voucher and expedited regulatory review," said Reenie McCarthy, Chief Executive Officer at Stealth. "We hope to complete enrollment of our Phase 2b study in dry AMD during the second half of this year, keeping us on-track for a second half of 2021 top-line read-out. We are actively planning development initiatives in other rare metabolic cardiomyopathies, on which we hope to engage with the FDA this year. We are also rapidly advancing our pipeline of novel mitochondrial medicines, with SBT-272 being assessed in a Phase 1 clinical trial, preclinical data read-outs expected this year for SBT-272 in amyotrophic lateral sclerosis and multiple system atrophy and SBT-259 in Charcot-Marie-Tooth, and lead optimization underway for our SBT-550 series, targeting the ferroptosis pathway of cell death implicated in neurodegenerative diseases such as Parkinson's."
Fourth Quarter 2019 and Recent Highlights
Announced Barth rare pediatric designation. In March 2020, the Company announced receipt of Rare Pediatric Disease (RPD) designation from the U.S. Food and Drug Administration (FDA) for elamipretide for the treatment of Barth syndrome. Under this program, upon FDA priority review and approval of elamipretide for Barth syndrome, the Company would be eligible for a voucher that can be used to obtain priority review for a subsequent drug application.
Announced positive Barth data from natural history efficacy study. In February 2020, the Company announced positive results from its SPIBA-001 natural history comparative control efficacy study in Barth patients, demonstrating a greater than 80 meter improvement in the primary endpoint of 6 Minute Walk Test at one year compared to natural history controls (p=0.0005).
Expanded clinical pipeline. In January 2020, the Company initiated a first-in-human Phase 1 clinical trial evaluating its second-generation pipeline compound, SBT-272, in healthy subjects. The Company anticipates that preclinical data expected later this year in models of amyotrophic lateral sclerosis (ALS) and multiple system atrophy (MSA) will help inform SBT-272's clinical development pathway for rare neurodegenerative diseases.
Implemented strategic repositioning. In January 2020, the Company implemented strategic actions to reduce costs and reposition its focus on Barth and other rare metabolic cardiomyopathies, in addition to its ophthalmic and pipeline neurology programs following 2019 year-end announcement of the Company's MMPOWER-3 clinical study results.
Announced improvement in cardiac function in Barth. In October 2019, data presented at the American Society of Human Genetics (ASHG) 2019 Annual Meeting showed that treatment with elamipretide was associated with a significant increase in average cardiac stroke volume, or the amount of blood pumped by the heart's left ventricle per contraction, in Barth subjects, measured from the trial baseline (40.8 mL) to week 36 (51.8 mL) of the open-label extension (p<0.01).
Alexion collaboration. In October 2019, the Company announced an option agreement with Alexion, in connection with which it received gross proceeds of $30 million. Although Alexion has declined to exercise this option, the gross proceeds provided the Company with flexibility to consider its strategic financing options and develop a Barth regulatory path.
Key Upcoming Milestones
Anticipated guidance from FDA meeting on Barth expected midyear 2020.
Complete enrollment of Phase 2b clinical trial in dry AMD expected second half of 2020.
Pre-clinical data for SBT-272 in ALS and MSA and for SBT-259 in CMT expected by year-end.
2019 Financial Results
Revenue: In 2019, the Company recognized $21.1 million in revenue associated with the Alexion arrangement. The revenue represents the portion of the non-refundable upfront payments that were recognized in full upon the delivery of the topline data for the Company's MMPOWER-3 trial. Alexion terminated the arrangement and as such, no additional revenue will be recognized.
Research and Development (R&D) Expenses: R&D expenses decreased by $8.5 million to $44.6 million for the year ended December 31, 2019, from $53.1 million for the year ended December 31, 2018. This decrease was primarily from a net decrease of $8.5 million in clinical trial costs due to the timing of trials that ended in 2018, a $2.8 million decrease in contract manufacturing, and a $0.9 million decrease in discovery related expenses due to timing of activities. These decreases were offset in part by increases of $3.6 million in employee and consultant related expenses driven by continued build-out of clinical, medical affairs and regulatory functions and $0.1 million in other costs.
General and Administrative (G&A) Expenses: G&A expenses increased by $0.1 million to $22.3 million for the year ended December 31, 2019, from $22.2 million for the year ended December 31, 2018. The increase was primarily attributable to a net $2.3 million increase in pre-commercial activities including building market disease awareness, a $1.8 million increase in professional services for activities attributable to operating as a public company, an increase of $3.2 million in employee related costs offset by a decrease of $6.7 million in costs associated with 2018 financing efforts and a decrease in IP legal fees of $0.5 million.
Other Expenses: Other expenses increased by $4.5 million to $25.9 million for the year ended December 31, 2019 from $21.4 million for the year ended December 31, 2018. The increase in other expenses is primarily attributable to a $22.7 million loss on extinguishment of debt recorded with respect to convertible debt conversion into ordinary shares in conjunction with the Company's 2019 initial public offering and a $0.7 million change period over period in the fair value adjustments of the warrant liability. These increases were offset by a $3.4 million change in period over period fair value adjustments of the derivative liability associated with the convertible debt, a decrease in interest expense mostly related to the convertible debt of $14.7 million and an increase in interest income of $0.8 million.
Cash Position: Cash and cash equivalents were $50.8 million at December 31, 2019, compared to $10.9 million at December 31, 2018.
Management will host a conference call today at 8:30 am ET to discuss the financial results and provide a general business update. The call can be accessed by dialing (877) 407-0989 or (201) 389-0921 (international) and referencing conference ID 13701108. A live audio webcast of the event can be accessed by visiting the Investors & News section of Stealth's Investor website, https://investor.stealthbt.com/. A replay of the webcast will be archived on Stealth's website for 30 days following the event.
We are a clinical-stage biotechnology company focused on the discovery, development and commercialization of novel therapies for diseases involving mitochondrial dysfunction. Mitochondria, found in nearly every cell in the body, are the body's main source of energy production and are critical for normal organ function. Dysfunctional mitochondria characterize a number of rare genetic diseases and are also involved in many common age-related diseases, typically involving organ systems with high energy demands such as the heart, the eye, and the brain. We believe our lead product candidate, elamipretide, has the potential to treat both rare metabolic cardiomyopathies, such as Barth, Duchenne and Becker muscular dystrophies and Friedreich's ataxia, as well as ophthalmic diseases entailing mitochondrial dysfunction, such as dry age-related macular degeneration and Leber's hereditary optic neuropathy. We are evaluating our second-generation clinical stage candidate, SBT-272, for rare neurodegenerative disease indications following promising preclinical data in amyotrophic lateral sclerosis, or ALS. Our pipeline compounds include SBT-259, which we are evaluating for rare peripheral neuropathies, and the SBT-550 series of compounds, which we plan to evaluate for rare neurodegenerative and ophthalmic indications. We have optimized our discovery platform to identify novel mitochondria-targeted compounds, which may be nominated as therapeutic product candidates or utilized as scaffolds to deliver other compounds to mitochondria. We have assembled a highly experienced management team, board of directors and group of scientific advisors to help us achieve our mission of leading mitochondrial medicine.
This press release contains forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. Such forward-looking statements include those regarding Stealth BioTherapeutics' plans, strategies and expectations for its preclinical and clinical advancement of its drug development programs, including its ongoing clinical trials of elamipretide and planned clinical trial of SBT-272; the potential benefits of Stealth BioTherapeutics' product candidates; its key milestones for 2020; its plans regarding future data presentations; and its financial guidance regarding the period in which it will have capital available to fund its operations. Statements that are not historical facts, including statements about Stealth BioTherapeutics' beliefs, plans and expectations, are forward-looking statements. The words "anticipate," "expect," "hope," "plan," "potential," "possible," "will," "believe," "estimate," "intend," "may," "predict," "project," "would" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Stealth BioTherapeutics may not actually achieve the plans, intentions or expectations disclosed in these forward-looking statements, and you should not place undue reliance on these forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements as a result of known and unknown risks, uncertainties and other important factors, including: Stealth BioTherapeutics' ability to obtain additional funding and to continue as a going concern; the impact of the COVID-19 pandemic; the ability to successfully demonstrate the efficacy and safety of Stealth BioTherapeutics' product candidates and future product candidates; the preclinical and clinical results for Stealth BioTherapeutics' product candidates, which may not support further development and marketing approval; the potential advantages of Stealth BioTherapeutics' product candidates; the content and timing of decisions made by the U.S. FDA, the EMA or other regulatory authorities, investigational review boards at clinical trial sites and publication review bodies, which may affect the initiation, timing and progress of preclinical studies and clinical trials of Stealth BioTherapeutics product candidates; Stealth BioTherapeutics' ability to obtain and maintain requisite regulatory approvals and to enroll patients in its planned clinical trials; unplanned cash requirements and expenditures; competitive factors; Stealth BioTherapeutics' ability to obtain, maintain and enforce patent and other intellectual property protection for any product candidates it is developing; and general economic and market conditions. These and other risks are described in greater detail under the caption "Risk Factors" included in the Stealth BioTherapeutics' most recent Annual Report on Form 20-F filed with the Securities and Exchange Commission ("SEC"), as well as in any future filings with the SEC. Forward-looking statements represent management's current expectations and are inherently uncertain. Except as required by law, Stealth BioTherapeutics does not undertake any obligation to update forward-looking statements made by us to reflect subsequent events or circumstances.