WARRINGTON, Pa., Aug. 21, 2017 /PRNewswire/ --Windtree Therapeutics, Inc. (OTCQB: WINT), a biotechnology company focused on developing aerosolized KL4 surfactant therapies for respiratory diseases, today reported financial results for the second quarter ended June 30, 2017.
"The second quarter of 2017 was marked with continued progress in the AEROSURF® development program and for the Company. We completed enrollment in the AEROSURF phase 2b clinical trial and released top-line results in late June. While the top-line results did not meet the specified endpoint, which we believe is due in large part to unexpected treatment interruptions, we are very encouraged that, when excluding patients with treatment interruptions, the 50 minute dose exhibited a positive treatment effect with a safety profile comparable to that of control. We look forward to finalizing a regulatory and clinical plan to incorporate our next generation aerosol delivery system (ADS) into our program, as we pursue a path potentially to advance AEROSURF into phase 3 development," commented Craig Fraser, President and Chief Executive Officer. "In addition, in June we announced an exclusive license agreement with Lee's Pharmaceutical (HK) Limited ("Lee's Pharm") for the development and commercialization of our KL4 surfactant products in select Asian markets. And finally, we recently announced our efforts to undertake a financial restructuring program to provide short-term financing and improve the Company's capital structure for the long term. If we are successful, we believe our Company will be better positioned to achieve long-term financial sustainment and to realize the full potential of AEROSURF and our KL4 surfactant and aerosol delivery platforms."
Select Financial Results for the Second Quarter ended June 30, 2017
For the quarter ended June 30, 2017, the Company reported an operating loss of $6.1 million, compared to $10.0 million for the second quarter of 2016.
Grant revenue for the second quarter of 2017 was $1.1 million compared to $0.1 million for the second quarter of 2016. Grant revenue for 2017 primarily represents funds received and expended under a Small Business Innovation Research (SBIR) grant from the National Heart, Lung, and Blood Institute (NHLBI) of the National Institutes of Health (NIH) to support the AEROSURF phase 2b clinical trial.
Research and development expenses were $5.5 million for the second quarter of 2017, compared to $8.3 million for the second quarter of 2016. The decrease was due to (i) reductions in AEROSURF phase 2 clinical development program costs including decreases in clinical trial site initiation costs and production of aerosol delivery systems; and (ii) cost reduction measures initiated in the second quarter of 2016.
General and administrative expenses were $1.8 million for the second quarter of 2017 and 2016.
Interest expense for the second quarter of 2017 and 2016 was $0.6 million and primarily represents interest expense on $25 million of long-term debt.
The Company reported a net loss of $6.8 million for the second quarter of 2017, compared to a net loss of $10.6 million for the comparable period in 2016.
In addition, in the second quarter of 2017, the Company reported a $0.5 million non-cash deemed dividend on preferred stock, resulting in a net loss attributable to common shareholders of $7.3 million ($0.76 per basic share) on 9.6 million weighted-average common shares outstanding, compared to a net loss attributable to common shareholders of $10.6 million ($1.29 per basic share) on 8.2 million weighted average common shares outstanding for the comparable period in 2016.
As of June 30, 2017, the Company had cash and cash equivalents of $2.5 million. Net operating cash outflows before financing activities for the second quarter of 2017 were $5.5 million. In addition, as of June 30, 2017, the Company reported current liabilities of $25.4 million (including $12.5 million of long-term debt, current portion) and long-term debt of $12.5 million. The current portion of long-term debt is due in February 2018. The non-current portion of long-term debt is due in February 2019.
The Company recently announced a financial restructuring plan to provide short-term financing and improve the Company's capital structure. Components of the plan include (i) up to a potential $3.9 million loan from Lee's Pharm ("Lee's Loan") payable to the Company in three equal installments in August, September and October 2017 with the initial installment of $1.3 million received by the Company on August 15, 2017; (ii) a potential $10 million share purchase by Lee's Pharm to acquire a controlling interest in the Company; and (iii) a potential Deerfield loan restructuring resulting in retirement of $25 million in long-term debt.
As of August 15, 2017, after receipt of the initial advance under the Lee's Loan, the Company had cash and cash equivalents of approximately $2.9 million and currently anticipates that, assuming receipt of the two additional installments under the Lee's Loan, and before any additional financings, it will have sufficient cash resources to fund its operations through November 2017.
Readers are referred to, and encouraged to read in its entirety, the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 which includes discussion about the Company's business plans and operations, financial condition and results of operations.
About Windtree Therapeutics
Windtree Therapeutics, Inc. is a clinical-stage biotechnology company focused on developing novel surfactant therapies for respiratory diseases and other potential applications. Windtree's proprietary technology platform includes a synthetic, peptide-containing surfactant (KL4 surfactant) that is structurally similar to endogenous pulmonary surfactant and novel drug-delivery technologies being developed to enable noninvasive administration of aerosolized KL4 surfactant. Windtree is focused initially on improving the management of respiratory distress syndrome (RDS) in premature infants and believes that its proprietary technology may make it possible, over time, to develop a pipeline of KL4 surfactant product candidates to address a variety of respiratory diseases for which there are few or no approved therapies.
To the extent that statements in this press release are not strictly historical, all such statements are forward-looking, and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results, including projections of future cash balances and anticipated cash outflows, to differ materially from the statements made. Examples of such risks and uncertainties include: the risk that, as a development company, with limited resources and no operating revenues, the Company's ability to continue as a going concern in the near term is highly dependent upon the success of AEROSURF clinical trials and whether they are sufficient to support a strategic or financing transaction and enable initiation of phase 3 development; risks that Windtree will be unable to secure significant additional capital as needed, if at all, whether through debt or equity financings, which could result in substantial equity dilution, or other strategic transaction that would also provide support for product development, regulatory and, if approved, commercialize our products, ; risks related to trading of the Company's common stock on the OTCQB® market; risks related to Windtree's AEROSURF development program and other development programs in the future, which may involve time-consuming and expensive pre-clinical studies and clinical trials and which may be subject to potentially significant delays or regulatory holds, or fail; risks related to the development of aerosol delivery systems (ADS) and related components; risks related to technology transfers to contract manufacturers and problems or delays encountered by Windtree, contract manufacturers or third party suppliers and service providers in manufacturing, testing and releasing drug products, drug substances, aerosol delivery systems (ADS) and other materials on a timely basis and in sufficient amounts; risks relating to rigorous regulatory requirements, including that: (i) the FDA or other regulatory authorities may not agree with Windtree on matters raised during regulatory reviews, may require significant additional activities, or may not accept or may withhold or delay consideration of applications, or may not approve or may limit approval of Windtree's products, and (ii) changes in the national or international political and regulatory environment may make it more difficult to gain regulatory approvals; risks related to Windtree's efforts to maintain and protect the patents and licenses related to its products; and other risks and uncertainties described in Windtree's filings with the Securities and Exchange Commission including the most recent reports on Forms 10-K, 10-Q and 8-K, and any amendments thereto.
Windtree Therapeutics, Inc.
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(1) Material non-cash items include depreciation and stock-based compensation included in operating expenses. For each of the three months ended June 30, 2017 and 2016, the charges for depreciation and stock-based compensation were $0.3 million ($0.2 million in R&D and $0.1 million in G & A). For the six months ended June 30, 2017 and 2016, the charges for depreciation and stock-based compensation were $0.7 million ($0.4 million in R&D and $0.3 million in G & A) and $0.9 million ($0.4 million in R&D and $0.5 million in G & A), respectively.
Windtree Therapeutics, Inc.
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