BeyondSpring Reports First-Quarter 2020 Financial Results and Operational Update

 

- PROTECTIVE-2 (Study 106) Phase 3 Interim Analysis This Month to Evaluate Superiority in CIN -

- PROTECTIVE-2 Phase 2 Shows Positive Results in Chemotherapy Optimization with Potentially Better Clinical Outcomes -

- DUBLIN-3 (Study 103 Phase 3) Second Interim Analysis for NSCLC Received DSMB’s Recommendation to Continue Without Modification -

 

NEW YORK, June 11, 2020 – BeyondSpring Inc. (the “Company” or “BeyondSpring”) (NASDAQ: BYSI), a global biopharmaceutical company focused on the development of innovative cancer therapies, announced today its financial results and provided an operational update for the three months ended March 31, 2020.

 

“During the first quarter, we continued to make progress in the two lead indications for Plinabulin for both the prevention of chemotherapy-induced neutropenia (CIN) and treatment of non-small cell lung cancer (NSCLC),” said Dr. Lan Huang, Co-Founder, Chairman and Chief Executive Officer. “Our recent data from PROTECTIVE-2 Phase 2 showed Plinabulin combined with G-CSF improves chemotherapy compliance compared to G-CSF alone, which potentially leads to better clinical outcomes. The Plinabulin-G-CSF combination’s potential to prevent infection and hospitalization becomes even more important to the physicians, patients and the healthcare system in the COVID-19 pandemic. We expect to reach the pre-specified interim analysis for PROTECTIVE-2 Phase 3 this month to evaluate superiority in CIN, which has the potential to mark the first significant enhancement in preventing neutropenia in 30 years.”

 

“With over 1,200 patients enrolled to date for Plinabulin clinical programs, we believe we are well-positioned to capitalize on our upcoming regulatory milestones with multiple New Drug Application (NDA) filings followed by near term commercial opportunities. Looking ahead, we continue to advance our clinical studies to support our view of Plinabulin as a ‘pipeline in a drug’ and believe its potential in improving standard of care in CIN prevention and cancer treatments will help many patients in need globally.”

 

 

Chemotherapy-Induced Neutropenia (CIN)

 

PROTECTIVE-2 Phase 2 for Chemotherapy-Induced Neutropenia Shows Positive Results in Chemotherapy Optimization with Potentially Better Clinical Outcomes

 

In June 2020, BeyondSpring announced that PROTECTIVE-2 Phase 2 superiority trial for CIN shows that Plinabulin in combination with Neulasta (pegfilgrastim), a long-lasting G-CSF, which is a predominant therapy to treat CIN, enables more cancer patients to receive the optimal chemotherapy dose and regimen, which potentially leads to better clinical outcomes.

 

 

 

Plinabulin’s Mechanism of Action Complements Neulasta in Cancer Treatment

 

In May 2020, two Company abstracts were presented at this year’s American Society of Clinical Oncology (ASCO) Virtual Scientific Program, evaluating Plinabulin alongside Neulasta.

 

 

 

Non-Small Cell Lung Cancer (NSCLC)

 

DSMB Recommends DUBLIN-3 Phase 3 NSCLC to Continue Without Modification

 

In June 2020, BeyondSpring reported it had reached the pre-specified second interim analysis for DUBLIN-3 for NSCLC treatment with Plinabulin.

 

 

 

 

Intellectual Properties

 

BeyondSpring Granted U.S. Patent for Plinabulin to Treat Severe CIN from Taxane in Cancer Patients

 

 

 

 

Research and development (“R&D”) expenses were $13.7 million for the quarter ended March 31, 2020, compared to $6.3 million for the quarter ended March 31, 2019. The $7.4 million increase was largely attributable to an increase of $4.4 million in clinical trial expenses and an increase of $3.0 million in non-cash share-based compensation.

 

Selling, general and administrative (“SG&A”) expenses were $2.9 million for the quarter ended March 31, 2020, compared to $1.6 million for the quarter ended March 31, 2019. The $1.3 million increase was mainly due to a $0.6 million increase in commercial and marketing expense, a $0.3 million increase in salary, wages and benefits expense, and a $0.4 million increase in other expenses.

Net loss attributable to the Company was $16.1 million for the quarter ended March 31, 2020, compared to $7.3 million for the quarter ended March 31, 2019.

 

As of March 31, 2020, the Company had a cash balance of $24.9 million. The Company believes currently available financial resources will be sufficient to support its clinical trials and submit NDAs in the U.S. and China for Plinabulin for the CIN and NSCLC indications, as well as to advance its immuno-oncology pipeline and ubiquitination protein degradation research platform.

 

 

The following outlines the Company’s anticipated upcoming milestones and projected timelines:

 

 

 

 

 

 

 

 

About BeyondSpring

 

BeyondSpring is a global clinical-stage biopharmaceutical company focused on the development of innovative immuno-oncology cancer therapies. BeyondSpring’s lead asset, first-in-class agent Plinabulin, is in a Phase 3 global clinical trial as a direct anticancer agent in the treatment of non-small cell lung cancer (NSCLC) and two Phase 3 clinical programs in the prevention of chemotherapy-induced neutropenia (CIN). BeyondSpring has strong R&D capabilities with a robust pipeline in addition to Plinabulin, including three immuno-oncology assets and a drug discovery platform using the ubiquitination degradation pathway. The Company also has a seasoned management team with many years of experience bringing drugs to the global market. BeyondSpring is headquartered in New York City.

 

Cautionary Note Regarding Forward-Looking Statements

 

This press release includes forward-looking statements that are not historical facts. Words such as "will," "expect," "anticipate," "plan," "believe," "design," "may," "future," "estimate," "predict," "objective," "goal," or variations thereof and variations of such words and similar expressions are intended to identify such forward-looking statements. Forward-looking statements are based on BeyondSpring's current knowledge and its present beliefs and expectations regarding possible future events and are subject to risks, uncertainties and assumptions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors including, but not limited to, difficulties raising the anticipated amount needed to finance the Company's future operations on terms acceptable to the Company, if at all, unexpected results of clinical trials, delays or denial in regulatory approval process, results that do not meet our expectations regarding the potential safety, the ultimate efficacy or clinical utility of our product candidates, increased competition in the market, the impact of widespread health developments, including the recent COVID-19 pandemic, and the responses thereto, which could materially and adversely affect, among other things, enrollment of patients in our clinical trials and our expected timeline for data readouts of our clinical trials and certain regulatory filings for our product candidates, unexpected changes to estimates of our expenses, future revenues and capital requirements, and other risks described in BeyondSpring’s most recent Form 20-F on file with the U.S. Securities and Exchange Commission. All forward-looking statements made herein speak only as of the date of this release and BeyondSpring undertakes no obligation to update publicly such forward-looking statements to reflect subsequent events or circumstances, except as otherwise required by law.

 

Contacts

 

Scott Eckstein / Caitlin Kasunich

KCSA Strategic Communications

212.896.1210 / 212.896.1241

 

seckstein@kcsa.com / ckasunich@kcsa.com

BEYONDSPRING INC.

 

AUDITED CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2019 AND

 

UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2020

 

(Amounts in thousands of U.S. Dollars (“$”), except for number of shares and per share data)

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

BEYONDSPRING INC.

 

 UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF

 

COMPREHENSIVE LOSS FOR THE THREE MONTHS ENDED MARCH 31, 2019 AND 2020

 

 (Amounts in thousands of U.S. Dollars (“$”), except for number of shares and per share data)

 

(Unaudited)

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

BEYONDSPRING INC.

 

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

FOR THE THREE MONTHS ENDED MARCH 31, 2019 AND 2020

 

 (Amounts in thousands of U.S. Dollars (“$”))

 

(Unaudited)

 

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

BEYONDSPRING INC.

 

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

BeyondSpring Inc. (the “Company”) was incorporated in the Cayman Islands on November 21, 2014. The Company and its subsidiaries (collectively, the “Group”) are principally engaged in clinical stage biopharmaceutical activities focusing on the development of innovative cancer therapies. The Company is under the control of Mr. Linqing Jia and Dr. Lan Huang as a couple (collectively, the “Founders”) since its incorporation.

As of March 31, 2020, the subsidiaries of the Company are as follows:

 

The accompanying unaudited interim condensed consolidated balance sheet as of March 31, 2020, the unaudited interim condensed consolidated statements of comprehensive loss for the three months ended March 31, 2019 and 2020, the cash flows for the three months ended March 31, 2019 and 2020, and the related footnote disclosures are unaudited. These unaudited interim condensed consolidated financial statements of the Company have been prepared in accordance with U.S. GAAP for interim financial information using accounting policies that are consistent with those used in the preparation of the Company’s audited consolidated financial statements for the year ended December 31, 2019. Accordingly, these unaudited interim condensed consolidated financial statements do not include all of the information and footnotes required by U.S. GAAP for annual financial statements.

 

BEYONDSPRING INC.

 

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements contain all normal recurring adjustments necessary to present fairly the financial position, operating results and cash flows of the Group for each of the periods presented. The results of operations for the three months ended March 31, 2020 are not necessarily indicative of results to be expected for any other interim period or for the full year of 2020. The consolidated balance sheet as of December 31, 2019 was derived from the audited consolidated financial statements at that date but does not include all of the disclosures required by U.S. GAAP for annual financial statements. These unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements for the year ended December 31, 2019.

 

 

Basis of consolidation

 

The unaudited interim condensed consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant intercompany transactions and balances between the Company and its subsidiaries are eliminated upon consolidation.

 

Going concern

 

According to Accounting Standards Codification (“ASC”) 205-40, Presentation of Financial Statements - Going Concern (“ASC 205-40”), management must evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. This evaluation initially does not take into consideration the potential mitigating effect of management’s plans that have not been fully implemented as of the date the financial statements are issued. When substantial doubt exists under this methodology, management evaluates whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the Company’s ability to continue as a going concern. The mitigating effect of management’s plans, however, is only considered if both (1) it is probable that the plans will be effectively implemented within one year after the date that the financial statements are issued, and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued.

The Company has incurred operating losses and negative cash flows from operations since inception. To date, the Company has no product revenue and management expects operating losses to continue for the foreseeable future, and has primarily funded these losses through equity financings. The Company incurred a net loss of $16,662 during the three months ended March 31, 2020 and has an accumulated deficit of $232,929 as of March 31, 2020. Net cash used in operations was approximately $11,050 for the three months ended March 31, 2020. As of March 31, 2020, the Company had $17,546 net current assets and $24,917 of cash and cash equivalents on hand.

 

The Company is implementing a cost reduction plan, which includes the deferral of certain research, development and clinical projects and reduction of administrative expenses until it obtains additional financings. With the implementation of cost reduction plan, the Company anticipates that its current financial resources will enable it to meet its operational expenses and capital expenditures into the second quarter of year 2021.

 

Therefore, the management believes that the substantial doubt about the Company’s ability to continue as a going concern within one year after the date the financial statements are issued has been alleviated. The accompanying unaudited interim condensed consolidated financial statements have been prepared on a going concern basis.

 

BEYONDSPRING INC.

 

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Use of estimates

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting periods. Significant estimates and assumptions reflected in these financial statements include, but are not limited to share-based compensation, clinical trial accrual, valuation allowance for deferred tax assets, estimating uncertain tax position, measurement of right of use assets and lease liabilities and estimating of useful life for property and equipment. Management bases the estimates on historical experience, known trends and various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from these estimates.

 

Fair value measurements

 

The Company measures certain financial assets and liabilities at fair value. Fair value is determined based upon the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, as determined by either the principal market or the most advantageous market. Inputs used in the valuation techniques to derive fair values are classified based on a three-level hierarchy, as follows:

 

 

 

 

ASC 820, Fair Value Measurements and Disclosures (“ASC 820”) describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required to replace an asset.

 

Financial instruments of the Company primarily include cash and cash equivalents, due from related parties, due to related parties, accounts payable and long-term loans. Except for the long-term loans, the carrying values of these financial instruments approximated their fair value due to their short term nature as of December 31, 2019 and March 31, 2020.

 

As of December 31, 2019 and March 31, 2020, the total carrying amount of long-term loans was $1,436 and $1,413, compared with an estimated fair value of $1,373 and $1,214, respectively. The fair value of the long-term loans is estimated by discounting cash flows using interest rates currently available for debts with similar terms and maturities (Level 2 fair value measurement).

 

Recent accounting pronouncements

 

 

 

BEYONDSPRING INC.

 

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Property and equipment consist of the following:

 

Depreciation expenses for the three months ended March 31, 2019 and 2020 were $23 and $15, respectively.

 

 

BEYONDSPRING INC.

 

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

 

 

 

There is no provision for income taxes because the Company and its subsidiaries were in a cumulative loss position for the three months ended March 31, 2019 and 2020.

 

The Company recorded a full valuation allowance against deferred tax assets for all periods presented. There were no material changes in unrecognized tax benefits and related interest and penalties for the three months ended March 31, 2020. The Company does not anticipate that the amount of existing unrecognized tax benefits will significantly change within the next 12 months.

 

 

The movement of equity is as follows:

 

As a result of PRC laws and regulations, the Company’s PRC subsidiaries are restricted in their ability to transfer a portion of their net assets to the Company. As of December 31, 2019 and March 31, 2020, amounts restricted were the net assets of the Company’s PRC subsidiaries, which amounted to $2,032 and $329, respectively.

 

BEYONDSPRING INC.

 

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Basic and diluted net loss per share attributable to ordinary shareholders was calculated as follows:

 

		Three months ended March 31,
		2019				2020
		(Unaudited)				(Unaudited)
Numerator:
Net loss attributable to BeyondSpring Inc.—basic and diluted		$	(7,293	)		$	(16,084	)
Denominator:
Weighted average number of ordinary shares outstanding—basic and diluted			23,029,362				27,732,449
Net loss per share —basic and diluted		$	(0.32	)		$	(0.58)

The effects of restricted shares and share options were excluded from the calculation of diluted loss per share as their effect would have been anti-dilutive during the three months ended March 31, 2019 and 2020.

 

Other current liabilities consist of the following:

 

		As of December 31,				As of March 31,
		2019				2020
			$				$
							(Unaudited)
Compensation related			226				207
Professional services			-				543
Other taxes related			798				810
Other			65				125
Total			1,089				1,685

BEYONDSPRING INC.

 

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

 

During the three months ended March 31, 2020, the Company granted a total of 381,301 share options and 3,293 restricted shares, respectively.

 

The following table summarizes total share-based compensation expense recognized for the three months ended March 31, 2019 and 2020:

 

		Three months ended March 31,
		2019				2020
			$				$
			(Unaudited)				(Unaudited)
Research and development			156				3,183
Selling, general and administrative			215				287
Total			371				3,470

---