Yahoo Finance AVIR - Cash-Rich With Three Pivotal Trials Underway; Reports Third Quarter Financial Results
NASDAQ:AVIR Financial Update: On May 5, 2016 AVIR (AVIR) reported financial results for the third quarter ending March 31, 2016. Royalty revenue amounted to $5.3 million as compared to $5.9 million in the same period in 2015. The reduced Relenza® government stockpiling orders and termination of contract with BARDA in 2014 contributed to the decrease in revenue recognition. The decline in royalty revenue from the sale of Relenza® and Inavir® is not unusual given the variability in the start of the flu season. Although the flu season recurs annually and runs from November to March, the timing and severity is a little hard to predict. For instance, due to the variability in the flu season in years 2014 and 2015 with 2014 experiencing an earlier than normal flu season, the Relenza and Inavir sales in Q2 and Q3 2015 were lower as compared to the same periods in 2014. Sales can fluctuate significantly between sequential quarters due to the variability in timing of government stock piling orders and the flu season. Due to this reason, our revenue estimates from royalty sales for Q2 and Q3 2016 were very different from the actual numbers. If sales from past flu seasons are an indication of what to expect in the current year, AVIR could realize similar numbers in Q4 2016. R&D expense in Q3 2015 was $8.5 million as compared to $4.8 million in the same period in 2015. Higher clinical costs were a result of the ongoing Phase 2b SPIRITUS trial for vapendavir and initiation of Phase 2 trials involving BTA585 and BTA074. Management noted on the call that they expect R&D expenses will be on the upward swing in the coming quarters as AVIR continues its clinical development related to vapendavir, BTA585 and BTA074. G&A expenses came in at $2.3 million. The net loss in Q3 2016 was $5.2 million (EPS of $0.14). The company’s cash position as of March 31, 2016 was $50.0 million in cash, cash equivalents, and short and long-term investments and was augmented by an additional $20 million from the sale of a portion of the royalties it receives from the flu medication, Inavir®. Business Update: We would like to remind investors that timelines regarding clinical trials remain the same as we noted in our previous update. The Phase 2b HRV SPIRITUS trial of vapendavir is progressing as expected and management noted on the conference call that they are anticipating having the results during 2H 2016. In February 2016, the company received positive news from the FDA. By recognizing BTA585 s potential to address the unmet medical need to treat RSV infections, the FDA granted Fast Track designation status for the development program of BTA585 that is being developed to treat RSV infections. The Fast Track program was put into place under the FDA Modernization Act of 1997. The Fast Track designation allows expedited review of new drugs that are intended to treat serious conditions as well as demonstrate the potential to address an unmet medical need. The designation allows AVIR to have a rolling review with the FDA during the submission process and this is because the Fast Track designation allows the following: Since no treatment for RSV infections currently exists, the Fast Track program will be beneficial for AVIR since the frequent communication between the FDA and AVIR s management will be required to ensure proper execution of clinical trials so that relevant data that the FDA deems important for gaining approval can be collected. With positive trial results from SAD and MAD studies and the recent Fast Track designation by the FDA, management initiated the Phase 2a RSV challenge efficacy study in the beginning of April 2016, as anticipated. The Phase 2a trial is a double-blind, placebo-controlled study is designed to evaluate the safety, pharmacokinetics, and antiviral activity of orally dosed BTA585 in healthy volunteers challenged intranasally with RSV. Following a positive test for RSV or five days after challenge, approximately 60 healthy adults will be randomized to receive either BTA585 or placebo. Subjects will be dosed twice daily for seven days and monitored for 28 days. Management is anticipating trial results during 2H 2016. If trial results are favorable, the firm will plan for a Phase 2b natural exposure trial shortly after. The first subject was dosed in the Phase 2 double-blind, randomized, placebo-controlled trial to evaluate the safety, tolerability and efficacy of BTA074 5% gel in male and female patients with condyloma, or anogenital warts, caused by human papillomavirus (HPV) types 6 & 11. The trial results were anticipated during 1H 2017 initially. However, due to an unforeseen delay in supplying the clinical trial materials that are required at the clinical sites, management updated guidance for top-line data, which is now expected sometime in 2H 2017. Management noted on the conference call that they are planning to add more clinical trial sites in order to help increase patient recruitment and obtain outcomes more quickly. While adding trial sites is a feasible option for completing enrollment to reach the study completion goal by 1H 2017, it may incrementally increase R&D expense. AVIR Inked $20 Million Non-Dilutive Royalty Agreement On April 25, 2016 AVIR inked a royalty agreement with HealthCare Royalty Partners. The transaction yielded net proceeds of $20 million to AVIR in exchange for an undisclosed portion of the firm s royalty rights to Inavir. With the closing of this transaction, the company s cash position is expected to be in the $75- $80 million range. This cash raise is in line with AVIR s strategy of generating non-dilutive financing by monetizing royalty assets, which relieves burden on shareholders. The current transaction with HealthCare Royalty Partners who have offered $20 million at the outset, gives AVIR a large influx of cash that will allow the company to spur the development of the next generation of direct-acting antivirals to treat infectious diseases as well as accelerate their clinical trial programs. At the same time, retaining a portion of the royalty will allow AVIR to benefit from the potential growth and anticipated future revenues of Inavir. In March 2016, the company sold certain assets (related to early stage antibiotics) to a newly formed subsidiary of Spero Therapeutics, LLC, a Cambridge-based biopharmaceutical company that develops novel therapies for the treatment of bacterial infections. As the company s core product offering are antiviral products, the sale of a noncore product is a strategic move by management. Financial terms of the transaction were not disclosed. READ THE FULL RESEARCH REPORT HERE SUBSCRIBE TO ZACKS SMALL CAP RESEARCH to receive our articles and reports emailed directly to you each morning. Please visit our website for additional information on Zacks SCR and to view our disclaimer.
Application (NDA) on a rolling basis. This implies that AVIR can submit those sections of an NDA that are completed, to be reviewed by the FDA, instead of waiting to complete every section and then submit the entire application for review.
Frequent communication (written/in-person meeting) with the FDA to discuss the clinical development plan and trial design for the drug
Relaying relevant data to support drug approval
Eligibility for an accelerated approval and priority review, including the submission of a New Drug
