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Windtree Therapeutics Reports First Quarter 2017 Financial Results and Provides Key Business Updates
AEROSURF® Phase 2b On-Track for Top Line Results in July 2017

WARRINGTON, Pa., May 15, 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 first quarter ended March 31, 2017 and provided key business updates. 

Windtree Therapeutics, Inc. - Striving to deliver hope for a lifetime

Key Business and Financial Updates

  • Enrollment in the AEROSURF® phase 2b clinical trial in up to 240 premature infants 28 to 32 week gestational age for respiratory distress syndrome (RDS) is progressing according to previous guidance and the Company expects to announce top-line results from this study in July 2017.
  • The Company previously reported the successful completion of the second and final planned AEROSURF 2b clinical trial interim safety review; the independent Data Safety Monitoring Board (DSMB) recommended continuing the trial without modification.
  • Enrollment in the third dose group of the AEROSURF phase 2a clinical trial in 48 premature infants 26 to 28 week gestational age for RDS is progressing and the Company now expects to complete enrollment and announce top-line results by July 2017.
  • In February 2017, the Company completed a private placement offering of convertible preferred stock units which generated net proceeds of approximately $10.5 million, including $1.6 million of non-cash consideration in the form of a reduction in amounts due for current development services that otherwise would have become payable in cash in the first and second quarters of 2017. 
  • As of March 31, 2017, the Company had cash and cash equivalents of $8.0 million and the Company anticipates that its currently existing cash resources are sufficient to fund its operations through the planned completion of the AEROSURF phase 2b clinical trial and announcement of top-line results.
  • Effective May 5, 2017, the Company's common stock shares began trading on the OTCQB® Market (OTCQB) under the symbol "WINT."

"The first quarter of 2017 was marked with significant progress for Windtree. As a result of expanding our phase 2b clinical program across 50 sites globally, we experienced an increasing rate of patient screening and enrollment. This achievement, along with clearing the final interim safety review, has us well positioned to deliver top-line data in July 2017," commented Craig Fraser, President and Chief Executive Officer. "The first quarter also saw Windtree successfully complete a private placement in February to fund our operations through announcement of top line phase 2b data in July 2017. We are looking forward to completing the phase 2b enrollment and sharing the top-line results with the medical and investor communities in approximately two months."

Select Financial Results for the First Quarter ended March 31, 2017

For the quarter ended March 31, 2017, the Company reported an operating loss of $8.1 million, compared to $13.9 million for the first quarter of 2016.

Grant revenue for the first quarter of 2017 was $0.2 million compared to $0.1 million for the first quarter of 2016. Grant revenue for 2017 and 2016 primarily represents funds received and expended under Small Business Innovation Research (SBIR) grants from the National Institutes of Health (NIH) to study the Company's aerosolized KL4 surfactant as (i) a medical countermeasure to mitigate acute and chronic/late-phase radiation-induced lung injury; and, (ii) to provide support for the AEROSURF phase 2b clinical trial in premature infants 28 to 32 week gestational age with RDS.

Research and development expenses were $6.4 million for the first quarter of 2017, compared to $10.4 million for the first quarter of 2016. The decrease was due to (i) reductions in AEROSURF phase 2 clinical development program costs including decreases in clinical trial site start-up costs and production of aerosol delivery systems; and (ii) cost reduction measures initiated in the second quarter of 2016.

General and administrative expenses for the first quarter of 2017 were $1.9 million, compared to $3.7 million for the first quarter of 2016. The decrease was primarily due to (i) cost reduction measures initiated in the second quarter of 2016; and (ii) a $1.2 million severance charge during the first quarter of 2016 associated with the termination of our former CEO.

Interest expense for the first quarter of 2017 and 2016 was $0.6 million.

The Company reported a net loss of $8.7 million for the quarter ended March 31, 2017, compared to a net loss of $13.9 million for the comparable period in 2016.

In addition, in the first quarter of 2017, the Company reported a $3.6 million one-time, non-cash deemed dividend on preferred stock, resulting in a net loss attributable to common shareholders of $12.3 million ($1.37 per basic share) on 9.0 million weighted-average common shares outstanding for the quarter ended March 31, 2017, compared to a net loss of $13.9 million ($1.70 per basic share) on 8.2 million weighted average common shares outstanding for the comparable period in 2016.

As of March 31, 2017, the Company had cash and cash equivalents of $8.0 million. Net operating cash outflows before financing activities for the first quarter of 2017 were $7.4 million. In February 2017, the Company completed a private placement offering of 7,049 Series A Convertible Preferred Stock units at a purchase price per unit of $1,495 for net proceeds of approximately $10.5 million, including $1.6 million of non-cash consideration in the form of a reduction in amounts due for current development services that otherwise would have become payable in cash in the first and second quarters of 2017. Each unit consists of one share of Series A Convertible Preferred Stock, which is convertible into 1,000 shares of the Company's common stock at a conversion price of $1.37 per share, and 1,000 Series A-1 seven-year warrants to purchase one share of the Company's common stock at an exercise price of $1.37. In addition, for the first quarter, we completed registered offerings under our at-the-market equity sales program resulting in net proceeds to us of $1.0 million

Based on current projections and development timelines, the Company anticipates that it has sufficient cash to support its operations through the planned completion of the AEROSURF phase 2b clinical trial and the release of top line results, which is expected in July 2017.

In addition, as of March 31, 2017, the Company reported current liabilities of $24.8 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, and may be deferred one year if certain conditions are satisfied. The non-current portion of long-term debt is due in February 2019.

Readers are referred to, and encouraged to read in its entirety, the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 which includes discussion about the Company's business plans and operations, financial condition and results of operations.

About AEROSURF®
Windtree's lead product candidate is AEROSURF®, a novel, investigational drug/device combination product that combines the Company's proprietary KL4 surfactant and aerosolization technologies.  AEROSURF is being developed to potentially reduce or eliminate the need for endotracheal intubation and mechanical ventilation in the treatment of premature infants with respiratory distress syndrome (RDS).  Enrollment is ongoing in a phase 2b clinical trial in up to 240 premature infants 28 to 32-week gestational age receiving nasal continuous positive airway pressure (nCPAP) for RDS, comparing AEROSURF to infants receiving nCPAP alone.  The phase 2b trial is a global trial with clinical sites in North America, Europe and Latin America.

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.

For more information, please visit the Company's website at www.windtreetx.com.

Forward-Looking Statements
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 successful completion of the AEROSURF phase 2b clinical trial, which is expected in July 2017, and obtaining results sufficient to support a strategic or financing transaction; risks that Windtree will be unable to secure significant additional capital as needed, and may be unable in a timely manner, if at all, to identify potential strategic transactions (including strategic partnerships and other transactions) that would provide funding and support product development, regulatory and, if approved, commercialize our products, or to access debt or equity financings, which could result in substantial equity dilution; 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 transfer of the Company's common stock to the  OTCQB® market operated by The OTC Markets, Inc., following the suspension of the Company's common stock from The Nasdaq Capital Market ; risks related to technology transfers to contract manufacturers and problems or delays encountered by Windtree, contract manufacturers or suppliers in manufacturing 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.


Condensed Consolidated
Statement of Operations


(in thousands, except per share
data)




Three Months Ended


March 31,


(unaudited)


2017


2016

Revenues:




Grant revenue

$             219


$              75





Operating expenses: (1)




Research and development

6,413


10,360

General and administrative

1,922


3,657

Total expenses

8,335


14,017





Operating loss

(8,116)


(13,942)





Change in fair value of common stock warrant
liability (1)

 


 

223

Interest income / (expense), net

(608)


(615)

Other income / (expense), net


433

Net loss

$    (8,724)


$    (13,901)





Deemed dividend on preferred stock

(3,604)






Net loss attributable to common shareholders

$    (12,328)


$    (13,901)





Net loss per common share – basic and diluted

$        (1.37)


$        (1.70)





Weighted avg. common shares outstanding – basic
and diluted

8,998


8,191


(1) Material non-cash items include the change in fair value of certain outstanding warrants accounted for as derivative liabilities, and in operating expenses, depreciation and stock-based compensation.  For the three months ended March 31, 2017 and 2016, the charges for depreciation and stock-based compensation were $0.4 million ($0.2 million in R&D and $0.2 million in G & A) and $0.7 million ($0.3 million in R&D and $0.4 million in G & A), respectively.

 

 

Windtree Therapeutics, Inc.

Condensed Consolidated Balance Sheets

(in thousands)



March 31,


December 31,



2017


2016



(unaudited)



ASSETS





Current Assets:





Cash and cash equivalents


$              8,022


$              5,588

Prepaid interest, current portion


1,094


1,094

Prepaid expenses and other current assets


392


512

Total current assets


9,508


7,194






Property and equipment, net


1,018


1,054

Restricted cash


225


225

Prepaid interest, non-current portion


956


1,226

Total Assets


$              11,707


$              9,699






LIABILITIES AND STOCKHOLDERS' EQUITY





Current Liabilities:





Accounts payable, collaboration payable, accrued expenses and current
portion of long-term debt


$              24,836


$              13,391






Long-term debt, non-current portion


12,500


25,000

Other liabilities


131


138

Stockholders' Equity


(25,760)


(28,830)

Total Liabilities and Stockholders' Equity


$              11,707


$             9,699

 

 

SOURCE Windtree Therapeutics, Inc.

For further information: John Tattory, Senior Vice President and Chief Financial Officer, 215.488.9418, jtattory@windtreetx.com

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