Pfenex Reports Second Quarter 2015 Results And Provides Business Update

SAN DIEGO, Aug. 13, 2015 /PRNewswire/ -- Pfenex Inc. (NYSE MKT: PFNX), a clinical-stage biotechnology company engaged in the development of biosimilar therapeutics, including high value and difficult to manufacture proteins, today reported financial results for the second quarter ended June 30, 2015 and provided a business update.

"Pfenex made significant progress in the second quarter of 2015, and we expect to provide key pipeline updates over the course of 2015 and into 2016.  Specifically, we look forward to updating you on progress for PF530, our biosimilar candidate to Betaseron later in 2015 as well as on PF708, our generic to Forteo, which we expect to enter bioequivalence studies in 2H15,"  stated Bertrand C. Liang, chief executive officer of Pfenex.  "In April, we completed a follow-on offering with net proceeds to the company of approximately $37 million after the deduction of underwriter discounts and offering expenses.   Our net cash balance as of the end of the second quarter was approximately $123 million which positions us well as we continue advancing our pipeline of biosimilar protein and generic peptide candidates."

Business Updates

• Pfenex initiated a Phase 1 trial of PF530, a biosimilar candidate to Betaseron, in the first quarter of 2015, with results expected in 2H15.
• PF708, our peptide generic to Forteo, is expected to enter a bioequivalence study in 2H15.   
• In 2015 Pfenex will assist in the manufacturing technology transfer of PF582, our biosimilar candidate to Lucentis, to Hospira's manufacturing site, and we expect that the Phase 3 PF582 trial will initiate in 2016.
• Pfenex expects to initiate the Phase 1 trial for its recombinant anthrax vaccine in 2H2015.
• In April, Pfenex completed a follow-on public offering pursuant to which we sold 2,610,000 shares of common stock and certain existing stockholders sold 4,140,000 shares of common stock at a per-share price of $15.50. The total proceeds the Company received from the offering were approximately $38.0 million, net of underwriting discounts and commissions of approximately $2.4 million. After deducting estimated offering expenses of approximately $0.6 million, net proceeds to us were approximately $37.4 million.

Financial Highlights for the Second Quarter

Total Revenue decreased by $1.0 million, or 30%, to $2.3 million in the three month period ended June 30, 2015 compared to $3.3 million in same period in 2014. The decrease in revenue was due to the stage of development of our Px563L product candidate under our government contracts and the decrease in activity related to our protein production service work, partially offset by an increase in license revenue and sales of our reagent protein products. We expect revenue related to our protein production services to decline in the near-term as we shift our resources to developing our product pipeline.

Cost of revenue decreased by approximately $1.6 million, or 64%, to $0.9 million in the three month period ended June 30, 2015 compared to $2.5 million in same period in 2014. The decrease in cost of revenue was due primarily to the stage of development of our Px563L product candidate under our government contracts. Given the nature of the novel vaccine development process, these costs will fluctuate depending on stage of development.

Research and development expenses increased by approximately $2.7 million, or 320%, to $3.6 million in the three month period ended June 30, 2015 compared to $0.9 million in same period in 2014. The increase in research and development expenses was due to the increase in development activity on our product candidates PF708 and PF530 and the hiring of additional personnel dedicated to our research and development efforts. PF530 was removed from the Joint Development License Agreement with Strides in February 2015 and initiated a Phase 1 trial for PF530 in March 2015. We expect research and development costs will increase going forward as we independently advance PF530 as a wholly-owned product candidate. Additionally, we expect research and development expenses to increase as we advance our other lead candidates and pipeline product candidates. For example, under our agreement with Hospira, we will share the confirmatory clinical study costs for PF582 with our share capped at $20 million, $10 million of which will be setoff as a credit against royalties payable to us unless the collaboration agreement is terminated prior to such setoff.

Selling, general and administrative expenses increased by $1.7 million, or 82%, to $3.7 million in the three month period ended June 30, 2015 compared to $2.0 million in the same period in 2014. The increase in selling, general and administrative expenses was due to an increase in activities associated with operating as a publicly-traded company. We expect general and administrative costs to increase for activities associated with operating as a publicly-traded company, including maintaining compliance with exchange listing and Securities and Exchange Commission requirements.

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