The Q2 beat and positive cash flow was all from the $45m collaboration payment from Elanco. The company guides that they expect another $6m in 2H. Including that pay and inventory build they expect to burn $35m of their cash balance of $110m
Balance sheet isn't great with $40m in debt and $110m in equity and only $57m in net tangible assets.
All signal a likely secondary equity raise soon to capitalize on the FDA approval and price increase.
charts are worth watching as the weekly indicates this move could be just beginning while the daily looks ripe for a correction though $9 has held so far.
Bottom line for me: This looks like a solid longer term company but expect to see a pullback. Planning to maintain a smallish position and add after they raise needed equity.
To recap pipeline below is company chart. 3 approved drugs
1) Galliprant FDA approved Q1-2016. License deal with Elanco which generated the $45m Q2 upfront. Additional milestone pays in future with co-promotion costs to PETX 10Q disclosure: GALLIPRANT osteoarthritis pain and inflammation On April 22, 2016, the Company entered into a Collaboration, License, Development and Commercialization Agreement (the “Collaboration Agreement”) with Elanco pursuant to which the Company granted Elanco rights to develop, manufacture, market and commercialize the Company’s products based on licensed grapiprant rights and technology (the “Product”), including GALLIPRANT (grapiprant tablets), an FDA-approved therapeutic for the control of pain and inflammation associated with osteoarthritis in dogs. Pursuant to the Collaboration Agreement, Elanco will have exclusive rights globally outside the United States and co-exclusive rights with the Company in the United States during the term of the Collaboration Agreement.
Under the terms of the Collaboration Agreement, the Company received a non-refundable, non-creditable upfront payment of $45,000. The Company is entitled to a $4,000 milestone payment upon European approval of GALLIPRANT for the treatment of pain and inflammation, another $4,000 payment u pon achievement of a development milestone related to the manufacturing of GALLIPRANT, and payments up to $75,000 upon the achievement of certain sales milestones. The sales milestone payments are subject to a one -third reduction for each year the occurrence of the milestone is not achieved beyond December 31, 2021, with any non-occurrence beyond December 31, 2023 cancelling out the applicable milestone payment obligation entirely.
The Collaboration Agreement also provides that Elanco will pay the Company royalty payments on a percentage of net sales in the mid-single to low-double digits. The Company is responsible for all development activities required to obtain the first registration or regulatory approval for the Product for use in dogs in each of the European Union (“the EU Product Regist ration”) and the United States, and Elanco is responsible for all other development activities. First registration for the Product in the U.S. was achieved before the completion of the Collaboration Agreement. In addition, the Company and Elanco have agreed to pay 25% and 75% , respectively, of all third-party development fees and expenses through December 31, 2018 in connection with preclinical and clinical trials necessary for any additional registration or regulatory approval of the Products, provided that the Company’s contribution to such development fees and expenses is capped at $7,000 (“R&D Cap”). Commencing on the effective date of the Collaboration Agreement, the Company is responsible for the manufacture and supply of all of Elanco’s reasonable requirements of GALLIPRANT under the supply terms agreed upon pursuant to the Collaboration Agreement . However, Elanco retains the ability to assume all or a portion of the manufacturing responsibility during the term of the Collaboration Agreement. The parties have agreed under the Collaboration Agreement to negotiate and enter into a supply agreement formalizing the terms of supply of active product ingredients and/or finished GALLIPRANT by the Company to Elanco.
On April 22, 2016, in connection with the Collaboration Agreement, the Company entered into a Co-Promotion Agreement (the “Co-Promotion Agreement”) with Elanco to co-promote the Product in the United States. Under the terms of the Co-Promotion Agreement, Elanco has agreed to pay the Company, as a fee for promotional services performed and expenses incurred by the Company under the Co-Promotion Agreement, (i) 25% of the gross margin on net sales of Product sold in the United States under the Collaboration Agreement prior to December 31, 2018 (unless extended by mutual agreement), and (ii) a mid-single digit percentage of net sales of the Product in the United States after December 31, 2018 through 2028 (unless extended by mutual agreement).
2) Entyce (appetite stimulation) FDA approved Q2-2016. We intend to commercially launch ENTYCE in the United States in the first quarter of 2017 in conjunction with the North American Veterinary Conference and other major veterinary conferences
3) Nocity (post-operative pain) FDA approved Q3-2016. Expect launch late C16 Ramping commerical team including sales force now which is included in company cash burn guide.
Pipeline description in 10Q AT-002 for cats
During the second quarter of 2016, we received concurrence from the FDA on the protocol for a pivotal field effectiveness study. We anticipate initiating this pivotal study in late 2016 with a cat specific formulation.
AT-003 for cats
In July 2016, we initiated the pivotal field effectiveness study for post-operative pain management in cats under a FDA concurred protocol.
AT-006 for cats
During 2014, we completed a field study of AT-006 as an anti-viral for the treatment of feline herpes virus induced ophthalmic conditions. We have subsequently been working on a refined formulation to meet the regulatory standards for both the U.S. and Europe and exploring how to move the product candidate into a pivo tal field effectiveness study. We had been collaborating and sharing the cost of developing AT-006 with Elanco but on May 11, 2016, we and Elanco agreed to terminate the Exclusive License, Development, and Commercialization Agreement that granted Elanco global rights for development and commercialization of licensed animal health products for AT-006 . In consideration for the return of the global rights for AT-006, we will be required to pay Elanco a low single-digit royalty on any product sales, if any, up to an amount in the low-single digit millions. We now fully control the global rights to AT-006, and we are planning to conduct a pilot study and eventually move forward with pivotal work that we anticipate will enable us to submit for regulatory approval for the product candidate.
AT-016 for dogs
As of April 2016, our exclusive license partner responsible for development, VetStem Biopharma, Inc. (“VetStem”), received concurrence from the FDA on the protocol for a pivotal field effectiveness and safety study. We anticipate VetStem will initiate the pivotal field effectiveness study for dogs with pain associated with osteoarthritis in 2016.
AT-018 for dogs
At the end of the first quarter of 2016, we closed enrollment of a multi-center, masked, placebo-controlled, randomized pilot field study in client-owned dogs with atopic dermatitis. We and our license partner, Atopix Therapies, Ltd, expect high-level results in the third quarter of 2016. In July 2016, we met with the FDA to discuss the regulatory path forward, and in preparation for the pivotal program, we intend to initiate an additional pilot field study in 2016.
We expect to continue to incur operating losses for the next several years as we work to develop and commercialize our product candidates. As a result, we expect to seek to fund our operations through corporate collaborations and licensing arrangements, as well as public or private equity offerings or further debt financings.
Additionally, the loan agreement requires that we maintain certain minimum liquidity at all times, which as of June 30, 2016, was approximately $20.0 million. As of the date of the filing of this Quarterly Report on Form 10-Q, we believe that our existing cash and cash equivalents and short-term investments of $109.5 million will allow us to fund our operations at least through June 30, 2017.
On October 16, 2015, we entered into a Sales Agreement with Barclays Capital Inc. (“Barclays”) pursuant to which we may sell from time to time, at our option, up to an aggregate of $52.0 million of shares of our common stock (the “Shares”) through Barclays, as sales agent. Sales of the Shares, if any, will be made under our previously filed and currently effective Registration Statement on Form S-3 (Reg. No. 333-197414), by means of ordinary brokers’ transactions on the NASDAQ Global Market or otherwise. Additionally, under the terms of the Sales Agreement, the Shares may be sold at market prices, at negotiated prices or at prices related to the prevailing market price. We will pay Barclays a commission of 2.75% of the gross proceeds from the sale of the Shares, if any. As of the date of this filing, we have not sold any shares pursuant to the Sales Agreement.
Under: Been on the sidelines for a bit holding (building) cash. Now that "BIGLEY" has rolled out the tax plan its time to jump in.
Dec 21, 2017 19:06:02 GMT -6
martyc: Looks like you are buying Msft again!
Dec 15, 2017 11:23:29 GMT -6
martyc: The news that Trump called Rupert to congratulate him sure seems to indicate that this is heading to approval
Dec 15, 2017 11:22:23 GMT -6
Under: DIS finally getting some traction.?
Dec 14, 2017 17:08:45 GMT -6
martyc: I took an entry level position in DIS. Will add eventually to overweight when it becomes clearer that the deal will go thru. Can't believe how well positioned they will be. 60% Hulu. 20% of content watched on NFLX they can pull. More in thread
Dec 14, 2017 11:05:16 GMT -6
Under: Great posts on $DIS
Dec 13, 2017 17:50:49 GMT -6
Under: $ROKU Citron on a war path.
Nov 28, 2017 15:11:20 GMT -6
Under: $HAS takeover bid for $MAT?
Nov 10, 2017 16:16:07 GMT -6
martyc: Not looking like the market will provide any discounted opp for SGMO. Call was just too professional and all signs indicate they are on a great path for commercialization. Happy with core but wish I had some trading shs
Nov 10, 2017 9:04:05 GMT -6
martyc: For anyone looking to find an entry point into SGMO, I'm almost hoping is sells off in next few days so I can add more. They are really clicking but the fact they haven't signed new deals might cause some to exit. Watching as I have room for trading shs
Nov 9, 2017 18:28:09 GMT -6
martyc: Been an interesting ride so far. I figured the Bears would be about this good but hoped the O wouldn't look so lame. Another building yr but still possible to get to 8-8 IMO
Nov 9, 2017 18:26:08 GMT -6
Under: whats up with your Bears this year Marty?
Nov 9, 2017 17:35:25 GMT -6
martyc: Hope you were long ROKU. I wanted to see Q first so missed out
Nov 9, 2017 7:08:53 GMT -6