Release – Tonix Pharmaceuticals Initiates Phase 1 Trial of TNX-1500 (Fc-modified humanized anti-CD40L mAb) in Healthy Volunteers

Research News and Market Data on TNXP

August 16, 2023 7:00am EDT

Single Ascending Dose Escalation Study to Evaluate the Safety, Tolerability, Pharmacokinetics, and Pharmacodynamics of TNX-1500

Study Designed to Support Planned Phase 2 Trial in Prevention of Kidney Transplant Rejection

Multiple Possible Indications, Including Bone Marrow Transplantation and Autoimmune Diseases: Potential Pipeline in a Product

TNX-1500 is the First of Tonix’s Internally-Developed Biologic Candidates to Reach the Clinic

CHATHAM, N.J., Aug. 16, 2023 (GLOBE NEWSWIRE) — Tonix Pharmaceuticals Holding Corp. (Nasdaq: TNXP), a biopharmaceutical company with marketed products and a pipeline of development candidates, today announced the initiation of a Phase 1 single ascending dose escalation study of TNX-1500 (Fc-modified humanized anti-CD40L monoclonal antibody or mAb) in healthy volunteers. The primary objectives of the study are to assess the safety, tolerability, pharmacokinetics and pharmacodynamics of intravenous (IV) TNX-1500.

TNX-1500 is in development for the prevention of kidney transplant rejection and other potential transplant and autoimmune disorder indications. Recent animal studies indicate that TNX-1500 prevents organ rejection and preserves graft function either as a single agent or in combination with other drugs.1,2 Eligible participants enrolled in the Phase 1 study will be evaluated regularly over a 120-day period after dosing. Target enrollment is 36 participants. Initiation of this first-in-human study is intended to support dosing in a planned Phase 2 trial in kidney transplant recipients.

“Despite advancements in the field of solid organ transplantation, there remains a significant need for new treatments with improved activity and tolerability,” said Seth Lederman, M.D., Chief Executive Officer of Tonix Pharmaceuticals. “TNX-1500 has demonstrated single agent activity for long-term organ acceptance and induction of tolerance in animals.1,2 Potentially related to its activity, in preclinical studies, TNX-1500 preserves T regulatory cells, or Tregs, which are key to maintaining tolerance to grafts as well as to self-antigens. We believe TNX-1500 has the potential to prevent organ transplant rejection and improve long-term graft survival with reduced long-term toxicity burden compared to current immunosuppressive regimens. In addition, TNX-1500 has the potential to address multiple indications, including a number of autoimmune diseases. The range of potential indications suggests ‘pipeline in a product’ potential.”

“We are excited to advance TNX-1500 into the clinic by initiating this Phase 1 trial,” said Dr. Greg Sullivan, Chief Medical Officer of Tonix. “TNX-1500 is a third generation anti-CD40L mAb that has been designed by protein engineering to decrease FcγRIIA binding. Preclinical studies in non-human primates demonstrated that TNX-1500 is active in preventing allograft organ rejection and is well tolerated. Specifically, thrombotic complications associated with first generation anti-CD40L mAbs, were not observed, suggesting that the protein engineering underlying TNX-1500 has achieved its design goals.”

Dr. Lederman continued, “Recently, positive clinical data with other CD40L blockers have been reported by Sanofi, with its Fc-modified humanized anti-CD40L mAb frexalimab in treating relapsing multiple sclerosis,3 and from Horizon Therapeutics plc with its tn03 fusion protein dazodalibep in treating Sjögren’s syndrome.4,5   UCB is in Phase 3 development with its anti-CD40L pegylated Fab, dapirolizumab pegol, for the treatment of systemic lupus erythematosus.6 Based on results from animals, we consider Fc-modified humanized TNX-1500 to be a potential best-in-class therapeutic in the CD40L blocker space.”  

CD40L is a member of the TNF-α superfamily, which includes TNF-α and RANKL. TNF-α is the target for several established drugs, including Humira® (adalimumab), Remicade® (infliximab), Enbrel® (etanercept), and Cimzia® (certolizumab). RANKL is targeted by Prolia® and Xgeva® (denosumab). Emerging TNF-α superfamily targets for therapeutics include TL1A, CD30L, Ox40L, and 41BBL. Merck acquired Prometheus Biosciences for its anti-TL1A and anti-CD30L programs.

Dr. Lederman concluded, “TNX-1500 is the first of Tonix’s internally-developed biologic candidates to reach the clinic. Tonix owns worldwide rights to TNX-1500, which are unencumbered by royalties. Our ability to develop and advance protein therapeutics is facilitated by our Research and Development Center (RDC) in Frederick, Md. and our Advanced Development Center (ADC) in Dartmouth, Mass.”

About TNX-1500

TNX-1500 (Fc-modified humanized anti-CD40L mAb) is a humanized monoclonal antibody that interacts with the CD40-ligand (CD40L), which is also known as CD154. TNX-1500 is being developed for the prevention of allograft and xenograft rejection, for the treatment of autoimmune diseases and for the prevention of graft-versus-host disease (GvHD) after hematopoietic stem cell transplantation (HCT). A Phase 1 study of TNX-1500 was initiated in the third quarter of 2023. Two articles have recently published in the American Journal of Transplantation that demonstrate TNX-1500 prolongs non-human primate renal and heart allograft survival1,2.

  1. Lassiter, G., et al. (2023). TNX-1500, a crystallizable fragment–modified anti-CD154 antibody, prolongs non-human primate renal allograft survival. American Journal of Transplantation. April 3, 2023. https://doi.org/10.1016/j.ajt.2023.03.022
  2. Miura, S., et al. (2023) TNX-1500, a crystallizable fragment–modified anti-CD154 antibody, prolongs non-human primate cardiac allograft survival. American Journal of Transplantation. April 6, 2023. https://doi.org/10.1016/j.ajt.2023.03.025
  3. Sanofi press release May 31, 2023 “Press Release: Positive Phase 2 data of novel investigational anti-CD40L antibody frexalimab show significantly reduced disease activity in relapsing multiple sclerosis”: https://www.sanofi.com/en/media-room/press-releases/2023/2023-05-31-05-00-00-2678991 (accessed August 11 2023)
  4. Horizon press release September 12, 2022 “Horizon Therapeutics plc Announces Phase 2 Trial Evaluating Dazodalibep for the Treatment of Sjögren’s Syndrome Meets Primary Endpoint” https://ir.horizontherapeutics.com/news-releases/news-release-details/horizon-therapeutics-plc-announces-phase-2-trial-evaluating (accessed August 11 2023)
  5. Horizon Press Release January 18, 2023 “Horizon Therapeutics plc Announces Phase 2 Trial Evaluating Dazodalibep for the Treatment of Sjögren’s Syndrome Meets Primary Endpoint in the Second Study Population; Only Phase 2 Trial to Meet Primary Endpoint in Both Patient Populations ”https://ir.horizontherapeutics.com/news-releases/news-release-details/horizon-therapeutics-plc-announces-phase-2-trial-evaluating-0 (accessed August 11 2023)
  6. https://www.ucb.com/our-science/pipeline (accessed August 11 2023)

Tonix Pharmaceuticals Holding Corp.*

Tonix is a biopharmaceutical company focused on commercializing, developing, discovering and licensing therapeutics to treat and prevent human disease and alleviate suffering. Tonix Medicines, our commercial subsidiary markets Zembrace® SymTouch® (sumatriptan injection) 3 mg and Tosymra® (sumatriptan nasal spray) 10 mg under a transition services agreement with Upsher-Smith Laboratories from whom the products were acquired on June 30, 2023. Zembrace SymTouch and Tosymra are each indicated for the treatment of acute migraine with or without aura in adults. Tonix’s development portfolio is composed of central nervous system (CNS), rare disease, immunology and infectious disease product candidates. Tonix’s CNS development portfolio includes both small molecules and biologics to treat pain, neurologic, psychiatric and addiction conditions. Tonix’s lead development CNS candidate, TNX-102 SL (cyclobenzaprine HCl sublingual tablet), is in mid-Phase 3 development for the management of fibromyalgia, having completed enrollment of a potentially confirmatory Phase 3 study in the third quarter of 2023, with topline data expected in the fourth quarter of 2023. TNX-102 SL is also being developed to treat fibromyalgia-type Long COVID, a chronic post-acute COVID-19 condition. Enrollment in a Phase 2 proof-of-concept study has been completed, and topline results are expected in the third quarter of 2023. TNX-601 ER (tianeptine hemioxalate extended-release tablets) is a once-daily oral formulation being developed as a treatment for major depressive disorder (MDD), that completed enrollment in a Phase 2 proof-of-concept study in the third quarter of 2023, with topline results expected in the fourth quarter of 2023. TNX-4300 (estianeptine) is a single isomer version of TNX-601, small molecule oral therapeutic in preclinical development to treat MDD, Alzheimer’s disease and Parkinson’s disease. Relative to tianeptine, estianeptine lacks activity on the µ-opioid receptor while maintaining activity in the rat Novel Object Recognition test in vivo and the ability to activate PPAR-β/δ and neuroplasticity in tissue culture. TNX-1900 (intranasal potentiated oxytocin), is in development for preventing headaches in chronic migraine, and has completed enrollment in a Phase 2 proof-of-concept study with topline data expected in the fourth quarter of 2023. TNX-1900 is also being studied in binge eating disorder, pediatric obesity and social anxiety disorder by academic collaborators under investigator-initiated INDs. TNX-1300 (cocaine esterase) is a biologic designed to treat cocaine intoxication and has been granted Breakthrough Therapy designation by the FDA. A Phase 2 study of TNX-1300 is expected to be initiated in the third quarter of 2023. Tonix’s rare disease development portfolio includes TNX-2900 (intranasal potentiated oxytocin) for the treatment of Prader-Willi syndrome. TNX-2900 has been granted Orphan Drug designation by the FDA. Tonix’s immunology development portfolio includes biologics to address organ transplant rejection, autoimmunity and cancer, including TNX-1500, which is a humanized monoclonal antibody targeting CD40-ligand (CD40L or CD154) being developed for the prevention of allograft rejection and for the treatment of autoimmune diseases. A Phase 1 study of TNX-1500 was initiated in the third quarter of 2023. Tonix’s infectious disease pipeline includes TNX-801, a vaccine in development to prevent smallpox and mpox. TNX-801 also serves as the live virus vaccine platform or recombinant pox vaccine platform for other infectious diseases. The infectious disease development portfolio also includes TNX-3900 and TNX-4000, which are classes of broad-spectrum small molecule oral antivirals.

*Tonix’s product development candidates are investigational new drugs or biologics and have not been approved for any indication.

Tonix Medicines has contracted to acquire the Zembrace SymTouch and Tosymra registered trademarks. Intravail is a registered trademark of Aegis Therapeutics, LLC, a wholly owned subsidiary of Neurelis, Inc.

This press release and further information about Tonix can be found at www.tonixpharma.com.

Forward Looking Statements

Certain statements in this press release are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may be identified by the use of forward-looking words such as “anticipate,” “believe,” “forecast,” “estimate,” “expect,” and “intend,” among others. These forward-looking statements are based on Tonix’s current expectations and actual results could differ materially. There are a number of factors that could cause actual events to differ materially from those indicated by such forward-looking statements. These factors include, but are not limited to, risks related to the failure to obtain FDA clearances or approvals and noncompliance with FDA regulations; risks related to the failure to successfully market any of our products; risks related to the timing and progress of clinical development of our product candidates; our need for additional financing; uncertainties of patent protection and litigation; uncertainties of government or third party payor reimbursement; limited research and development efforts and dependence upon third parties; and substantial competition. As with any pharmaceutical under development, there are significant risks in the development, regulatory approval and commercialization of new products. Tonix does not undertake an obligation to update or revise any forward-looking statement. Investors should read the risk factors set forth in the Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the Securities and Exchange Commission (the “SEC”) on March 13, 2023, and periodic reports filed with the SEC on or after the date thereof. All of Tonix’s forward-looking statements are expressly qualified by all such risk factors and other cautionary statements. The information set forth herein speaks only as of the date thereof.

Investor Contact

Jessica Morris
Tonix Pharmaceuticals
investor.relations@tonixpharma.com
(862) 904-8182

Peter Vozzo
ICR Westwicke
peter.vozzo@westwicke.com
(443) 213-0505

Media Contact

Ben Shannon
ICR Westwicke
ben.shannon@westwicke.com
(919) 360-3039

Source: Tonix Pharmaceuticals Holding Corp.

Released August 16, 2023

Release – Cocrystal Pharma Reports Second Quarter 2023 Financial Results and Provides Updates on its Antiviral Drug Development Programs

Research News and Market Data on COCP

AUGUST 14, 2023

  • On track to begin a Phase 2a trial in the second half of 2023 with CC-42344 for the treatment of pandemic and seasonal influenza A
  • Selected the novel protease inhibitor CDI-988 as development lead in the oral norovirus program
  • CDI-988, the first potential dual coronavirus-norovirus oral antiviral, was cleared by the Australian regulatory agency for evaluation in healthy volunteers

BOTHELL, Wash., Aug. 14, 2023 (GLOBE NEWSWIRE) — Cocrystal Pharma, Inc. (Nasdaq: COCP) (Cocrystal or the Company) reports financial results for the three and six months ended June 30, 2023, and provides updates on its antiviral pipeline, upcoming milestones and business activities.

“This is an eventful time for Cocrystal with notable advancements in developing our pipeline of highly promising antivirals,” said Sam Lee, Ph.D., President and co-CEO of Cocrystal. “With our novel oral PB2 inhibitor CC-42344 for the treatment of pandemic and seasonal influenza A, we are building on the favorable data from our Phase 1 trial with the submission of an application for UK MHRA (Medicine and Healthcare Products Regulatory Agency) approval to begin a Phase 2a human challenge trial later this year.

“In our COVID-19 program, we received approval from the Australian regulatory agency in late May to begin a first-in-human trial with our novel, broad-spectrum oral protease inhibitor CDI-988. Earlier this month we announced the selection of CDI-988 as our lead oral norovirus candidate. This Phase I study is designed to access the safety, tolerability, and pharmacokinetics of CDI-988 for both our COVID-19 and our norovirus programs. We expect to report top-line data of CDI-988 Phase 1 study in 2024.”

“We have a number of significant near-term inflection points with our three leading antiviral programs including the commencement of multiple clinical trials,” said James Martin, CFO and co-CEO. “I’m pleased to report that under our cost-efficient business model, we believe our current cash position is sufficient to fund our planned operations for the next 12 months.”

Antiviral Product Pipeline Overview

We are developing therapeutics that inhibit the viral replication function of RNA viruses that cause acute and chronic diseases. Our drug discovery process focuses on the highly conserved regions of the viral enzymes and inhibitor-enzyme interactions at the atomic level. It differs from traditional, empirical medicinal chemistry approaches that often require iterative high-throughput compound screening and lengthy hit-to-lead processes. By designing and selecting antiviral drug candidates that interrupt the viral replication process and have specific binding characteristics, we seek to develop drugs that are effective against both the virus and mutants of the virus, and also have reduced off-target interactions that may cause undesirable clinical side effects.

Influenza Programs

Influenza is a severe respiratory illness caused by the influenza A or B virus that results in disease outbreaks mainly during the winter months. The global seasonal influenza market including diagnostics, treatments and vaccines is projected to reach up to $27.95 billion by 2029, according to Data Bridge Market Research.

  • Pandemic and Seasonal Influenza A
    • Our novel oral PB2 inhibitor CC-42344 has shown excellent antiviral activity against influenza A strains including pandemic and seasonal strains, as well as strains that are resistant to Tamiflu® and Xofluza®.
    • In March 2022 we initiated enrollment in a randomized, double-controlled, dose-escalating Phase 1 trial to evaluate the safety, tolerability and pharmacokinetics (PK) of orally administered CC-42344 in healthy adults.
    • In April 2022 we announced preliminary Phase 1 trial data demonstrating a favorable safety and PK profile in the first two cohorts in the single-ascending-dose portion of the study.
    • In July 2022 we reported PK results from the single-ascending-dose portion of the study that support once-daily dosing.
    • In December 2022 we reported favorable safety and tolerability results from the CC-42344 Phase 1 trial.
    • We entered into an agreement with a UK-based clinical research organization to conduct a Phase 2a human challenge study to evaluate safety, and viral and clinical measures of orally administered CC-42344 in influenza A-infected subjects.
    • We submitted an application to the United Kingdom Medicines and Healthcare Products Regulatory Agency to conduct the Phase 2a human challenge study and, pending clearance, we expect to initiate the study in the second half of 2023.
    • Preclinical development is underway with an inhaled formulation of CC-42344 as a potential treatment and prophylaxis for influenza A. We expect to complete active pharmaceutical ingredient (API) manufacturing in preparation for toxicity studies, and to begin the Phase 1 clinical trial in the first half of 2024.

  • Pandemic and Seasonal Influenza A/B Program


    • In January 2019 we entered into an Exclusive License and Research Collaboration Agreement with Merck Sharp & Dohme Corp. (Merck) to discover and develop certain proprietary influenza antiviral agents that are effective against both influenza A and B strains. This agreement includes milestone payments of up to $156 million plus royalties on sales of products discovered under the agreement.
    • In January 2021 we announced completion of all research obligations under the agreement, making Merck solely responsible for further preclinical and clinical development of these compounds.
    • In early 2023 Merck notified us of its intent to continue development of the proprietary compounds discovered under this agreement and of their filing on behalf of both companies of multiple U.S. and international patent applications associated with these compounds. Merck continues to be responsible for managing the patents.

COVID-19 and Other Coronavirus Programs

By targeting viral replication enzymes and protease, we believe it is possible to develop effective treatments for all diseases caused by coronaviruses including COVID-19, Severe Acute Respiratory Syndrome (SARS) and Middle East Respiratory Syndrome (MERS). Our main SARS-CoV-2 protease inhibitors showed potent in vitro pan-viral activity against common human coronaviruses, rhinoviruses and respiratory enteroviruses that cause the common cold, as well as against noroviruses that can cause symptoms of acute gastroenteritis.

  • Oral Protease Inhibitor CDI-988
    • In August 2023 we announced the selection of CDI-988 as our lead candidate for development as a potential oral treatment for SARS-CoV-2. Designed and developed using our proprietary structure-based drug discovery platform technology, CDI-988 targets a highly conserved region in the active site of SARS-CoV-2 3CL (main) protease required for viral RNA replication.
    • CDI-988 exhibited superior in vitro potency against SARS-CoV-2 with activity maintained against variants of concern, and demonstrated a safety profile and PK properties that are supportive of once-daily dosing.
    • In May 2023 we announced approval of our application to the Australian regulatory agency for a planned randomized, double-blind, placebo-controlled Phase 1 trial in healthy volunteers.
    • We believe the FDA’s guidance for further development of our antiviral candidate CDI-45205 (described below) assists us in designing a subsequent Phase 2 trial for CDI-988.

  • Intranasal/Pulmonary Protease Inhibitor CDI-45205


    • CDI-45205 is our novel SARS-CoV-2 3CL (main) protease inhibitor and was among the broad-spectrum viral protease inhibitors we obtained from Kansas State University Research Foundation (KSURF) under an exclusive license agreement announced in April 2020. We believe the protease inhibitors obtained from KSURF have the ability to inhibit the inactive SARS-CoV-2 polymerase replication enzymes into an active form.
    • CDI-45205 and several analogs showed potent in vitro activity against the main SARS-CoV-2 variants, surpassing the activity observed with the original Wuhan strain of the virus.
    • CDI-45205 demonstrated good bioavailability in mouse and rat PK studies via intraperitoneal injection, and no cytotoxicity against a variety of human cell lines. CDI-45205 also demonstrated a strong synergistic effect with the FDA-approved COVID-19 medicine remdesivir.
    • In January 2022 we received guidance from the FDA regarding further preclinical and clinical development of CDI-45205, which provides a clearer pathway for future development.
    • An IND-enabling study is ongoing with CDI-45205.
  • Replication Inhibitors
    • We are using our proprietary structure-based drug discovery platform technology to discover replication inhibitors for orally administered therapeutic and prophylactic treatments for SARS-CoV-2. Replication inhibitors hold potential to work with protease inhibitors in combination therapy regimens.

Norovirus Program

  • In August 2023 we announced our selection of the novel broad-spectrum 3CL protease inhibitor CDI-988 as our lead potential oral treatment for norovirus. CDI-988 is approved for evaluation in a first-in-human trial in healthy volunteers in Australia, and that trial is expected to serve as the Phase 1 trial for both our norovirus and our coronavirus programs.
  • With no approved treatments or vaccines, norovirus represents a significant unmet medical need. It is a highly contagious infection and is the most common cause of acute gastroenteritis, accounting for nearly one in five cases. According to the Centers for Disease Control and Prevention (CDC), an estimated 685 million cases and an estimated 200,000 deaths are attributed to norovirus each year worldwide, with an estimated societal cost of $60 billion.

Hepatitis C Program

  • We are seeking a partner to advance development of CC-31244 following the successful completion of a Phase 2a trial. This compound has shown favorable safety and preliminary efficacy in a triple-regimen Phase 2a trial in combination with Epclusa (sofosbuvir/velpatasvir) for the ultra-short duration treatment of individuals infected with the hepatitis C virus (HCV).
  • HCV is a viral infection of the liver that causes both acute and chronic infection. The World Health Organization estimated that 58 million people worldwide had chronic HCV infection in 2019. 

Corporate Updates

  • In April we announced the appointment of Fred Hassan to our Board of Directors. Mr. Hassan’s distinguished 40-year career includes serving in senior executive and director positions at global pharmaceutical companies and leading investment firms. He currently is Chairman of the investment firm Caret Group and a Director of Warburg Pincus LLC, a global private equity firm.
  • In April we completed a $4.0 million private placement offering of common stock with Mr. Hassan and Phillip Frost, M.D., a Company co-founder and director, who currently is Chairman and CEO of OPKO Health.

Second Quarter Financial Results

Research and development (R&D) expenses for the second quarter of 2023 were $2.8 million, compared with $2.4 million for the second quarter of 2022. The increase was primarily due to preparations for a Phase 2a clinical trial with CC-42344 for pandemic and seasonal influenza A, and preparations for advancing CDI-988’s COVID-19 and norovirus programs toward a Phase 1 clinical trial.

General and administrative (G&A) expenses for the second quarter of 2023 were $1.5 million, compared with $1.4 million for the second quarter of 2022, with the increase primarily due to professional fees and general corporate cost increases.

The net loss for the second quarter of 2023 was $4.2 million, or $0.41 per share, compared with the net loss for the second quarter of 2022 of $24.4 million, or $3.00 per share. The second quarter of 2022 included a legal settlement of $1.6 million, which was returned to the Company in the third quarter of 2023 following a successful appeal of the trial court’s summary judgment ruling. In the second quarter of 2022, the Company also recorded a non-cash goodwill impairment of $19.1 million.

Six Month Financial Results

R&D expenses for the six months ended June 30, 2023 were $6.7 million, compared with $5.2 million for the first six months of 2022. G&A expenses for the six months ended June 30, 2023 and 2022 were unchanged at $2.7 million.

During the first six months of 2022, the Company recorded a $19.1 million non-cash goodwill impairment. There was no comparable impairment charge during the first six months of 2023.

The net loss for the six months ended June 30, 2023 was $9.4 million, or $1.03 per share. The net loss for the six months ended June 30, 2022 was $28.6 million, or $3.48 per share, and reflected the litigation expense and non-cash impairment charge described above.

Cocrystal reported unrestricted cash as of June 30, 2023 of $32.4 million, compared with $37.1 million as of December 31, 2022. Net cash used in operating activities for the first six months of 2023 was $8.7 million. The Company had working capital of $34.1 million and 10.2 million common shares outstanding as of June 30, 2023. During the second quarter of 2023, the Company raised $4.0 million in a private placement offering of common stock that was priced “at-the-market” under Nasdaq Listing Rules.

About Cocrystal Pharma, Inc.

Cocrystal Pharma, Inc. is a clinical-stage biotechnology company discovering and developing novel antiviral therapeutics that target the replication process of influenza viruses, coronaviruses (including SARS-CoV-2), noroviruses and hepatitis C viruses. Cocrystal employs unique structure-based technologies and Nobel Prize-winning expertise to create first- and best-in-class antiviral drugs. For further information about Cocrystal, please visit www.cocrystalpharma.com.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our plans for the future development of preclinical and clinical drug candidates, our expectations regarding future characteristics of the product candidates we develop, the expected time of achieving certain value-driving milestones in our programs, including, preparation, commencement and advancement of clinical studies for certain product candidates in 2023 and beyond, the viability and efficacy of potential treatments for coronavirus and other diseases, expectations for the markets for certain therapeutics, our ability to execute our clinical and regulatory goals and deploy regulatory guidance towards future studies, the expected sufficiency of our cash balance to advance our programs and fund our planned operations, and our liquidity. The words “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “could,” “target,” “potential,” “is likely,” “will,” “expect” and similar expressions, as they relate to us, are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events. Some or all of the events anticipated by these forward-looking statements may not occur. Important factors that could cause actual results to differ from those in the forward-looking statements include, but are not limited to, the risks and uncertainties arising from the risks arising from interest rate increases in response to inflation, uncertainty in the financial markets, the possibility of a recession and the Ukraine war on our Company, our collaboration partners, and on the U.S., U.K., Australia and global economies, including manufacturing and research delays arising from raw materials and labor shortages, supply chain disruptions and other business interruptions including any adverse impacts on our ability to obtain raw materials and test animals as well as similar problems with our vendors and our current and any future CROs and contract manufacturing organizations (CMOs), the ability of our CROs to recruit volunteers for, and to proceed with, clinical studies, our reliance on Merck for further development in the influenza A/B program under the license and collaboration agreement, our and our collaboration partners’ technology and software performing as expected, financial difficulties experienced by certain partners, the results of any current and future preclinical and clinical trials, general risks arising from clinical trials, receipt of regulatory approvals, regulatory changes, development of effective treatments and/or vaccines by competitors, including as part of the programs financed by the U.S. government, potential mutations in a virus we are targeting which may result in variants that are resistant to a product candidate we develop, and the outcome of the ongoing litigation with the insurance company. Further information on our risk factors is contained in our filings with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2022. Any forward-looking statement made by us herein speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

Investor Contact:
LHA Investor Relations
Jody Cain
310-691-7100
jcain@lhai.com

Media Contact:
JQA Partners
Jules Abraham
917-885-7378
Jabraham@jqapartners.com

Financial Tables to follow

 COCRYSTAL PHARMA, INC.

CONSOLIDATED BALANCE SHEETS
(in thousands)

  June 30, 2023  December 31, 2022 
   (unaudited)     
Assets        
Current assets:        
Cash $32,419  $37,144 
Restricted cash  75   75 
Tax credit receivable  1,207   716 
Prepaid expenses and other current assets  1,200   2,243 
Total current assets  34,901   40,178 
Property and equipment, net  305   342 
Deposits  46   46 
Operating lease right-of-use assets, net (including $72 and $99 respectively, to related party)  167   274 
Total assets $35,419  $40,840 
         
Liabilities and stockholders’ equity        
Current liabilities:        
Accounts payable and accrued expenses $1,421  $976 
Current maturities of finance lease liabilities     7 
Current maturities of operating lease liabilities (including $62 and $59 respectively, to related party)  166   233 
Total current liabilities  1,587   1,216 
Long-term liabilities:        
         
Operating lease liabilities (including $10 and $42 respectively, to related party)  10   57 
         
Total liabilities  1,597   1,273 
         
Commitments and contingencies        
         
Stockholders’ equity:        
Common stock, $0.001 par value; 150,000 shares authorized as of June 30, 2023, and December 31, 2022; 10,174 and 8,143 shares issued and outstanding as of June 30, 2023 and December 31, 2022  10   8 
Additional paid-in capital  341,957   337,489 
Accumulated deficit  (308,145)  (297,930)
Total stockholders’ equity  33,822   39,567 
Total liabilities and stockholders’ equity $35,419  $40,840 

COCRYSTAL PHARMA, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share data)

  Three months ended
June 30,
  Six months ended
June 30,
 
  2023  2022  2023  2022 
Operating expenses:                
Research and development  3,661   2,361   7,568   5,233 
General and administrative  1,538   1,375   2,742   2,708 
Legal settlement     1,600      1,600 
Impairments     19,092      19,092 
Total operating expenses  5,199   24,428   10,310   28,633 
                 
Loss from operations  (5,199)  (24,428)  (10,310)  (28,633)
Other income (expense):                
Interest income (expense), net  140      140   (1)
Foreign exchange loss  33   (1)  (45)  (14)
Change in fair value of derivative liabilities     1      12 
Total other expense, net  173      95   (3)
Net loss $(5,026) $(24,428)  (10,215)  (28,636)
Net loss per common share, basic and diluted $(0.50) $(3.00)  (1.12)  (3.48)
Weighted average number of common shares outstanding, basic and diluted  10,065   8,143   9,109   8,143 

# # #

Source: Cocrystal Pharma, Inc.

Released August 14, 2023

Release – PDS Biotech Reports Second Quarter 2023 Financial Results and Provides Business Update

Research News and Market Data on PDSB

  • Successful submission of final clinical protocol and supporting CMC information to FDA to initiate Phase 3 VERSATILE-003 trial in the fourth quarter 2023
  • Biomarker data from VERSATILE-002 to be presented at ESMO 2023
  • Company to host conference call and webcast today at 8:00 AM EDT

PRINCETON, N.J., Aug. 14, 2023 (GLOBE NEWSWIRE) — PDS Biotechnology Corporation (Nasdaq: PDSB) (PDS Biotech or the Company), a clinical-stage immunotherapy company developing a growing pipeline of targeted cancer immunotherapies and infectious disease vaccines based on the Company’s proprietary T cell activating platforms, will discuss its financial results for the quarter ended June 30, 2023 and provide a business update on its conference call today.

Recent Business Highlights:
PDS0101 Lead Drug Candidate

  • VERSATILE-003: Submitted the final Phase 3 clinical protocol and supporting Chemistry, Manufacturing and Controls (CMC) information to the U.S. Food and Drug Administration (FDA) to enable initiation of the VERSATILE-003 randomized, controlled multicenter study of PDS0101 in combination with Merck’s anti-PD-1 therapy, KEYTRUDA® (pembrolizumab) in patients with human papillomavirus (HPV) 16-positive recurrent and/or metastatic head and neck cancer in the fourth quarter 2023
  • VERSATILE-002: Phase 2 open-label, multicenter study of PDS0101 in combination with KEYTRUDA® in patients with human papillomavirus (HPV) 16-positive recurrent and/or metastatic head and neck cancer
    • Announced clinical immune response data to be presented at upcoming European Society for Medical Oncology (ESMO) Congress 2023
      • Biomarker data highlighting HPV16-specific killer and helper T cell responses will be presented
    • Presented interim data at the 2023 American Society of Clinical Oncology (ASCO) annual meeting, demonstrating a 12-month overall survival rate of 87%, with only 8% of patients experiencing Grade 3 treatment-related adverse events, and no reports of more severe Grade 4 or 5 adverse events
    • Achieved the efficacy threshold in Stage 2 of this clinical trial for the naïve patient arm
      • 14 patients in the immune checkpoint inhibitor (ICI) naïve arm experienced either a complete response or partial response on two consecutive scans 9-12 weeks apart, constituting a confirmed objective response. This result suggests that PDS0101 has a statistically significant additive effect over published results of ICI monotherapy
    • Completed enrollment in the ICI naïve arm and expect final data readout in mid-2024

PDS0301 Antibody-Conjugated Interleukin 12 (IL-12)

  • PDS0301 + docetaxel: Phase 2, open label, single-arm trial of PDS0301 in combination with docetaxel in metastatic castration sensitive and castration resistant prostate cancer, led by the National Cancer Institute (NCI)
    • Announced selection of abstract for oral presentation by the NCI at the upcoming Cytokines 2023 Annual Meeting on October 15-18, 2023
    • The Phase 2 clinical trial is investigating the safety, immune responses, and clinical activity of the combination in metastatic prostate cancer patients
    • First clinical trial of an immunocytokine with docetaxel in prostate cancer patients

Business Highlights

  • PDS Biotech was added to the broad-market Russell 2000® and Russell 3000® Indexes in June 2023

“We continue to make significant strides with our lead candidate, PDS0101, specifically with the regulatory and clinical activities necessary to initiate the VERSATILE-003 trial, as well as with progression of the Phase 2 VERSATILE-002 clinical trial,” stated Dr. Frank Bedu-Addo, CEO of PDS Biotech. “In the second quarter, at ASCO 2023, we presented interim data from VERSATILE-002 which revealed an impressive estimated 12-month overall survival rate of 87% and a progression-free survival of 10.4 months, while maintaining a favorable safety profile when PDS0101 is combined with KEYTRUDA®. The reported 12-month overall survival rate for immune checkpoint inhibitors is 30-50%. These encouraging findings fuel our enthusiasm as we prepare to initiate the Phase 3 VERSATILE-003 clinical trial in which patient overall survival will be the primary trial outcome in the fourth quarter of 2023.”

Dr. Bedu-Addo further commented, “In addition to our enthusiasm for PDS0101, we are thrilled about the prospects of PDS0301 which we believe may potentially overcome some of the key safety and efficacy limitations of current cytokines. We are excited about the NCI’s abstract acceptance at the upcoming Cytokines 2023 annual meeting. We anticipate these results have the potential to offer valuable insights into the use of PDS0301 in conjunction with chemotherapy for various solid tumors, presenting a promising avenue for future development and commercialization possibilities.”

Second Quarter 2023 Financial Results

Net loss for the three months ended June 30, 2023 was approximately $11.5 million, or ($0.37) per basic share and diluted share, compared to a net loss of approximately $5.8 million, or ($0.20) per basic share and diluted share, for the three months ended June 30, 2022. The higher net loss this quarter was primarily due to costs incurred in connection with our research and development programs.

Research and development expenses increased to $8.0 million for the three months ended June 30, 2023 from $3.8 million for the three months ended June 30, 2022. The increase of $4.2 million is primarily attributable to an increase of $1.4 million in clinical trials, $0.5 million in personnel costs, including $0.2 million in non-cash stock-based compensation, and $2.3 million in manufacturing expenses.

General and administrative expenses increased to $4.7 million for the three months ended June 30, 2023 from $3.3 million for the three months ended June 30, 2022. The increase of $1.4 million is primarily attributable to an increase of $0.5 million in personnel costs, including $0.4 million in non-cash stock-based compensation and $0.9 million in professional fees.

Cash and cash equivalents as of June 30, 2023, totaled approximately $60.6 million. Based on the company’s cash resources, PDS Biotech believes this amount is sufficient to fund operations and research and development programs for 12 months following the filing of the Company’s June 2023 Quarterly Report on Form 10-Q which will be filed as of the date of this press release.

Conference Call and Webcast

The conference call is scheduled to begin at 8:00 AM EDT today, August 14, 2023. Participants should dial 877-407-3088 (United States) or 201-389-0927 (International) and reference conference ID 13731437. To access the webcast, please use the following link. The event will be archived in the investor relations section of PDS Biotech’s website for six months.

About PDS Biotechnology
PDS Biotech is a clinical-stage immunotherapy company developing a growing pipeline of targeted cancer and infectious disease immunotherapies based on our proprietary Versamune®, Versamune® plus PDS0301, and Infectimune® T cell-activating platforms. We believe our targeted immunotherapies have the potential to overcome the limitations of current immunotherapy approaches through the activation of the right type, quantity and potency of T cells. To date, our lead Versamune® clinical candidate, PDS0101, has demonstrated the ability to reduce and shrink tumors and stabilize disease in combination with approved and investigational therapeutics in patients with a broad range of HPV16-associated cancers in multiple Phase 2 clinical trials and will be advancing into a Phase 3 clinical trial in combination with KEYTRUDA® for the treatment of recurrent/metastatic HPV16-positive head and neck cancer in 2023. Our Infectimune® based vaccines have also demonstrated the potential to induce not only robust and durable neutralizing antibody responses, but also powerful T cell responses, including long-lasting memory T cell responses in pre-clinical studies to date. To learn more, please visit www.pdsbiotech.com or follow us on Twitter at @PDSBiotech.

About Versamune®
Versamune® is a novel investigational T cell activating platform which effectively stimulates a precise immune system response to a cancer-specific protein. Versamune® based investigational immunotherapies promote a potent targeted T cell attack against cancers expressing the protein. They are given by subcutaneous injection and can be combined with standard of care treatments. Clinical data suggest that Versamune® based investigational immunotherapies, such as PDS0101, demonstrate meaningful disease control by reducing and shrinking tumors, delaying disease progression and/or prolonging survival. Versamune® based immunotherapies have demonstrated minimal toxicity to date that may allow them to be safely combined with other treatments. We believe Versamune® based investigational immunotherapies represent a transformative treatment approach for cancer patients to provide improved efficacy, safety and tolerability.

About PDS0101
PDS0101, PDS Biotech’s lead candidate, is a novel investigational human papillomavirus (HPV)-targeted immunotherapy that stimulates a potent targeted T cell attack against HPV-positive cancers. PDS0101 is given by subcutaneous injection alone or in combination with other immunotherapies and cancer treatments. In a Phase 1 study of PDS0101 in monotherapy, the treatment demonstrated the ability to generate multifunctional HPV16 targeted CD8 and CD4 T cells with minimal toxicity. Interim data suggests PDS0101 generates clinically effective immune responses and the combination of PDS0101 with other treatments can demonstrate significant disease control by reducing or shrinking tumors, delaying disease progression, and/or prolonging survival. The combination of PDS0101 with other treatments does not appear to compound the toxicity of other agents.

About PDS0301
PDS0301 is a novel investigational tumor-targeting antibody-conjugated Interleukin 12 (IL-12) that enhances the proliferation, potency and longevity of T cells in the tumor microenvironment. PDS0301 is given by a subcutaneous injection. PDS0301 is designed to improve the safety profile of IL-12 and to enhance the anti-tumor response.

Forward Looking Statements
This communication contains forward-looking statements (including within the meaning of Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended) concerning PDS Biotechnology Corporation (the “Company”) and other matters. These statements may discuss goals, intentions and expectations as to future plans, trends, events, results of operations or financial condition, or otherwise, based on current beliefs of the Company’s management, as well as assumptions made by, and information currently available to, management. Forward-looking statements generally include statements that are predictive in nature and depend upon or refer to future events or conditions, and include words such as “may,” “will,” “should,” “would,” “expect,” “anticipate,” “plan,” “likely,” “believe,” “estimate,” “project,” “intend,” “forecast,” “guidance”, “outlook” and other similar expressions among others. Forward-looking statements are based on current beliefs and assumptions that are subject to risks and uncertainties and are not guarantees of future performance. Actual results could differ materially from those contained in any forward-looking statement as a result of various factors, including, without limitation: the Company’s ability to protect its intellectual property rights; the Company’s anticipated capital requirements, including the Company’s anticipated cash runway and the Company’s current expectations regarding its plans for future equity financings; the Company’s dependence on additional financing to fund its operations and complete the development and commercialization of its product candidates, and the risks that raising such additional capital may restrict the Company’s operations or require the Company to relinquish rights to the Company’s technologies or product candidates; the Company’s limited operating history in the Company’s current line of business, which makes it difficult to evaluate the Company’s prospects, the Company’s business plan or the likelihood of the Company’s successful implementation of such business plan; the timing for the Company or its partners to initiate the planned clinical trials for PDS0101, PDS0203 and other Versamune® and Infectimune® based product candidates; the future success of such trials; the successful implementation of the Company’s research and development programs and collaborations, including any collaboration studies concerning PDS0101, PDS0203 and other Versamune® and Infectimune® based product candidates and the Company’s interpretation of the results and findings of such programs and collaborations and whether such results are sufficient to support the future success of the Company’s product candidates; the success, timing and cost of the Company’s ongoing clinical trials and anticipated clinical trials for the Company’s current product candidates, including statements regarding the timing of initiation, pace of enrollment and completion of the trials (including the Company’s ability to fully fund its disclosed clinical trials, which assumes no material changes to the Company’s currently projected expenses), futility analyses, presentations at conferences and data reported in an abstract, and receipt of interim or preliminary results (including, without limitation, any preclinical results or data), which are not necessarily indicative of the final results of the Company’s ongoing clinical trials; any Company statements about its understanding of product candidates mechanisms of action and interpretation of preclinical and early clinical results from its clinical development programs and any collaboration studies; and other factors, including legislative, regulatory, political and economic developments not within the Company’s control. The foregoing review of important factors that could cause actual events to differ from expectations should not be construed as exhaustive and should be read in conjunction with statements that are included herein and elsewhere, including the other risks, uncertainties, and other factors described under “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in the documents we file with the U.S. Securities and Exchange Commission. The forward-looking statements are made only as of the date of this press release and, except as required by applicable law, the Company undertakes no obligation to revise or update any forward-looking statement, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.

Versamune® and Infectimune® are registered trademarks of PDS Biotechnology Corporation.

KEYTRUDA® is a registered trademark of Merck Sharp and Dohme LLC, a subsidiary of Merck & Co., Inc., Rahway, N.J., USA.

Investor Contacts:
Deanne Randolph
PDS Biotech
Phone: +1 (908) 517-3613
drandolph@pdsbiotech.com 

Rich Cockrell
CG Capital
Phone: +1 (404) 736-3838
pdsb@cg.capital 

Media Contacts:
Tiberend Strategic Advisors, Inc.
Dave Schemelia
Phone: +1 (609) 468-9325
dschemelia@tiberend.com 

Eric Reiss
Phone: +1 (802) 249-1136
ereiss@tiberend.com

PDS BIOTECHNOLOGY CORPORATION AND SUBSIDIARY
Condensed Consolidated Balance Sheets
 
 June 30, 2023 December 31, 2022
ASSETS(unaudited)  
Current assets:   
Cash and cash equivalents$60,624,991  $73,820,160 
Prepaid expenses and other assets 2,725,958   2,660,230 
Total current assets 63,350,949   76,480,390 
      
Property and equipment, net 143,600    
Financing lease right-to-use assets 220,213   374,888 
Operating lease right-to-use asset 39,488   152,645 
      
Total assets$63,754,250  $77,007,923 
      
LIABILITIES AND STOCKHOLDERS’ EQUITY     
Current liabilities:     
Accounts payable$4,414,905  $1,219,287 
Accrued expenses 3,376,325   8,313,708 
Financing lease obligation-short term 53,309   56,612 
Operating lease obligation-short term 59,650   231,429 
Total current liabilities 7,904,189   9,821,036 
      
Noncurrent liabilities:     
Note payable, net of debt discount 23,254,367   23,020,844 
Financing lease obligation-long term 151,505   164,013 
Total liabilities:$31,310,061  $33,005,893 
      
      
STOCKHOLDERS’ EQUITY     
Common stock, $0.00033 par value, 75,000,000 shares authorized at June 30, 2023
and December 31, 2022, 30,868,188 shares and 30,170,317 shares issued and
outstanding at June 30, 2023 and December 31, 2022, respectively
 10,188   9,956 
Additional paid-in capital 155,187,231   145,550,491 
Accumulated deficit (122,753,230)  (101,558,417)
Total stockholders’ equity 32,444,189   44,002,030 
      
Total liabilities and stockholders’ equity$63,754,250  $77,007,923 
 
PDS BIOTECHNOLOGY CORPORATION AND SUBSIDIARY
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
 
 Three Months Ended June 30, Six Months Ended June 30,
  2023   2022   2023   2022 
Operating expenses:               
Research and development expenses$8,004,852  $3,761,646  $13,848,538  $8,922,961 
General and administrative expenses 4,691,321   3,331,006   8,270,049   6,648,913 
Total operating expenses 12,696,173   7,092,652   22,118,587   15,571,874 
                
Loss from operations (12,696,173)  (7,092,652)  (22,118,587)  (15,571,874)
                
Interest income (expenses), net               
Interest income 750,654   74,547   1,479,995   80,247 
Interest expense (995,397)     (1,962,242)   
Interest income (expenses), net (244,743)  74,547   (482,247)  80,247 
                
Loss before income taxes (12,940,916)  (7,018,105)  (22,600,834)  (15,491,627)
Benefit for income taxes 1,406,021   1,198,905   1,406,021   1,198,905 
Net loss and comprehensive loss (11,534,895)  (5,819,200)  (21,194,813)  (14,292,722)
                
Per share information:               
Net loss per share, basic and diluted$(0.37) $(0.20) $(0.69) $(0.50)
                
Weighted average common shares outstanding, basic,
and diluted
 30,802,498   28,451,579   30,616,310   28,450,104 

Release – PDS Biotech Announces Submission of Phase 3 Protocol to FDA to Initiate VERSATILE-003 Trial

Research News and Market Data on PDSB

VERSATILE-003 will evaluate PDS0101 in combination with KEYTRUDA® in recurrent or metastatic HPV16-positive head and neck cancer

PDS Biotech anticipates initiating the VERSATILE-003 trial in the fourth quarter of 2023

PRINCETON, N.J., Aug. 14, 2023 (GLOBE NEWSWIRE) — PDS Biotechnology Corporation (Nasdaq: PDSB) (PDS Biotech or the Company), a clinical-stage immunotherapy company developing a growing pipeline of targeted cancer immunotherapies and infectious disease vaccines based on the Company’s proprietary T cell activating platforms, today announced the submission to the U.S. Food and Drug Administration (FDA) of an updated Chemistry, Manufacturing and Controls (CMC) package and a Phase 3 multicenter registrational protocol to the company’s Investigational New Drug (IND) submission to evaluate the combination of PDS0101 and KEYTRUDA® (pembrolizumab), Merck’s anti-PD-1 therapy, for the treatment of recurrent or metastatic human papillomavirus (HPV) 16-positive head and neck squamous cell carcinoma (HNSCC). The protocol was developed in accordance with guidance from the FDA on key elements of the Phase 3 program to support the eventual submission of a Biologics License Application (BLA).

The Phase 3 trial, named VERSATILE-003, is a randomized, active comparator-controlled study designed to investigate the safety and efficacy of PDS0101 combined with KEYTRUDA® compared to KEYTRUDA® monotherapy in immune checkpoint inhibitor (ICI)-naïve patients with recurrent or metastatic HPV16-positive HNSCC. The primary efficacy endpoint for VERSATILE-003, per the protocol, is overall survival (OS). The Phase 3 study is expected to involve approximately 90-100 clinical sites globally. PDS Biotech anticipates initiating the VERSATILE-003 Phase 3 trial in the fourth quarter of 2023.

“Submission of the protocol and supportive CMC documents for this Phase 3 registrational trial is an important milestone for PDS Biotech and our VERSATILE-003 program investigating PDS0101 in combination with KEYTRUDA® as a potential treatment for recurrent or metastatic HPV16-positive HNSCC,” stated Dr. Lauren V. Wood, PDS Biotech’s Chief Medical Officer. “Interim data from our ongoing VERSATILE-002 Phase 2 clinical trial have been very encouraging, with impressive interim OS and PFS results. With VERSATILE-003, we have an opportunity to confirm the Phase 2 results from VERSATILE-002 in a controlled, Phase 3 clinical trial comparing the combination of PDS0101 and KEYTRUDA® to KEYTRUDA® monotherapy.”

About PDS0101 

PDS0101, PDS Biotech’s lead candidate, is a novel investigational human papillomavirus (HPV)-targeted immunotherapy that stimulates a potent targeted T cell attack against HPV-positive cancers. PDS0101 is given by subcutaneous injection alone or in combination with other immunotherapies and cancer treatments. In a Phase 1 study of PDS0101 in monotherapy, the treatment demonstrated the ability to generate multifunctional HPV16-targeted CD8 and CD4 T cells with minimal toxicity. Interim data suggest PDS0101 generates clinically effective immune responses, and the combination of PDS0101 with other treatments can demonstrate significant disease control by reducing or shrinking tumors, delaying disease progression and/or prolonging survival. The combination of PDS0101 with other treatments does not appear to compound the toxicity of other agents.

About VERSATILE-002 

VERSATILE-002 is a single-arm Phase 2 trial evaluating the safety and efficacy of PDS0101, an HPV16-targeted investigational T cell-activating immunotherapy that leverages PDS Biotech’s proprietary Versamune® technology, in combination with Merck’s anti-PD-1 therapy, KEYTRUDA® (pembrolizumab). The combination is being evaluated in immune checkpoint inhibitor (ICI)-naïve and ICI-refractory patients with recurrent/metastatic HPV16-positive head and neck squamous cell carcinoma (HNSCC) and was granted Fast Track designation by the Food and Drug Administration in June 2022.   

Interim efficacy and safety data were presented at the 2023 American Society of Clinical Oncology (ASCO) Annual Meeting for ICI-naïve patients. Preliminary data from the first 34 patients demonstrated a 12-month overall survival rate of 87% and median progression free survival of 10.4 months. No Grade 4 or higher treatment related adverse events were observed, and Grade 3 treatment related adverse events were observed in 8% of patients.

About VERSATILE-003 

VERSATILE-003 is a randomized, controlled Phase 3 trial evaluating the safety and efficacy of PDS0101 in combination with Merck’s anti-PD-1 therapy, KEYTRUDA® (pembrolizumab) versus KEYTRUDA® monotherapy. The combination is being evaluated in immune checkpoint inhibitor (ICI)-naïve patients with recurrent/metastatic HPV16-positive head and neck squamous cell carcinoma (HNSCC) and was granted Fast Track designation by the Food and Drug Administration in June 2022.  

About PDS Biotechnology 

PDS Biotech is a clinical-stage immunotherapy company developing a growing pipeline of targeted cancer and infectious disease immunotherapies based on our proprietary Versamune®, Versamune® plus PDS0301, and Infectimune® T cell-activating platforms. We believe our targeted immunotherapies have the potential to overcome the limitations of current immunotherapy approaches through the activation of the right type, quantity and potency of T cells. To date, our lead Versamune® clinical candidate, PDS0101, has demonstrated the ability to reduce and shrink tumors and stabilize disease in combination with approved and investigational therapeutics in patients with a broad range of HPV16-associated cancers in multiple Phase 2 clinical trials and will be advancing into a Phase 3 clinical trial in combination with KEYTRUDA® for the treatment of recurrent/metastatic HPV16-positive head and neck cancer in 2023. Our Infectimune® based vaccines have also demonstrated the potential to induce not only robust and durable neutralizing antibody responses, but also powerful T cell responses, including long-lasting memory T cell responses in pre-clinical studies to date. To learn more, please visit www.pdsbiotech.com or follow us on Twitter at @PDSBiotech. 

Forward Looking Statements 

This communication contains forward-looking statements (including within the meaning of Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended) concerning PDS Biotechnology Corporation (the “Company”) and other matters. These statements may discuss goals, intentions and expectations as to future plans, trends, events, results of operations or financial condition, or otherwise, based on current beliefs of the Company’s management, as well as assumptions made by, and information currently available to, management. Forward-looking statements generally include statements that are predictive in nature and depend upon or refer to future events or conditions, and include words such as “may,” “will,” “should,” “would,” “expect,” “anticipate,” “plan,” “likely,” “believe,” “estimate,” “project,” “intend,” “forecast,” “guidance”, “outlook” and other similar expressions among others. Forward-looking statements are based on current beliefs and assumptions that are subject to risks and uncertainties and are not guarantees of future performance. Actual results could differ materially from those contained in any forward-looking statement as a result of various factors, including, without limitation: the Company’s ability to protect its intellectual property rights; the Company’s anticipated capital requirements, including the Company’s anticipated cash runway and the Company’s current expectations regarding its plans for future equity financings; the Company’s dependence on additional financing to fund its operations and complete the development and commercialization of its product candidates, and the risks that raising such additional capital may restrict the Company’s operations or require the Company to relinquish rights to the Company’s technologies or product candidates; the Company’s limited operating history in the Company’s current line of business, which makes it difficult to evaluate the Company’s prospects, the Company’s business plan or the likelihood of the Company’s successful implementation of such business plan; the timing for the Company or its partners to initiate the planned clinical trials for PDS0101, PDS0203 and other Versamune® and Infectimune® based product candidates; the future success of such trials; the successful implementation of the Company’s research and development programs and collaborations, including any collaboration studies concerning PDS0101, PDS0203 and other Versamune® and Infectimune® based product candidates and the Company’s interpretation of the results and findings of such programs and collaborations and whether such results are sufficient to support the future success of the Company’s product candidates; the success, timing and cost of the Company’s ongoing clinical trials and anticipated clinical trials for the Company’s current product candidates, including statements regarding the timing of initiation, pace of enrollment and completion of the trials (including the Company’s ability to fully fund its disclosed clinical trials, which assumes no material changes to the Company’s currently projected expenses), futility analyses, presentations at conferences and data reported in an abstract, and receipt of interim or preliminary results (including, without limitation, any preclinical results or data), which are not necessarily indicative of the final results of the Company’s ongoing clinical trials; any Company statements about its understanding of product candidates mechanisms of action and interpretation of preclinical and early clinical results from its clinical development programs and any collaboration studies; and other factors, including legislative, regulatory, political and economic developments not within the Company’s control. The foregoing review of important factors that could cause actual events to differ from expectations should not be construed as exhaustive and should be read in conjunction with statements that are included herein and elsewhere, including the other risks, uncertainties, and other factors described under “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in the documents we file with the U.S. Securities and Exchange Commission. The forward-looking statements are made only as of the date of this press release and, except as required by applicable law, the Company undertakes no obligation to revise or update any forward-looking statement, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.    

Versamune® and Infectimune® are trademarks of PDS Biotechnology Corporation. KEYTRUDA® is a registered trademark of Merck Sharp and Dohme LLC, a subsidiary of Merck & Co., Inc., Rahway, N.J., USA.

Investor Contacts: 
Deanne Randolph 
PDS Biotech 
Phone: +1 (908) 517-3613 
Email: drandolph@pdsbiotech.com 

Rich Cockrell 
CG Capital 
Phone: +1 (404) 736-3838 
Email: pdsb@cg.capital 
  
Media Contacts: 
Dave Schemelia 
Tiberend Strategic Advisors, Inc. 
Phone: +1 (609) 468-9325 
Email: dschemelia@tiberend.com 

Eric Reiss
Tiberend Strategic Advisors, Inc. 
Phone: +1 (802) 249-1136
Email: ereiss@tiberend.com 

Release – Tonix Pharmaceuticals Reports Second Quarter 2023 Financial Results and Operational Highlights

Research News and Market Data on TNXP

August 10, 2023 4:30pm EDT

Download as PDF

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Completed Strategic Acquisition of Two Marketed Acute Migraine Products: Zembrace® SymTouch® (sumatriptan injection) and Tosymra® (sumatriptan nasal spray)

CHATHAM, N.J., Aug. 10, 2023 (GLOBE NEWSWIRE) — Tonix Pharmaceuticals Holding Corp. (Nasdaq: TNXP) (Tonix or the Company), a biopharmaceutical company, today announced financial results for the second quarter ended June 30, 2023, and provided an overview of recent operational highlights.

“We have recently completed enrollment in four clinical trials for central nervous system (CNS) indications, representing our continuing progress towards bringing forth new treatments for serious CNS conditions that affect large patient populations,” said Seth Lederman, M.D., Chief Executive Officer of Tonix. “We look forward to data readouts before year-end 2023 for fibromyalgia, fibromyalgia-type Long COVID, chronic migraine, and depression. The topline results from the Phase 3 fibromyalgia trial are of particular importance because we believe the RESILIENT trial, if successful, will be the final efficacy trial required for submitting a New Drug Application (NDA) for approval by the U.S. Food and Drug Administration (FDA).”  

On June 30, 2023, Tonix completed the acquisition of two marketed products from Upsher-Smith Laboratories, LLC (Upsher-Smith): Zembrace® SymTouch® (sumatriptan injection) 3 mg and Tosymra® (sumatriptan nasal spray) 10 mg. Zembrace SymTouch and Tosymra are both non-oral proprietary products indicated for the treatment of acute migraine with or without aura in adults. Zembrace SymTouch is the only branded sumatriptan autoinjector professionally promoted in the United States and is designed for ease of use and favorable tolerability with a low 3 mg dose. Tosymra is a novel intranasal sumatriptan product formulated with a permeation enhancer that provides rapid and efficient absorption of sumatriptan. Collectively, these products generated gross factory sales of approximately $30 million for the twelve months ended March 31, 2023. Zembrace SymTouch and Tosymra each may provide onset of migraine pain relief in as few as 10 minutes for some patients and currently have patent protection to 2036 and 2031, respectively.  

Seth Lederman continued, “The acquisition of these two marketed products is transformative for Tonix as we believe that we are on track to become a fully integrated pharmaceutical company and to expand our expertise in CNS disorders by interacting with health care providers and payers. The build out of our commercial capabilities is timely, given the potential 2025 launch of TNX-102 SL (cyclobenzaprine HCl sublingual tablets) for fibromyalgia, if results from the RESILIENT trial are positive. The two marketed acute migraine products also align strongly with our clinical product candidate TNX-1900 (intranasal potentiated oxytocin), in development as a preventive medication in chronic migraineurs.”

“We plan to submit an IND to study TNX-2900 (intranasal potentiated oxytocin) in Prader-Willi syndrome, for which Orphan Drug Designation has already been granted by the FDA,” said Gregory Sullivan, M.D., Chief Medical Officer of Tonix Pharmaceuticals. “Academic collaborators have initiated enrollment in three Phase 2 investigator-initiated trials studying TNX-1900 (intranasal potentiated oxytocin). The trials in adolescent obesity and binge eating disorder at Massachusetts General Hospital (MGH) have the potential to expand the use of TNX-1900 to the treatment of disorders of appetite, eating behaviors and weight. The trial in social anxiety at University of Washington has the potential to expand the use of TNX-1900 to the treatment of disorders of social functioning.”

Dr. Lederman continued, “During the second quarter of 2023, we also announced the prioritization of our clinical stage CNS programs and de-prioritization of our COVID-19 vaccine and related therapeutic programs, as well as certain other preclinical programs in order to reallocate cash and resources. We also streamlined several CNS studies by eliminating interim analyses and reducing enrollment targets to ensure data readouts this year. We incurred a one-time cash outlay related to our acquisition of Zembrace SymTouch and Tosymra in the second quarter.”

Recent Highlights—Marketed Products

On June 30, 2023, Tonix completed the acquisition of two currently marketed products from Upsher-Smith Laboratories, LLC (Upsher-Smith): Zembrace SymTouch (sumatriptan injection) 3 mg and Tosymra (sumatriptan nasal spray) 10 mg. Zembrace SymTouch and Tosymra are both indicated for the treatment of acute migraine with or without aura in adults.

Recent Highlights—Key Product Candidates*

Upcoming Data Readouts in Central Nervous System (CNS) Pipeline During 2023

Fibromyalgia (4Q): Phase 3 Potentially NDA-Enabling Study of TNX-102 SL

Fibromyalgia-Type Long COVID (3Q): Phase 2 Proof-of-Concept Study of TNX-102 SL

Chronic Migraine (4Q): Phase 2 Proof-of-Concept Study of TNX-1900

Depression (4Q): Phase 2 Proof-of-Concept Study of TNX-601 ER

Central Nervous System (CNS) Pipeline

TNX-102 SL (cyclobenzaprine HCl sublingual tablets): once-daily at bedtime small molecule for the management of fibromyalgia (FM) – centrally-acting, non-opioid analgesic.

  • In August 2023, the Company announced that it completed enrollment of its potentially confirmatory Phase 3 RESILIENT trial of TNX-102 SL (cyclobenzaprine HCl sublingual tablets) 5.6 mg in fibromyalgia. A total of 457 participants were randomized in the trial, which, if successful, may serve as the final, well-controlled efficacy trial required for submission of an NDA for approval by the FDA. RESILIENT is a registration-quality, double-blind, placebo-controlled study.
  • Topline results from the RESILIENT trial are expected in the fourth quarter of 2023

TNX-102 SL for the treatment of Fibromyalgia-Type Long COVID, also known as Post-Acute Sequelae of COVID-19 (PASC)

  • In August 2023, the Company announced it completed the clinical phase of the PREVAIL study, a Phase 2 proof-of-concept study of TNX-102 SL for fibromyalgia-type Long COVID, as the last patient completed their final study visit. PREVAIL is a registration-quality, double-blind, placebo-controlled study.
  • Topline results from the PREVAIL Phase 2 trial are expected in the third quarter of 2023.

TNX-1900 (intranasal potentiated oxytocin): small peptide for migraine, craniofacial pain, social anxiety disorder, insulin resistance and related disorders, and adolescent obesity and binge eating disorder

  • Tonix has developed a formulation of intranasal oxytocin that contains magnesium (Mg2+) which is believed to potentiate the effects of oxytocin and may address the “inverted U” dose response of oxytocin. The company believes that if Mg2+ reduces the high dose inhibition of oxytocin alone, then the new formulation may improve consistency in clinical trials.
  • Enrollment has been completed in the proof-of-concept Phase 2 PREVENTION study of TNX-1900 for the prevention of migraine headache in chronic migraineurs with a total of 88 patients enrolled. PREVENTION is a registration-quality, double-blind, placebo-controlled study.
  • Topline results from the PREVENTION Phase 3 trial are expected in the fourth quarter of 2023.
  • In July 2023, Tonix announced that the first participant was enrolled in the investigator-initiated Phase 2 STROBE Study of TNX-1900 for the treatment of binge-eating disorder at the Massachusetts General Hospital (MGH) under the direction of Principal Investigator Elizabeth Lawson. Tonix is supporting the STROBE study through a clinical trial agreement with MGH.
  • In July 2023, Tonix announced that the first participant was enrolled in a Phase 2 investigator-initiated, proof-of-concept study of TNX-1900 for enhancing social safety learning in social anxiety disorder (SAD) under the direction of Principal Investigator Angela Fang. Tonix entered into an agreement with the University of Washington to examine the potential role of TNX-1900 in enhancing vicarious extinction learning in SAD, compared to healthy controls.
  • In July 2023, Tonix announced that the first participant was enrolled in the Phase 2 POWER study of TNX-1900 for the treatment of pediatric obesity with MGH under the direction of Principal Investigator Elizabeth Lawson. MGH is the sponsor of the National Institutes of Health-funded trial, being conducted under an investigator-initiated IND.
  • In May 2023, Tonix entered into a research collaboration agreement with the principal investigator of the study, Dr. Antoinette Maassen van den Brink, Professor of Neurovascular Pharmacology, Erasmus University Medical Center, to evaluate the effect of TNX-1900 on capsaicin- or electrical stimulation-induced forehead dermal blood flow in health female volunteers.

TNX-601 ER (tianeptine hemioxalate extended-release tablets): a once-daily orally administered small molecule for the treatment of major depressive disorder (MDD), posttraumatic stress disorder (PTSD), neurocognitive dysfunction associated with corticosteroid use, and potentially Alzheimer’s disease

  • Enrollment has been completed in the proof-of-concept Phase 2 UPLIFT study for the treatment of MDD, with 116 patients enrolled. UPLIFT is a registration-quality, double-blind, placebo-controlled study.
  • Topline results for the UPLIFT Phase 2 trial are expected in the fourth quarter of 2023.
  • Scientists at Tonix’s Research and Development Center (RDC) in Frederick, Md. established the molecular mechanism of action of tianeptine, the active ingredient of TNX-601 ER. The research supports a direct role for restoring neuroplasticity and neurogenesis, and upsets previously held beliefs about the significance of neurotransmitters in treating depression. It also provides clarity on why tianeptine does not cause sexual dysfunction, weight gain or several other treatment-limiting toxicities associated with traditional antidepressants.

TNX-4300 (estianeptine): small molecule oral therapeutic for MDD, bipolar disorder, Alzheimer’s disease and Parkinson’s disease

  • In July 2023, the Company announced that it would focus resources on the development of single isomer TNX-4300 as a first-in-class oral therapy for mood disorders, Alzheimer’s disease and other psychiatric and neurodegenerative conditions with memory deficits. The decision follows the Company’s announcement in May 2023 of the isolation and characterization of the (S)-isomer of tianeptine, which activates PPAR-β/δ, restores neuroplasticity in neuronal tissue culture and is free of µ-opioid receptor activity.

TNX-1300 (recombinant double mutant cocaine esterase): biologic for life-threatening cocaine intoxication

  • Tonix expects to initiate a potentially pivotal Phase 2 clinical study of TNX-1300 for the treatment of cocaine intoxication in the third quarter of 2023. In 2022, Tonix was awarded a Cooperative Agreement grant from the National Institute on Drug Abuse (NIDA), part of the National Institutes of Health (NIH), to support development of TNX-1300.
  • TNX-1300 has been granted Breakthrough Therapy designation by the FDA.

Rare Disease Pipeline

TNX-2900 (intranasal potentiated oxytocin): small peptide for the treatment of Prader-Willi syndrome (PWS)

  • TNX-2900 has been granted Orphan Drug designation from the FDA for the treatment of PWS and the preparation of the IND is in process.
  •  TNX-2900 is in development to treat PWS and the planned clinical study will study its effects on hyperphagia, or pathological over-eating, in children and young adult patients with PWS.

Immunology Pipeline

TNX-1500 (anti-CD40L monoclonal antibody): third generation anti-CD40L monoclonal antibody for prophylaxis of organ transplant rejection and treatment of autoimmune disorders.

  • In May 2023, the IND for prevention of organ rejection in patients receiving a kidney transplant was cleared by FDA. A first-in-human Phase 1 study is expected to start in the third quarter of 2023. The first indication for TNX-1500 will be prophylaxis of organ rejection in adult patients receiving a kidney transplant, but multiple additional indications are possible, including autoimmune diseases. Two peer reviewed publications described the work at the Massachusetts General Hospital on allogeneic transplants in animals.1,2

      *All of Tonix’s product candidates are investigational new drugs or biologics and none have been approved for any indication.

1Lassiter, G., et al. (2023). TNX-1500, a crystallizable fragment–modified anti-CD154 antibody, prolongs non-human primate renal allograft survival. American Journal of Transplantation. https://doi.org/10.1016/j.ajt.2023.03.022

2Miura, S., et al. (2023). TNX-1500, a crystallizable fragment–modified anti-CD154 antibody, prolongs non-human primate cardiac allograft survival. American Journal of Transplantationhttps://doi.org/10.1016/j.ajt.2023.03.025

      Recent Highlights—Financial

As of June 30, 2023, Tonix had approximately $25.6 million of cash and cash equivalents, compared to $120.2 million as of December 31, 2022. Subsequent to the end of the second quarter of 2023, Tonix raised $7.0 million in gross proceeds through a public offering of its common stock. Cash used in operations was approximately $56.3 million for the six months ended June 30, 2023, compared to $52.2 million for the same period in 2022. Cash used by investing activities for the six months ended June 30, 2023 was approximately $27.8 million, primarily driven by the purchase of certain assets from Upsher-Smith Laboratories, LLC.

The acquisition cost of Zembrace SymTouch and Tosymra was $15 million, consisting of $12 million up front and an additional deferred payment of $3.0 million. We also purchased inventory for $10.0 million and expect to pay an additional $1.3 million related to an inventory adjustment.

On April 8, 2020, the Company entered into a sales agreement with AGP of up to $320.0 million in at-the-market offerings sales. During the quarter ended June 30, 2023, the Company sold approximately 0.4 million shares of common stock under the sales agreement, for net proceeds of approximately $1.0 million.

On August 1, 2023, the Company sold in a public offering securities consisting of 2,530,000 shares of common stock, pre-funded warrants to purchase up to 4,470,000 shares of common stock, and accompanying common warrants to purchase 7,000,000 shares of common stock, at $1.00 per unit of common stock and common warrant, and $0.99 per pre-funded warrant and common warrant. The Company received net proceeds of approximately $6.2 million, after deducting underwriting discount and other offering expenses.

Second Quarter 2023 Financial Results

R&D expenses for the second quarter 2023 were approximately $22.0 million, compared to $16.6 million for the same period in 2022. As expected, R&D expenses have increased during 2023 due to progressing clinical development programs forward and investing in our preclinical development pipeline.

G&A expenses for the second quarter 2023 were $7.0 million, compared to $6.8 million for the same period in 2022.

Net loss available to common stockholders was $28.4 million, or $2.68 per share, basic and diluted, for the second quarter 2023, compared to net loss available to common stockholders of $27.4 million, or $7.64 per share, basic and diluted, for the same period in 2022. The basic and diluted weighted average common shares outstanding for the second quarter 2023 was 10,587,096 compared to 3,584,699 shares for the same period in 2022.

Tonix Pharmaceuticals Holding Corp.*

Tonix is a biopharmaceutical company focused on commercializing, developing, discovering and licensing therapeutics to treat and prevent human disease and alleviate suffering. Tonix markets Zembrace® SymTouch® (sumatriptan injection) 3 mg and Tosymra® (sumatriptan nasal spray) 10 mg. Zembrace SymTouch and Tosymra are each indicated for the treatment of acute migraine with or without aura in adults. Tonix’s development portfolio is composed of central nervous system (CNS), rare disease, immunology and infectious disease product candidates. Tonix’s CNS development portfolio includes both small molecules and biologics to treat pain, neurologic, psychiatric and addiction conditions. Tonix’s lead CNS candidate, TNX-102 SL (cyclobenzaprine HCl sublingual tablet), is in mid-Phase 3 development for the management of fibromyalgia, having completed enrollment in a potentially registration-enabling study, and with topline data expected in the fourth quarter of 2023. TNX-102 SL is also being developed to treat Long COVID, a chronic post-acute COVID-19 condition. Enrollment in a Phase 2 study has been completed, and topline results are expected in the third quarter of 2023. TNX-601 ER (tianeptine hemioxalate extended-release tablets), is a once-daily formulation being developed as a treatment for major depressive disorder (MDD). Enrollment is now complete in the UPLIFT trial of TNX-601 ER in MDD and topline results are expected in the fourth quarter of 2023. TNX-4300 (estianeptine) is a small molecule oral therapeutic in preclinical development to treat MDD, Alzheimer’s disease and Parkinson’s disease. TNX-1900 (intranasal potentiated oxytocin), is in development for chronic migraine, and the PREVENTION study has completed enrollment with topline data expected in the fourth quarter of 2023. TNX-1300 (cocaine esterase) is a biologic designed to treat cocaine intoxication and has been granted Breakthrough Therapy designation by the FDA. A Phase 2 study of TNX-1300 is expected to be initiated in the third quarter of 2023. Tonix’s rare disease development portfolio includes TNX-2900 (intranasal potentiated oxytocin) for the treatment of Prader-Willi syndrome. TNX-2900 has been granted Orphan Drug designation by the FDA. Tonix’s immunology development portfolio includes biologics to address organ transplant rejection, autoimmunity and cancer, including TNX-1500, which is a humanized monoclonal antibody targeting CD40-ligand (CD40L or CD154) being developed for the prevention of allograft rejection and for the treatment of autoimmune diseases. A Phase 1 study of TNX-1500 is expected to be initiated in the third quarter of 2023. Tonix’s infectious disease pipeline includes TNX-801, a vaccine in development to prevent smallpox and mpox. TNX-801 also serves as the live virus vaccine platform or recombinant pox vaccine platform for other infectious diseases. The infectious disease development portfolio also includes TNX-3900 and TNX-4000, classes of broad-spectrum small molecule antivirals.

*Tonix’s product development candidates are investigational new drugs or biologics and have not been approved for any indication.

Tonix Medicines has contracted to acquire the Zembrace SymTouch and Tosymra registered trademarks. Intravail is a registered trademark of Aegis Therapeutics, LLC, a wholly owned subsidiary of Neurelis, Inc.

This press release and further information about Tonix can be found at www.tonixpharma.com.

Forward Looking Statements

Certain statements in this press release are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may be identified by the use of forward-looking words such as “anticipate,” “believe,” “forecast,” “estimate,” “expect,” and “intend,” among others. These forward-looking statements are based on Tonix’s current expectations and actual results could differ materially. There are a number of factors that could cause actual events to differ materially from those indicated by such forward-looking statements. These factors include, but are not limited to, risks related to the failure to obtain FDA clearances or approvals and noncompliance with FDA regulations; risks related to the failure to successfully market any of our products; risks related to the timing and progress of clinical development of our product candidates; our need for additional financing; uncertainties of patent protection and litigation; uncertainties of government or third party payor reimbursement; limited research and development efforts and dependence upon third parties; and substantial competition. As with any pharmaceutical under development, there are significant risks in the development, regulatory approval and commercialization of new products. Tonix does not undertake an obligation to update or revise any forward-looking statement. Investors should read the risk factors set forth in the Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the Securities and Exchange Commission (the “SEC”) on March 13, 2023, and periodic reports filed with the SEC on or after the date thereof. All of Tonix’s forward-looking statements are expressly qualified by all such risk factors and other cautionary statements. The information set forth herein speaks only as of the date thereof.

TONIX PHARMACEUTICALS HOLDING CORP. 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Share and Per Share Amounts)
(unaudited)

 
  Three Months Ended
June 30,
  Six Months Ended
June 30,
 
  2023  2022  2023  2022 
COSTS AND EXPENSES:                
Research and development $21,976  $16,579  $48,487  $35,001 
General and administrative  7,026   6,757   14,417   14,771 
   29,002   23,336   62,904   49,772 
                 
Operating loss  (29,002)  (23,336)  (62,904)  (49,772)
                 
Interest and other income, net  646   196   1,543   215 
                 
Net loss  (28,356)  (23,140)  (61,361)  (49,557)
                 
Preferred stock deemed dividend     4,255      4,255 
                 
Net loss available to common stockholders $(28,356) $(27,395) $(61,361) $(53,812)
                 
Net loss per common share, basic and diluted $(2.68) $(7.64) $(5.88) $(17.28)
                 
Weighted average common shares outstanding, basic and diluted  10,587,096   3,584,699   10,428,678   3,113,965 

See the accompanying notes to the condensed consolidated financial statements 
 
TONIX PHARMACEUTICALS HOLDING CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited)

 June 30, 2023 December 31, 20221
Assets  
Cash and cash equivalents$25,617 $120,229
Inventory 13,700  
Prepaid expenses and other 12,012  10,548
Total current assets 51,329  130,777
Other non-current assets 108,407  94,913
Total assets$159,736 $225,690
   
Liabilities and stockholders’ equity  
Total liabilities$19,273 $18,508
Stockholders’ equity 140,463  207,182
Total liabilities and stockholders’ equity$159,736 $225,690

1The condensed consolidated balance sheet for the year ended December 31, 2022 has been derived from the audited financial statements but do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

Investor Contact

Jessica Morris
Tonix Pharmaceuticals
investor.relations@tonixpharma.com
(862) 904-8182

Peter Vozzo
ICR Westwicke
peter.vozzo@westwicke.com
(443) 213-0505

Media Contact

Ben Shannon
ICR Westwicke
ben.shannon@westwicke.com
(919) 360-3039

Zembrace® SymTouch® (sumatriptan Injection):   IMPORTANT SAFETY INFORMATION

Zembrace SymTouch (Zembrace) can cause serious side effects, including heart attack and other heart problems, which may lead to death. Stop use and get emergency help if you have any signs of a heart attack:

  • discomfort in the center of your chest that lasts for more than a few minutes or goes away and comes back
  • severe tightness, pain, pressure, or heaviness in your chest, throat, neck, or jaw
  • pain or discomfort in your arms, back, neck, jaw or stomach
  • shortness of breath with or without chest discomfort
  • breaking out in a cold sweat
  • nausea or vomiting
  • feeling lightheaded

Zembrace is not for people with risk factors for heart disease (high blood pressure or cholesterol, smoking, overweight, diabetes, family history of heart disease) unless a heart exam shows no problem.

Do not use Zembrace if you have:

  • history of heart problems
  • narrowing of blood vessels to your legs, arms, stomach, or kidney (peripheral vascular disease)
  • uncontrolled high blood pressure
  • hemiplegic or basilar migraines. If you are not sure if you have these, ask your provider.
  • had a stroke, transient ischemic attacks (TIAs), or problems with blood circulation
  • severe liver problems
  • taken any of the following medicines in the last 24 hours: almotriptan, eletriptan, frovatriptan, naratriptan, rizatriptan, ergotamines, dihydroergotamine.
  • are taking certain antidepressants, known as monoamine oxidase (MAO)-A inhibitors or it has been 2 weeks or less since you stopped taking a MAO-A inhibitor. Ask your provider for a list of these medicines if you are not sure.
  • an allergy to sumatriptan or any of the components of Zembrace

Tell your provider about all of your medical conditions and medicines you take, including vitamins and supplements.

Zembrace can cause dizziness, weakness, or drowsiness. If so, do not drive a car, use machinery, or do anything where you need to be alert.

Zembrace may cause serious side effects including:

  • changes in color or sensation in your fingers and toes
  • sudden or severe stomach pain, stomach pain after meals, weight loss, nausea or vomiting, constipation or diarrhea, bloody diarrhea, fever
  • cramping and pain in your legs or hips; feeling of heaviness or tightness in your leg muscles; burning or aching pain in your feet or toes while resting; numbness, tingling, or weakness in your legs; cold feeling or color changes in one or both legs or feet
  • increased blood pressure including a sudden severe increase even if you have no history of high blood pressure
  • medication overuse headaches from using migraine medicine for 10 or more days each month. If your headaches get worse, call your provider.
  • serotonin syndrome, a rare but serious problem that can happen in people using Zembrace, especially when used with anti-depressant medicines called SSRIs or SNRIs. Call your provider right away if you have: mental changes such as seeing things that are not there (hallucinations), agitation, or coma; fast heartbeat; changes in blood pressure; high body temperature; tight muscles; or trouble walking.
  • hives (itchy bumps); swelling of your tongue, mouth, or throat
  • seizures even in people who have never had seizures before

The most common side effects of Zembrace include: pain and redness at injection site; tingling or numbness in your fingers or toes; dizziness; warm, hot, burning feeling to your face (flushing); discomfort or stiffness in your neck; feeling weak, drowsy, or tired.

Tell your provider if you have any side effect that bothers you or does not go away. These are not all the possible side effects of Zembrace. For more information, ask your provider.

This is the most important information to know about Zembrace but is not comprehensive. For more information, talk to your provider and read the Patient Information and Instructions for Use. You can also visit www.upsher-smith.com or call 1-888-650-3789.

You are encouraged to report adverse effects of prescription drugs to the FDA. Visit www.fda.gov/medwatch, or call 1-800-FDA-1088.

INDICATION AND USAGE

Zembrace is a prescription medicine used to treat acute migraine headaches with or without aura in adults who have been diagnosed with migraine.

Zembrace is not used to prevent migraines. It is not known if it is safe and effective in children under 18 years of age.

Tosymra® (sumatriptan nasal spray): IMPORTANT SAFETY INFORMATION

Tosymra can cause serious side effects, including heart attack and other heart problems, which may lead to death. Stop Tosymra and get emergency medical help if you have any signs of heart attack:

  • discomfort in the center of your chest that lasts for more than a few minutes or goes away and comes back
  • severe tightness, pain, pressure, or heaviness in your chest, throat, neck, or jaw
  • pain or discomfort in your arms, back, neck, jaw, or stomach
  • shortness of breath with or without chest discomfort
  • breaking out in a cold sweat
  • nausea or vomiting
  • feeling lightheaded

Tosymra is not for people with risk factors for heart disease (high blood pressure or cholesterol, smoking, overweight, diabetes, family history of heart disease) unless a heart exam is done and shows no problem.

Do not use Tosymra if you have:

  • history of heart problems
  • narrowing of blood vessels to your legs, arms, stomach, or kidney (peripheral vascular disease)
  • uncontrolled high blood pressure
  • severe liver problems
  • hemiplegic or basilar migraines. If you are not sure if you have these, ask your healthcare provider.
  • had a stroke, transient ischemic attacks (TIAs), or problems with blood circulation
  • taken any of the following medicines in the last 24 hours: almotriptan, eletriptan, frovatriptan, naratriptan, rizatriptan, ergotamines, or dihydroergotamine. Ask your provider if you are not sure if your medicine is listed above.
  • are taking certain antidepressants, known as monoamine oxidase (MAO)-A inhibitors or it has been 2 weeks or less since you stopped taking a MAO-A inhibitor. Ask your provider for a list of these medicines if you are not sure.
  • an allergy to sumatriptan or any ingredient in Tosymra

Tell your provider about all of your medical conditions and medicines you take, including vitamins and supplements.

Tosymra can cause dizziness, weakness, or drowsiness. If so, do not drive a car, use machinery, or do anything where you need to be alert.

Tosymra may cause serious side effects including:

  • changes in color or sensation in your fingers and toes
  • sudden or severe stomach pain, stomach pain after meals, weight loss, nausea or vomiting, constipation or diarrhea, bloody diarrhea, fever
  • cramping and pain in your legs or hips, feeling of heaviness or tightness in your leg muscles, burning or aching pain in your feet or toes while resting, numbness, tingling, or weakness in your legs, cold feeling or color changes in one or both legs or feet
  • increased blood pressure including a sudden severe increase even if you have no history of high blood pressure
  • medication overuse headaches from using migraine medicine for 10 or more days each month. If your headaches get worse, call your provider.
  • serotonin syndrome, a rare but serious problem that can happen in people using Tosymra, especially when used with anti-depressant medicines called SSRIs or SNRIs. Call your provider right away if you have: mental changes such as seeing things that are not there (hallucinations), agitation, or coma; fast heartbeat; changes in blood pressure; high body temperature; tight muscles; or trouble walking.
  • hives (itchy bumps); swelling of your tongue, mouth, or throat
  • seizures even in people who have never had seizures before

The most common side effects of Tosymra include: tingling, dizziness, feeling warm or hot, burning feeling, feeling of heaviness, feeling of pressure, flushing, feeling of tightness, numbness, application site (nasal) reactions, abnormal taste, and throat irritation.

Tell your provider if you have any side effect that bothers you or does not go away. These are not all the possible side effects of Tosymra. For more information, ask your provider.

This is the most important information to know about Tosymra but is not comprehensive. For more information, talk to your provider and read the Patient Information and Instructions for Use. You can also visit www.upsher-smith.com or call 1-888-650-3789.

You are encouraged to report negative side effects of prescription drugs to the FDA. Visit www.fda.gov/medwatch, or call 1-800-FDA-1088.

INDICATION AND USAGE
Tosymra is a prescription medicine used to treat acute migraine headaches with or without aura in adults.

Tosymra is not used to treat other types of headaches such as hemiplegic or basilar migraines or cluster headaches.

Tosymra is not used to prevent migraines. It is not known if Tosymra is safe and effective in children under 18 years of age. 

Source:

Released August 10, 2023

Release – Onconova Therapeutics Reports Corporate Update And Announces Second Quarter 2023 Financial Results

Research News and Market Data on ONTX

Aug 10, 2023

PDF Version

Anticipate topline results from the Phase 1 monotherapy and Phase 1/2 combination study with letrozole in Q4 2023

Plans are underway for a registrational trial with rigosertib in patients with RDEB-associated squamous cell carcinoma based on a constructive Type B FDA meeting held in June

Company to host conference call and webcast at 4:30 p.m. ET on Thursday, August 10, 2023

NEWTOWN, Pa., Aug. 10, 2023 (GLOBE NEWSWIRE) — Onconova Therapeutics, Inc. (NASDAQ: ONTX), (“Onconova” or “the Company”), a clinical-stage biopharmaceutical company focused on discovering and developing novel products for patients with cancer, today reported second quarter 2023 financial results and provided an update on recent pipeline progress. Management plans to host a conference call and live webcast at 4:30 p.m. ET today to discuss these results.

“We are very encouraged about the recent progress that the Onconova team has made for our two lead programs, narazaciclib, a differentiated multikinase CDK4/6 inhibitor targeting proteins involved in resistance pathways, and rigosertib, a cell signaling inhibitor, over the last few months, while effectively managing our financial resources. In addition, we are pleased that Victor Moyo, M.D., a highly experienced and successful clinical researcher and drug developer, has agreed to join the Company as Consulting Chief Medical Officer. We look forward to sharing several important updates in the coming months,” said Steve Fruchtman, M.D., President and Chief Executive Officer.

Dr. Fruchtman continued, “For narazaciclib, our efforts have been dedicated to completing a Phase 1 program and defining a recommended Phase 2 dose to support evaluation of narazaciclib in a randomized trial. Onconova believes this CDK4/6 compound has the potential to provide differentiated efficacy based on targeting proteins that have been implicated in resistance mechanisms and the potential for an improved safety profile. We are pleased to see target engagement based on an assay measuring proliferation. We expect to report the results from our Phase 1 monotherapy and Phase 1/2 combination study with letrozole in Q4 2023. The readout will include safety, pharmacokinetics and the definition of a recommended Phase 2 dose.”

Dr. Fruchtman concluded, “For rigosertib, we continue to believe this rigosertib’s unique action on cell signaling pathways, including K-RAS and PLK-1, combined with an acceptable safety profile, could position it as an attractive anti-cancer agent. In June, we had a constructive Type B meeting with the FDA for the use of rigosertib monotherapy in the lead, ultra-rare indication of RDEB-associated squamous cell carcinoma. Based on that meeting and the impressive clinical responses in previously refractory patients we have seen and presented at major medical meetings, we plan to design a registrational trial and will look to provide an update on next steps in H1 2024. In the meantime, we continue to support two investigator sponsored studies for rigosertib, underway in melanoma and KRAS mutated non-small cell lung cancer which includes any KRAS mutation that may be present.”

Second Quarter Financial Results
Cash and cash equivalents as of June 30, 2023, were $29.7 million, compared to $38.8 million as of December 31, 2022. The Company believes that its cash and cash equivalents will be sufficient to fund ongoing clinical trials and business into the second quarter of 2024.

Research and development expenses were $2.5 million for the second quarter of 2023, compared with $2.0 million for the second quarter of 2022.

General and administrative expenses were $2.2 million for the second quarter of 2023, compared with $2.1 million for the second quarter of 2022.

Net loss for the second quarter of 2023 was $4.3 million, or $0.20 per share on 21.0 million weighted shares outstanding, compared with a net loss of $4.0 million, or $0.19 per share for the second quarter of 2022 on 20.9 million weighted shares outstanding.

Conference Call and Webcast Information
Interested parties who wish to participate in the conference call may do so by dialing:

  • (800) 715-9871 for domestic and
  • (646) 307-1963 for international callers and
  • Using conference ID 9506701

Those interested in listening to the conference call via the internet may do so by visiting the investors and media page on the Company’s website at www.onconova.com and clicking on the webcast link. In addition to the live webcast, a replay will be available on the Onconova website for 90 days following the call.

About Onconova Therapeutics, Inc.
Onconova Therapeutics is a clinical-stage biopharmaceutical company focused on discovering and developing novel products for patients with cancer. The Company’s product candidates include proprietary targeted anti-cancer agents designed to disrupt specific cellular pathways that are important for cancer cell proliferation.

Onconova’s novel, proprietary multi-kinase inhibitor narazaciclib (formerly ON 123300) is being evaluated in a Phase 1/2 combination trial with the estrogen blocker, letrozole, in advanced low grade endometrial cancer (NCT05705505). Based on preclinical and clinical studies of CDK 4/6 inhibitors, Onconova is also evaluating opportunities for combination studies with narazaciclib and letrozole in additional indications.

Onconova’s product candidate rigosertib is being studied in multiple investigator-sponsored studies. These studies include a dose-escalation and expansion Phase 1/2a study of oral rigosertib in combination with nivolumab in patients with KRAS+ non-small cell lung cancer (NCT04263090), a Phase 2 program evaluating oral or IV rigosertib monotherapy in advanced squamous cell carcinoma complicating recessive dystrophic epidermolysis bullosa (RDEB-associated SCC (NCT03786237NCT04177498), and a Phase 2 trial evaluating rigosertib in combination with pembrolizumab in patients with metastatic melanoma (NCT05764395).

For more information, please visit www.onconova.com.

Forward Looking Statements
Some of the statements in this release are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, and involve risks and uncertainties. These statements relate to Onconova’s expectations regarding its clinical development and trials, its product candidates and its business and financial position. Onconova has attempted to identify forward-looking statements by terminology including “believes,” “estimates,” “anticipates,” “expects,” “plans,” “intends,” “may,” “could,” “might,” “will,” “should,” “preliminary,” “encouraging,” “approximately” or other words that convey uncertainty of future events or outcomes. Although Onconova believes that the expectations reflected in such forward-looking statements are reasonable as of the date made, expectations may prove to have been materially different from the results expressed or implied by such forward-looking statements. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors, including the success and timing of Onconova’s clinical trials, investigator-sponsored trials, regulatory agency and institutional review board approvals of protocols, Onconova’s collaborations, market conditions and those discussed under the heading “Risk Factors” in Onconova’s most recent Annual Report on Form 10-K and quarterly reports on Form 10-Q. Any forward-looking statements contained in this release speak only as of its date. Onconova undertakes no obligation to update any forward-looking statements contained in this release to reflect events or circumstances occurring after its date or to reflect the occurrence of unanticipated events.

Company Contact:
Mark Guerin
Onconova Therapeutics, Inc.
267-759-3680
ir@onconova.us
https://www.onconova.com/contact/

Investor Contact:
Bruce Mackle
LifeSci Advisors, LLC
646-889-1200
bmackle@lifesciadvisors.com

ONCONOVA THERAPEUTICS, INC.   
Condensed Consolidated Balance Sheets   
(in thousands)   
 June 30, December 31,
  2023   2022 
Assets(unaudited)  
Current assets:   
Cash and cash equivalents$29,729  $38,757 
Receivables 17   29 
Prepaid expenses and other current assets 704   561 
Total current assets 30,450   39,347 
Property and equipment, net 17   24 
Other non-current assets 1   1 
Total assets$30,468  $39,372 
    
Liabilities and stockholders’ equity   
Current liabilities:   
Accounts payable$5,071  $3,860 
Accrued expenses and other current liabilities 3,369   3,960 
Deferred revenue 226   226 
Total current liabilities 8,666   8,046 
Deferred revenue, non-current 2,904   3,017 
Total liabilities 11,570   11,063 
    
Stockholders’ equity:   
Preferred stock     
Common stock 210   209 
Additional paid in capital 492,424   491,816 
Accumulated other comprehensive loss (28)  (33)
Accumulated deficit (473,708)  (463,683)
Total stockholders’ equity 18,898   28,309 
Total liabilities and stockholders’ equity$30,468  $39,372 
    
ONCONOVA THERAPEUTICS, INC.
Condensed Consolidated Statements of Operations (unaudited)
(in thousands, except share and per share amounts)
        
 Three Months Ended June 30, Six months months ended June 30,
  2023   2022   2023   2022 
        
Revenue$57  $57  $113  $113 
Operating expenses:       
General and administrative 2,211   2,139   4,324   4,325 
Research and development 2,456   2,038   6,536   4,040 
Total operating expenses 4,667   4,177   10,860   8,365 
Loss from operations (4,610)  (4,120)  (10,747)  (8,252)
        
Change in fair value of warrant liability           
Other income, net 360   96   722   106 
Net loss (4,250)  (4,024)  (10,025)  (8,146)
Net loss per share of common stock, basic and diluted$(0.20) $(0.19) $(0.48) $(0.39)
Basic and diluted weighted average shares outstanding 20,979,766   20,904,085   20,970,022   20,904,085 

Release – Harte Hanks Reports Fiscal 2023 Second Quarter Results

Research News and Market Data on HHS

CHELMSFORD, MA / ACCESSWIRE / August 10, 2023 / Harte Hanks, Inc. (NASDAQ:HHS), a leading global customer experience company focused on bringing companies closer to customers for 100 years, today announced financial results for the second quarter and six-month period ended June 30, 2023.

Kirk Davis, Chief Executive Officer, commented: “My favorable impressions of Harte Hanks were confirmed in my first month as CEO; Harte Hanks has great people and significant capabilities that are desired by global brands. The pandemic had a positive, multi-year impact on our business, which we’re now beyond. In addition, many of our customers have curtailed budgets for 2023 due to concerns about the economy. This necessitates our near-term focus on further aligning our cost structure, and in addition, shifting some of our current spend to bolster sales productivity.”

“The second quarter results represent a baseline for our expectations in the near term and present a solid foundation on which to build,” added Mr. Davis. “We’re focused on bolstering our sales pipeline, retooling our marketing programs, improving sales effectiveness, and leveraging a new partnership we’ve struck with a highly reputable business development company. Our acquisition of InsideOut in December of 2022 expands our end-to-end offering and specifically our lead generation capabilities. We expect to build on the consistent profitability that has been achieved and position Harte Hanks to generate more sustainable, profitable growth. We’re excited to deliver on these objectives. Additionally, the company executed on its stock repurchase plan by repurchasing almost 315,000 shares.”

Second Quarter Financial Highlights

  • Total revenues for Q2 2023 were $47.8 million, up 1.4% sequentially and down 1.6% year over year compared to $48.6 million in Q2 2022. Included in 2023 was $2.3 million from InsideOut acquired in fourth quarter of 2022.
  • Operating income was $1.7 million compared to $4.0 million in the prior-year quarter.
  • Net income of $0.6 million compared to net income of $4.5 million in the prior year.
  • Diluted EPS was $0.08 compared to $0.52 for the prior year’s second quarter.
  • EBITDA was $2.7 million compared to $4.6 million in the same period in the prior year.[1] Adjusted EBITDA, which excludes stock-based compensation and severance, was $4.4 million compared to $5.2 million.

Segment Highlights

  • Customer Care, $17.2 million in revenue, 36% of total – Segment revenue increased $1.8 million or 11.9% versus prior year and EBITDA totaled $3.0 million for the quarter, up 18.3% year-over-year. New business wins that are expected to positively impact results during the second quarter include:
    • A multi-national pharmaceutical company has engaged Harte Hanks to develop the strategy for their long-term Customer Service Experience. The scope includes the analysis and validation of their Customer Service vision, benchmarking, gap analysis and a blueprint with an implementation roadmap to inform their 2024 plans to optimize their Customer Care strategy and delivery.
    • One of the largest consultancy firms in the world has selected Harte Hanks to support a state government’s rollout of Medicaid renewal support for its constituents. This program helps Medicaid users renew for services, as well as provides education on how to engage and leverage the online systems to improve use of these benefits.
  • Fulfillment & Logistics Services, $19.6 million in revenue, 41% of total – Segment revenue decreased slightly versus the prior year quarter and EBITDA for Q2 2023 totaled $1.9 million, down $1.2 million or 39%. Revenue mix drove the reduced EBITDA margins as growth in lower-margin logistics revenue was offset by reduced volumes in our financial services vertical that yielded higher margins. New business wins during the second quarter include:
    • Harte Hanks Fulfillment won New Logo business with a major international manufacturer, providing fulfillment support for a new program of Direct-to-Customer hearing aid sales. As a major player in the industry, the manufacturer is well-positioned for growth as the hearing aid market pivots from prescription-only into “Over the Counter” space.
    • A leading branding company selected Harte Hanks Fulfillment to manage the production, kitting, and distribution of 150k+ curated Food & Beverage product gift boxes for a Fortune 50 retail partner. After producing several million kits on this partner’s behalf over the past year, this represents the first instance where the relationship has fully leveraged our FDA approved, climate-controlled facility for food grade items.
  • Marketing Services, $10.9 million in revenue, 23% of total – Segment revenue declined $2.5 million (19%) compared to the prior year quarterand EBITDA for the quarter totaled $1.3 million vs. $1.8 million. Pressure on both revenue and EBITDA was driven by a reduction in legacy direct mail campaigns and lighter project volumes. New business wins during second quarter include:
    • A major insurance carrier supporting government employees has selected Harte Hanks to help facilitate their email transition to a new CRM. While this organization is an existing customer for our Customer Care and Fulfillment segments, this is the first engagement for this client with our Marketing Services team.
    • One of the largest online travel agencies has expanded its services with Harte Hanks to support an ‘Always On’ nurture program for their global business customers.

Consolidated Second Quarter 2023 Results

Second quarter revenues were $47.8 million, down 1.6% from $48.6 million in the second quarter of 2022. The Company’s Customer Care segment grew, largely offsetting declines in Fulfillment & Logistics Services and Marketing Services.

Second quarter operating income was $1.7 million, compared to operating income of $4.0 million in the second quarter of 2022. The decrease resulted from a less favorable revenue mix and lower consolidated revenue.

Net income for the quarter was $0.6 million, or $0.08 per diluted share, compared to net income of $4.5 million, or $0.52 per diluted share, in the second quarter last year. Results this quarter included $1.2 million of pension expense, as well as $503,000 in stock-based compensation and $1.2 million in severance, largely related to the CEO transition. The severance and other costs related to the CEO transition created a non-recurring, $0.12 per share impact, without tax impact, in the second quarter of 2023.

Consolidated Year-to-Date 2023 Results

Year-to-date revenues were $94.9 million, down 2.8% from $97.6 million in the same period of 2022. Year-to-date operating income was $2.7 million, compared to operating income of $7.9 million. Net loss for the first six months was $(0.2) million, or $(0.03) per diluted share, compared to net income of $7.8 million, or $0.91 per diluted share, in the first six months of last year.

Balance Sheet and Liquidity

Harte Hanks ended the quarter with $13.4 million in cash and cash equivalents and $24 million of capacity on its credit line. The Company has no outstanding debt as of June 30, 2023. The Company’s financial position continues to be strong, and it is well-positioned to execute on its long-term growth strategies in 2023 and beyond.

During the quarter, Harte Hanks repurchased approximately 315,000 shares at an average price of $5.97 per share for a total of $1.9 million.

Conference Call Information

The Company will host a conference call and live webcast to discuss these results on Thursday, August 10, 2023 at 4:30 p.m. EST. Interested parties may access the webcast at https://investors.hartehanks.com/events or may access the conference call by dialing (877) 545-0320 in the United States or (973) 528-0002 from outside the U.S. and using access code 183563.

A replay of the call can also be accessed via phone through August 24, 2023 by dialing (877) 481-4010 from the U.S., or (919) 882-2331 from outside the U.S. The conference call replay passcode is 48804.

About Harte Hanks:

Harte Hanks (NASDAQ:HHS) is a leading global customer experience company whose mission is to partner with clients to provide them with CX strategy, data-driven analytics and actionable insights combined with seamless program execution to better understand, attract and engage their customers.

Using its unparalleled resources and award-winning talent in the areas of Customer Care, Fulfillment and Logistics, and Marketing Services, Harte Hanks has a proven track record of driving results for some of the world’s premier brands, including Bank of America, GlaxoSmithKline, Unilever, Pfizer, HBOMax, Volvo, Ford, FedEx, Midea, Sony and IBM among others. Headquartered in Chelmsford, Massachusetts, Harte Hanks has over 2,500 employees in offices across the Americas, Europe, and Asia Pacific.

For more information, visit hartehanks.com

As used herein, “Harte Hanks” or “the Company” refers to Harte Hanks, Inc. and/or its applicable operating subsidiaries, as the context may require. Harte Hanks’ logo and name are trademarks of Harte Hanks.

Cautionary Note Regarding Forward-Looking Statements:

Our press release and related earnings conference call contain “forward-looking statements” within the meaning of U.S. federal securities laws. All such statements are qualified by this cautionary note, provided pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Statements other than historical facts are forward-looking and may be identified by words such as “may,” “will,” “expects,” “believes,” “anticipates,” “plans,” “estimates,” “seeks,” “could,” “intends,” or words of similar meaning. These forward-looking statements are based on current information, expectations and estimates and involve risks, uncertainties, assumptions and other factors that are difficult to predict and that could cause actual results to vary materially from what is expressed in or indicated by the forward-looking statements. In that event, our business, financial condition, results of operations or liquidity could be materially adversely affected and investors in our securities could lose part or all of their investments. These risks, uncertainties, assumptions and other factors include: (a) local, national and international economic and business conditions, including (i) the outbreak of diseases, such as the COVID-19 coronavirus, which has curtailed travel to and from certain countries and geographic regions, created supply chain disruption and shortages, disrupted business operations and reduced consumer spending, (ii) market conditions that may adversely impact marketing expenditures, (iii) the impact of the Russia/Ukraine conflict on the global economy and our business, including impacts from related sanctions and export controls and (iv) the impact of economic environments and competitive pressures on the financial condition, marketing expenditures and activities of our clients and prospects; (b) the demand for our products and services by clients and prospective clients, including (i) the willingness of existing clients to maintain or increase their spending on products and services that are or remain profitable for us, and (ii) our ability to predict changes in client needs and preferences; (c) economic and other business factors that impact the industry verticals we serve, including competition and consolidation of current and prospective clients, vendors and partners in these verticals; (d) our ability to manage and timely adjust our facilities, capacity, workforce and cost structure to effectively serve our clients; (e) our ability to improve our processes and to provide new products and services in a timely and cost-effective manner though development, license, partnership or acquisition; (f) our ability to protect our facilities against security breaches and other interruptions and to protect sensitive personal information of our clients and their customers; (g) our ability to respond to increasing concern, regulation and legal action over consumer privacy issues, including changing requirements for collection, processing and use of information; (h) the impact of privacy and other regulations, including restrictions on unsolicited marketing communications and other consumer protection laws; (i) fluctuations in fuel prices, paper prices, postal rates and postal delivery schedules; (j) the number of shares, if any, that we may repurchase in connection with our repurchase program; (k) unanticipated developments regarding litigation or other contingent liabilities; (l) our ability to complete anticipated divestitures and reorganizations, including cost-saving initiatives; (m) our ability to realize the expected tax refunds; and (n) other factors discussed from time to time in our filings with the Securities and Exchange Commission, including under “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022 which was filed on March 31, 2023. The forward-looking statements in this press release and our related earnings conference call are made only as of the date hereof, and we undertake no obligation to update publicly any forward-looking statement, even if new information becomes available or other events occur in the future.

Supplemental Non-GAAP Financial Measures:

The Company reports its financial results in accordance with generally accepted accounting principles (“GAAP”). However, the Company may use certain non-GAAP measures of financial performance in order to provide investors with a better understanding of operating results and underlying trends to assess the Company’s performance and liquidity in this press release and our related earnings conference call. We have presented herein a reconciliation of these measures to the most directly comparable GAAP financial measure.

The Company presents the non-GAAP financial measure “Adjusted Operating Income (Loss)” as a measure useful to both management and investors in their analysis of the Company’s financial results because it facilitates a period-to-period comparison of Operating Revenue and Operating Income (Loss) by excluding restructuring expense, impairment expense and stock-based compensation. The most directly comparable measure for this non-GAAP financial measure is Operating Income (Loss).

The Company presents the non-GAAP financial measure “EBITDA” and “Adjusted EBITDA” as a supplemental measure of operating performance in order to provide an improved understanding of underlying performance trends. The Company defines “Adjusted EBITDA” as earnings before interest expense net, income tax expense (benefit), depreciation expense, stock compensation expense and severance expenses. The most directly comparable measure for each of EBITDA and Adjusted EBITDA is Net Income (Loss). We believe each of EBITDA and Adjusted EBITDA are important performance metrics because they facilitates the analysis of our results, exclusive of certain non-cash items, non-recurring or special charges and items we believe do not directly correlate to our business operations; however, we urge investors to review the reconciliation of each of EBITDA and Adjusted EBITDA to the comparable GAAP Net Income (Loss), which is included in this press release, and not to rely on any single financial measure to evaluate the Company’s financial performance.

The use of non-GAAP measures do not serve as a substitute and should not be construed as a substitute for GAAP performance but should provide supplemental information concerning our performance that our investors and we find useful. The Company evaluates its operating performance based on several measures, including this non-GAAP financial measures. The Company believes that the presentation of this non-GAAP financial measures in this press release and earnings conference call presentations are useful supplemental financial measures of operating performance for investors because they facilitate investors’ ability to evaluate the operational strength of the Company’s business. However, there are limitations to the use of this non-GAAP measures, including that they may not be calculated the same by other companies in our industry limiting their use as a tool to compare results. Any supplemental non-GAAP financial measures referred to herein are not calculated in accordance with GAAP and they should not be considered in isolation or as substitutes for the most comparable GAAP financial measures.

EBITDA is the Company’s measure of segment profitability.

1 EBITDA is a non-GAAP financial measure. See “Supplemental Non-GAAP Financial Measures” below. EBITDA is also the Company’s measure of segment profitability.

Investor Relations Contact:

Rob Fink or Tom Baumann
646.809.4048 / 646.349.6641
FNK IR
HHS@fnkir.com

Harte Hanks, Inc.

Consolidated Statements of Operations (Unaudited)

Three Months Ended
June 30,
Six Months Ended
June 30,
In thousands, except per share data2023202220232022
Revenues………………………………………………………………………………..$47,762$48,553$94,882$97,615
Operating expenses
Labor…………………………………………………………………………………..26,66625,10951,13151,027
Production and distribution……………………………………………………….13,32813,50727,78026,225
Advertising, selling, general and administrative………………………………5,0655,34011,14911,273
Depreciation and amortization expense………………………………………..1,0335862,0991,184
Total operating expenses…………………………………………………….46,09244,54292,15989,709
Operating income …………………………………………………………………….1,6704,0112,7237,906
Other expense (income), net
Interest expense (income), net…………………………………………………..5995(151)230
Pension expense……………………………………………………………………1,1866821,6971,022
Foreign currency (gain) loss ……………………………………………………..(624)(2,396)305(2,792)
Other income, net…………………………………………………………………..2294981,375515
Total other expense (income), net……………………………………………850(1,121)3,226(1,025)
Income (loss) before income taxes………………………………………………..8205,132(503)8,931
Income tax expense (benefit)……………………………………………………….240671(292)1,125
Net income (loss)……………………………………………………………………..5804,461(211)7,806
Less: Preferred stock dividends………………………………………………….124246
Less: Earnings attributable to participating securities………………………542946
Income (loss) income attributable to common stockholders$580$3,795$(211)$6,614
Income (loss) Earning per common share
Basic…………………………………………………………………………………..$0.08$0.54(0.03)0.94
Diluted…………………………………………………………………………………$0.08$0.52(0.03)0.91
Weighted-average common shares outstanding………………………………..
Basic…………………………………………………………………………………..7,3587,0177,3927,004
Diluted…………………………………………………………………………………7,5057,3887,6117,338

Harte Hanks, Inc.

Condensed Consolidated Balance Sheets (Unaudited)

In thousands, except per share dataJune 30, 2023December 31, 2022
ASSETS…………………………………………………………………………………
Current Assets
Cash and cash equivalents……………………………………………………….$13,364$10,364
Accounts receivable (less allowance for doubtful accounts of $215 and $163, respectively)36,09539,700
Unbilled accounts receivable……………………………………………………..8,2357,893
Contract assets……………………………………………………………………..259309
Prepaid expenses…………………………………………………………………..3,3392,176
Prepaid income tax and income tax receivable………………………………1,4684,262
Other current assets……………………………………………………………….1,1901,607
Total current assets…………………………………………………………..63,95066,311
Net property, plant and equipment…………………………………………………9,73410,523
Right-of-use assets……………………………………………………………………18,01119,169
Other assets……………………………………………………………………………22,96523,981
Total assets…………………………………………………………………….$114,660$119,984
LIABILITIES AND STOCKHOLDERS’ EQUITY………………………………….
Current liabilities ………………………………………………………………………
Accounts payable and accrued expenses…………………………………….$17,887$22,465
Accrued payroll and related expenses…………………………………………5,5726,679
Deferred revenue and customer advances……………………………………..6,7014,590
Customer postage and program deposits……………………………………..1,6631,223
Other current liabilities…………………………………………………………….2,6802,862
Short-term lease liabilities………………………………………………………..5,9035,747
Total current liabilities………………………………………………………..40,40643,566
Pensions liabilities – Qualified plans……………………………………………….17,96218,674
Pension liabilities – Nonqualified plan …………………………………………….18,73019,098
Long-term lease liabilities, net of current portion……………………………….14,63116,575
Other long-term liabilities…………………………………………………………….2,3813,263
Total liabilities………………………………………………………………….94,110101,176
Stockholders’ equity …………………………………………………………………
Common stock………………………………………………………………………12,22112,221
Additional paid-in capital…………………………………………………………..187,386218,411
Retained earnings…………………………………………………………………..846,280846,490
Less treasury stock………………………………………………………………..(980,157)(1,010,012)
Accumulated other comprehensive loss……………………………………….(45,180)(48,302)
Total stockholders’ equity……………………………………………………20,55018,808
Total liabilities and stockholders’ equity………………………………….$114,660$119,984

Harte Hanks, Inc.

Reconciliations of Non-GAAP Financial Measures (Unaudited)

Three Months Ended June 30,Six Months Ended June 30,
In thousands, except per share data2023202220232022
Net Income (loss) …………………………………………………………………….$580$4,461$(211)$7,806
Income tax expense (benefit) ………………………………………………………240671(292)1,125
Other expense (income), net………………………………………………………..850(1,121)3,226(1,025)
Depreciation and amortization expense…………………………………………..1,0335862,0991,184
EBITDA……………………………………………………………………………….$2,703$4,597$4,822$9,090
Stock-based compensation…………………………………………………………5035611,043850
Severance……………………………………………………………………………….1,187(5)1,20978
Adjusted EBITDA……………………………………………………………………$4,393$5,153$7,074$10,018
Operating income …………………………………………………………………….$1,670$4,011$2,723$7,906
Stock-based compensation…………………………………………………………5035611,043850
Severance……………………………………………………………………………….1,187(5)1,20978
Adjusted operating income ………………………………………………………$3,360$4,5674,9758,834
Adjusted operating margin (a)……………………………………………………7.0%9.4%5.2%9.0%
(a) Adjusted Operating Margin equals Adjusted Operating Income divided by Revenues.

Harte Hanks, Inc.

Statement of Operations by Segments (Unaudited)

Quarter ended June 30, 2023Marketing ServicesCustomer CareFulfillment & Logistics ServicesUnallocated CorporateTotal
(In thousands)
2023
Revenues$10,921$17,211$19,630$$47,762
Segment Operating Expense$8,835$13,541$16,931$5,752$45,059
Contribution margin (loss)$2,086$3,670$2,699$(5,752)$2,703
Shared Services$766$720$765$(2,251)$
EBITDA$1,320$2,950$1,934$(3,501)$2,703
Depreciation and Amortization Expense$47$371$241$374$1,033
Operating income (loss)$1,273$2,579$1,693$(3,875)$1,670
Quarter ended June 30, 2022Marketing ServicesCustomer CareFulfillment & Logistics ServicesUnallocated CorporateTotal
2022
Revenues$13,450$15,382$19,721$$48,553
Segment Operating Expense$10,584$12,212$15,770$5,390$43,956
Contribution margin (loss)$2,866$3,170$3,951$(5,390)$4,597
Shared Services$1,052$677$779(2,508)$
EBITDA$1,814$2,493$3,172$(2,882)$4,597
Depreciation and Amortization Expense$89$201$202$94$586
Operating income (loss)$1,725$2,292$2,970$(2,976)$4,011

SOURCE: Harte Hanks, Inc.



View source version on accesswire.com:
https://www.accesswire.com/773403/Harte-Hanks-Reports-Fiscal-2023-Second-Quarter-Results

Release – Direct Digital Holdings Reports Second Quarter 2023 Financial Results

Research News and Market Data on DRCT

August 10, 2023 4:01pm EDT

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Second Quarter 2023 Revenue Up 67% Year-Over-Year to $35.4 Million

Company Raises Full-Year 2023 Revenue Guidance

HOUSTON, Aug. 10, 2023 /PRNewswire/ — Direct Digital Holdings, Inc. (Nasdaq: DRCT) (“Direct Digital Holdings” or the “Company”), a leading advertising and marketing technology platform operating through its companies Colossus Media, LLC (“Colossus SSP”), Huddled Masses LLC (“Huddled Masses”) and Orange142, LLC (“Orange142”), today announced financial results for the second quarter ended June 30, 2023.

Mark D. Walker, Chairman and Chief Executive Officer, commented, “We are thrilled to report substantial growth this quarter in both our buy- and sell-side businesses. We continue to see a shift in media spend from traditional to digital as well as an increase in media spend targeted at the middle market. The results of our second quarter begin to demonstrate the fruits of our previous strategic investments across our platform and we will continue executing on our growth strategies in the back half of the year.”

Keith Smith, President, added, “We find the current market dynamics to be greatly favorable for Direct Digital Holdings as we continue to see strong demand for our advertising solutions within the numerous industries in which we operate. Our unique, differentiated approach to both the buy- and sell-side verticals within our business continue to separate Direct Digital Holdings from the rest and we greatly look forward to growing all aspects of our business through the rest of 2023 and beyond.”  

Second Quarter 2023 Business Highlights

  • For the second quarter ended June 30, 2023, Direct Digital Holdings processed approximately 300 billion monthly impressions through its sell-side advertising segment, an increase of 205% over the same period of 2022.
  • In addition, the Company’s sell-side advertising platforms received over 11.2 billion bid responses in the second quarter of 2023, an increase of over 70% over the same period in 2022, through 119,000 advertisers for the quarter, which equates to a 34% increase over the same period in 2022.
  • The Company’s buy-side advertising segment served approximately 227 customers in the second quarter of 2023, a decrease of 7% compared to the same period of 2022. However, revenue per customer of $52,000 in the second quarter of 2023 increased 36% compared to the same period of 2022.

Second quarter 2023 Financial Highlights:

  • Revenue was $35.4 million in the second quarter of 2023, an increase of $14.1 million, or 67% over the $21.3 million in the same period of 2022.

    • Sell-side advertising segment revenue grew to $23.6 million and contributed $11.7 million of the increase, or 98% growth over the $11.9 million of sell-side revenue in the same period of 2022.
    • Buy-side advertising segment revenue grew to $11.8 million and contributed $2.5 million of the increase, or 27% growth over the $9.3 million of buy-side revenue in the same period of 2022.
  • Consolidated operating income was $2.3 million for the second quarter of 2023 compared to consolidated operating income of $3.1 million in the same period of 2022.
  • The operating income of our business segments for the second quarter of 2023 was $6.1 million compared to the operating income of our business segments of $4.8 million in the same period of 2022, an increase of 28% year-over-year.
  • Net income was $1.2 million in the second quarter of 2023, compared to net income of $2.6 million in the same period of 2022. Net income was negatively impacted by higher operating expenses associated with investments in growth as well as operating as a public company and higher interest expense.
  • Adjusted EBITDA(1) was $3.1 million in the second quarter 2023, compared to $3.6 million in the same period of 2022.

Financial Outlook

Assuming the U.S. economy does not experience any major economic conditions that deteriorate or otherwise significantly reduce advertiser demand, we are increasing our previously issued estimate as disclosed in our Q1 2023 update:

  • For fiscal year 2023, we expect revenue to be in the range of $125 million to $130 million, or 43% year-over-year growth at the mid-point.

“Our financial results illustrate the momentum we continue to see in our overall business and specifically a strong acceleration within our sell-side segment. We have also further solidified our balance sheet and provided the company additional financial flexibility via our previously announced $5 million revolving credit facility, positioning us well to continue growing in 2023 and maximizing value for our shareholders,” commented Diana Diaz, Chief Financial Officer.  

Conference Call and Webcast Details

Direct Digital Holdings will host a conference call on Thursday, August 10, 2023 at 5:00 p.m. Eastern Time to discuss the Company’s second quarter 2023 financial results. The live webcast and replay can be accessed at https://ir.directdigitalholdings.com/. Please access the website at least fifteen minutes prior to the call to register, download and install any necessary audio software. For those who cannot access the webcast, a replay will be available at https://ir.directdigitalholdings.com/ for a period of twelve months.

Footnotes

(1) “Adjusted EBITDA” is a non-GAAP financial measure. The section titled “Non-GAAP Financial Measures” below describes our usage of non-GAAP financial measures and provides reconciliations between historical GAAP and non-GAAP information contained in this press release.

Forward Looking Statements

This press release may contain forward-looking statements within the meaning of federal securities laws, including the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and which are subject to certain risks, trends and uncertainties.

As used below, “we,” “us,” and “our” refer to the Company. We use words such as “could,” “would,” “may,” “might,” “will,” “expect,” “likely,” “believe,” “continue,” “anticipate,” “estimate,” “intend,” “plan,” “project” and other similar expressions to identify forward-looking statements, but not all forward-looking statements include these words. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements.

All of our forward-looking statements involve estimates and uncertainties that could cause actual results to differ materially from those expressed in or implied by the forward-looking statements. Our forward-looking statements are based on assumptions that we have made in light of our industry experience and our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. Although we believe that these forward-looking statements are based on reasonable assumptions, many factors could affect our actual operating and financial performance and cause our performance to differ materially from the performance expressed in or implied by the forward-looking statements, including, but not limited to: our dependence on the overall demand for advertising, which could be influenced by economic downturns; any slow-down or unanticipated development in the market for programmatic advertising campaigns; the effects of health epidemics; operational and performance issues with our platform, whether real or perceived, including a failure to respond to technological changes or to upgrade our technology systems; any significant inadvertent disclosure or breach of confidential and/or personal information we hold, or of the security of our or our customers’, suppliers’ or other partners’ computer systems; any unavailability or non-performance of the non-proprietary technology, software, products and services that we use; unfavorable publicity and negative public perception about our industry, particularly concerns regarding data privacy and security relating to our industry’s technology and practices, and any perceived failure to comply with laws and industry self-regulation; restrictions on the use of third-party “cookies,” mobile device IDs or other tracking technologies, which could diminish our platform’s effectiveness; any inability to compete in our intensely competitive market; any significant fluctuations caused by our high customer concentration; our limited operating history, which could result in our past results not being indicative of future operating performance; any violation of legal and regulatory requirements or any misconduct by our employees, subcontractors, agents or business partners; any strain on our resources, diversion of our management’s attention or impact on our ability to attract and retain qualified board members as a result of being a public company; our dependence, as a holding company, on receiving distributions from Direct Digital Holdings, LLC to pay our taxes, expenses and dividends; and other factors and assumptions discussed in the “Risk Factors,” “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” and other sections of our filings with the Securities and Exchange Commission that we make from time to time. Should one or more of these risks or uncertainties materialize or should any of these assumptions prove to be incorrect, our actual operating and financial performance may vary in material respects from the performance projected in these forward-looking statements. Further, any forward-looking statement speaks only as of the date on which it is made, and except as required by law, we undertake no obligation to update any forward-looking statement contained in this press release to reflect events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances, and we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

About Direct Digital Holdings

Direct Digital Holdings (Nasdaq: DRCT), owner of operating companies Colossus SSP, Huddled Masses, and Orange 142, brings state-of-the-art sell- and buy-side advertising platforms together under one umbrella company. Direct Digital Holdings’ sell-side platform, Colossus SSP, offers advertisers of all sizes extensive reach within general market and multicultural media properties. The company’s subsidiaries Huddled Masses and Orange142 deliver significant ROI for middle market advertisers by providing data-optimized programmatic solutions at scale for businesses in sectors that range from energy to healthcare to travel to financial services. Direct Digital Holdings’ sell- and buy-side solutions manage approximately 136,000 clients monthly, generating over 250 billion impressions per month across display, CTV, in-app and other media channels.  

CONSOLIDATED BALANCE SHEETS
June 30, 2023December 31, 2022
ASSETS
CURRENT ASSETS
Cash and cash equivalents$5,668,479$4,047,453
Accounts receivable, net29,628,79726,354,114
Prepaid expenses and other current assets1,051,982883,322
Total current assets36,349,25831,284,889
Property, equipment and software, net of accumulated depreciation and amortization of $155,698 and $34,218, respectively688,716673,218
Goodwill6,519,6366,519,636
Intangible assets, net12,660,85013,637,759
Deferred tax asset, net5,170,8705,164,776
Operating lease right-of-use assets714,129798,774
Other long-term assets46,98746,987
Total assets$62,150,446$58,126,039
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable$23,357,665$17,695,404
Accrued liabilities3,879,4204,777,764
Liability related to tax receivable agreement, current portion40,112182,571
Notes payable, current portion982,500655,000
Deferred revenues950,831546,710
Operating lease liabilities, current portion47,66891,989
Income taxes payable22,280174,438
Related party payables1,197,1751,448,333
Total current liabilities30,477,65125,572,209
Notes payable, net of short-term portion and deferred financing cost of $1,858,720 and $2,115,161, respectively22,515,03022,913,589
Economic Injury Disaster Loan150,000150,000
Liability related to tax receivable agreement, net of current portion4,246,2634,149,619
Operating lease liabilities, net of current portion741,771745,340
Total liabilities58,130,71553,530,757
COMMITMENTS AND CONTINGENCIES (Note 9)
STOCKHOLDERS’ EQUITY
Class A common stock, $0.001 par value per share, 160,000,000 shares authorized, 3,519,780 and 3,252,764 shares issued and outstanding, respectively3,5203,253
Class B common stock, $0.001 par value per share, 20,000,000 shares authorized, 11,278,000 shares issued and outstanding11,27811,278
Additional paid-in capital8,539,8588,224,012
Accumulated deficit(4,534,925)(3,643,261)
Total stockholders’ equity4,019,7314,595,282
Total liabilities and stockholders’ equity$62,150,446$58,126,039
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months EndedFor the Six Months Ended
June 30, June 30, 
2023202220232022
Revenues
Buy-side advertising$11,803,092$9,321,267$19,242,758$15,152,308
Sell-side advertising23,600,70811,940,04137,383,95217,479,337
Total revenues35,403,80021,261,30856,626,71032,631,645
Cost of revenues
Buy-side advertising4,587,8973,154,4717,537,0505,223,817
Sell-side advertising20,743,2669,771,01732,583,97214,291,209
Total cost of revenues25,331,16312,925,48840,121,02219,515,026
Gross profit10,072,6378,335,82016,505,68813,116,619
Operating expenses
Compensation, taxes and benefits4,553,0293,494,6928,187,3256,049,728
General and administrative3,265,1601,776,9816,205,2543,417,873
Total operating expenses7,818,1895,271,67314,392,5799,467,601
Income from operations2,254,4483,064,1472,113,1093,649,018
Other income (expense)
Other income42,31392,14147,982
Forgiveness of Paycheck Protection Program loan287,143287,143
Loss on redemption of non-participating preferred units(590,689)
Contingent loss on early termination of line of credit(299,770)
Interest expense(1,027,493)(650,251)(2,044,794)(1,364,038)
Total other expense(985,180)(363,108)(2,252,423)(1,619,602)
Income (loss) before taxes1,269,2682,701,039(139,314)2,029,416
Tax expense (benefit)74,31286,676(336)86,676
Net income (loss)$1,194,956$2,614,363$(138,978)$1,942,740
Net income (loss) per common share:
Basic$0.08$0.18$(0.01)$0.18
Diluted$0.08$0.18$(0.01)$0.18
Weighted-average number of shares of common stock outstanding:
Basic14,772,62414,257,82714,676,09610,701,715
Diluted14,834,05114,257,82714,676,09610,701,715
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 
20232022
Cash Flows Provided By Operating Activities:
Net income (loss)$(138,978)$1,942,740
 Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Amortization of deferred financing costs272,008301,105
Amortization of intangible assets976,909976,909
Amortization of right-of-use assets84,64550,021
Amortization of capitalized software104,005
Depreciation of property and equipment17,475
Stock-based compensation304,01315,407
Forgiveness of Paycheck Protection Program loan(287,143)
Deferred income taxes(6,094)38,966
Payment on tax receivable agreement(45,815)
Loss on redemption of non-participating preferred units590,689
Contingent loss on early termination of line of credit299,770
Bad debt expense51,53224,799
Changes in operating assets and liabilities:
Accounts receivable(3,326,215)(6,996,667)
Prepaid expenses and other assets(256,496)386,258
Accounts payable5,662,2613,406,355
Accrued liabilities(769,344)601,699
Income taxes payable(152,158)47,710
Deferred revenues404,121(905,111)
Operating lease liability(47,890)(49,422)
Related party payable(251,158)(70,801)
Net cash provided by operating activities3,182,59173,514
Cash Flows Used In Investing Activities:
Cash paid for capitalized software and property and equipment(136,978)
Net cash used in investing activities(136,978)
Cash Flows Provided by (Used In) Financing Activities:
Payments on term loan(327,500)(275,000)
Payments of litigation settlement(129,000)
Payment of deferred financing costs(227,501)(185,093)
Proceeds from Issuance of Class A common stock, net of transaction costs11,212,043
Redemption of common units(3,237,838)
Redemption of non-participating preferred units(7,046,251)
Proceeds from warrants exercised12,100
Distributions to members(752,686)(309,991)
Net cash provided by (used in) financing activities(1,424,587)157,870
Net increase in cash and cash equivalents1,621,026231,384
Cash and cash equivalents, beginning of the period4,047,4534,684,431
Cash and cash equivalents, end of the period$5,668,479$4,915,815
Supplemental Disclosure of Cash Flow Information:
Cash paid for taxes$348,862$
Cash paid for interest$1,769,452$1,058,548
Non-cash Financing Activities:
Transaction costs related to issuances of Class A shares included in accrued liabilities$$1,045,000
Common unit redemption balance included in accrued liabilities$$3,962,162
Outside basis difference in partnership$$3,234,000
Tax receivable agreement payable to Direct Digital Management, LLC$$2,748,900
Tax benefit on tax receivable agreement$$485,100

NON-GAAP FINANCIAL MEASURES

In addition to our results determined in accordance with U.S. generally accepted accounting principles (“GAAP”), including, in particular operating income, net cash provided by operating activities, and net income, we believe that earnings before interest, taxes, depreciation and amortization (“EBITDA”), as adjusted for stock compensation expense, loss on early termination of line of credit, and loss on early extinguishment of debt, and loss on early redemption of non-participating preferred units (“Adjusted EBITDA”), a non-GAAP financial measure, is useful in evaluating our operating performance. The most directly comparable GAAP measure to Adjusted EBITDA is net income (loss).

In addition to operating income and net income, we use Adjusted EBITDA as a measure of operational efficiency. We believe that this non-GAAP financial measure is useful to investors for period-to-period comparisons of our business and in understanding and evaluating our operating results for the following reasons:

  • Adjusted EBITDA is widely used by investors and securities analysts to measure a company’s operating performance without regard to items such as depreciation and amortization, interest expense, provision for income taxes, and certain one-time items such as acquisition transaction costs and gains from settlements or loan forgiveness that can vary substantially from company to company depending upon their financing, capital structures and the method by which assets were acquired;
  • Our management uses Adjusted EBITDA in conjunction with GAAP financial measures for planning purposes, including the preparation of our annual operating budget, as a measure of operating performance and the effectiveness of our business strategies and in communications with our board of directors concerning our financial performance; and
  • Adjusted EBITDA provides consistency and comparability with our past financial performance, facilitates period-to-period comparisons of operations, and also facilitates comparisons with other peer companies, many of which use similar non-GAAP financial measures to supplement their GAAP results.

Our use of this non-GAAP financial measure has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under GAAP. The following table presents a reconciliation of Adjusted EBITDA to net income (loss) for each of the periods presented:

NON-GAAP FINANCIAL METRICS (unaudited)
For the Three Months Ended June 30, For the Six Months Ended June 30, 
2023202220232022
Net income (loss)$1,194,956$2,614,363$(138,978)$1,942,740
Add back (deduct):
Interest expense1,027,493650,2512,044,7941,364,038
Stock-based compensation209,47515,407304,01415,407
Amortization of intangible assets488,455488,455976,909976,909
Depreciation and amortization of property and equipment64,988121,480
Contingent loss on early termination of line of credit299,770
Tax expense (benefit)74,31286,676(336)86,676
Forgiveness of PPP loan(287,143)(287,143)
Loss on early redemption of non-participating preferred units590,689
Adjusted EBITDA$3,059,679$3,568,009$3,607,653$4,689,316

Contacts:

Investors:
Brett Milotte, ICR
Brett.Milotte@icrinc.com

View original content to download multimedia:https://www.prnewswire.com/news-releases/direct-digital-holdings-reports-second-quarter-2023-financial-results-301898267.html

SOURCE Direct Digital Holdings

Release – GeoVax Announces First Patients Vaccinated in Phase 2 Clinical Trial of COVID-19 Vaccine Booster in Patients with Chronic Lymphocytic Leukemia

Research News and Market Data on GOVX

Seeking Improved Immune Response vs mRNA Vaccine

Full Patient Enrollment Expected Within Six Months

ATLANTA, GA, August 10, 2023 — GeoVax Labs, Inc. (Nasdaq: GOVX), a biotechnology company developing immunotherapies and vaccines against cancers and infectious diseases, today announced that vaccinations have begun in an investigator-initiated clinical trial (ClinicalTrials.gov Identifier: NCT05672355) of GEO-CM04S1 in patients with chronic lymphocytic leukemia (CLL), being conducted at City of Hope National Medical Center.

Despite a high vaccination rate, CLL patients may be at high risk for lethal COVID-19 infection due to poor immune response to currently available vaccines. The GEO-CM04S1 vaccine uses a modified vaccinia virus (MVA) backbone to carry SARS-CoV-2 virus antigens that may be more effective at inducing COVID-19 immunity in patients with poor humoral immune responses since MVA strongly induces T cell expansion even in the background of immunosuppression. By targeting both the spike (S) and nucleocapsid (N) protein antigens, GEO-CM04S1 broadens the specificity of the immune responses and protects against the loss of efficacy associated with current vaccines due to the significant sequence variation observed with the spike antigen.

The study is examining the use of two injections of GEO-CM04S1, three months apart, to assess immune responses in these vulnerable patients, with an mRNA vaccine (currently, the Pfizer-BioNTech Bivalent vaccine) as the control arm. Participants will be randomized 1:1 to receive two boosters with either the GEO-CM04S1 or the control vaccine. The primary immune response outcome will be assessed at 56 days following the first booster injection. Up to 40 participants in each arm will be vaccinated, with immune responses evaluated and compared at the interim and final analyses.

David Dodd, GeoVax President and CEO, stated, “We are very pleased with the rapid start for this third important study for GEO-CM04S1, which we expect will achieve full patient enrollment within six months. We believe the GEO-CM04S1 vaccine, containing the two antigens, S and N, along with the recognized antibody and cellular immune responses resulting from the MVA approach, has the potential to offer greater booster protection than that from the current vaccines in use, as well as provide a greater degree of protection within immunocompromised patients. We expect the CLL trial will add to the data coming from our other ongoing trials, confirming the potential benefit of GEO-CM04S1 in another population of immunocompromised individuals. We look forward to sharing progress reports as we advance.”

About GEO-CM04S1

GEO-CM04S1 is a next-generation COVID-19 vaccine based on GeoVax’s MVA viral vector platform, which supports the presentation of multiple vaccine antigens to the immune system in a single dose. GEO-CM04S1 presents both the spike and nucleocapsid antigens of SARS-CoV-2 and is specifically designed to induce both antibody and T cell responses to non-variable parts of the virus. The more broadly specific and functional engagement of the immune system is designed to protect against the new and continually emerging variants of COVID-19. Based on data from animal models and a completed Phase 1 clinical study, vaccine-induced immune responses were shown to recognize both early and later variants of SARS-CoV-2, including the Omicron variant. Vaccines of this format should not require repeated modification and updating.

A recent presentation of unpublished data from the open-label portion of the Phase 2 trial of GEO-CM04S1 (ClinicalTrials.gov Identifier: NCT04977024) in patients undergoing hematological cancer treatment (i.e., patients who have reduced immune system function as a result of treatment) indicates that GEO-CM04S1 is highly immunogenic in these patients, inducing both antibody responses, including neutralizing antibodies, and T cell responses. These data support the planned progression of the Phase 2 clinical study, which will include a direct comparison to currently approved mRNA vaccines. GEO-CM04S1 also continues to advance in another Phase 2 clinical trial as a booster for healthy patients who have previously received the Pfizer or Moderna mRNA vaccine (ClinicalTrials.gov Identifier: NCT04639466). Data from these studies will form the basis for comparing vaccine potential in unique patient groups as well as the general population.

About GeoVax

GeoVax Labs, Inc. is a clinical-stage biotechnology company developing novel therapies and vaccines for solid tumor cancers and many of the world’s most threatening infectious diseases. The company’s lead program in oncology is a novel oncolytic solid tumor gene-directed therapy, Gedeptin®, presently in a multicenter Phase 1/2 clinical trial for advanced head and neck cancers. GeoVax’s lead infectious disease candidate is GEO-CM04S1, a next-generation COVID-19 vaccine targeting high-risk immunocompromised patient populations. Currently in three Phase 2 clinical trials, GEO-CM04S1 is being evaluated as a primary vaccine for immunocompromised patients such as those suffering from hematologic cancers and other patient populations for whom the current authorized COVID-19 vaccines are insufficient, and as a booster vaccine in patients with chronic lymphocytic leukemia (CLL). In addition, GEO-CM04S1 is in a Phase 2 clinical trial evaluating the vaccine as a more robust, durable COVID-19 booster among healthy patients who previously received the mRNA vaccines. GeoVax has a leadership team who have driven significant value creation across multiple life science companies over the past several decades. For more information, visit our website: www.geovax.com.

Forward-Looking Statements

This release contains forward-looking statements regarding GeoVax’s business plans. The words “believe,” “look forward to,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “could,” “target,” “potential,” “is likely,” “will,” “expect” and similar expressions, as they relate to us, are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. Actual results may differ materially from those included in these statements due to a variety of factors, including whether: GeoVax is able to obtain acceptable results from ongoing or future clinical trials of its investigational products, GeoVax’s immuno-oncology products and preventative vaccines can provoke the desired responses, and those products or vaccines can be used effectively, GeoVax’s viral vector technology adequately amplifies immune responses to cancer antigens, GeoVax can develop and manufacture its immuno-oncology products and preventative vaccines with the desired characteristics in a timely manner, GeoVax’s immuno-oncology products and preventative vaccines will be safe for human use, GeoVax’s vaccines will effectively prevent targeted infections in humans, GeoVax’s immuno-oncology products and preventative vaccines will receive regulatory approvals necessary to be licensed and marketed, GeoVax raises required capital to complete development, there is development of competitive products that may be more effective or easier to use than GeoVax’s products, GeoVax will be able to enter into favorable manufacturing and distribution agreements, and other factors, over which GeoVax has no control.

Further information on our risk factors is contained in our periodic reports on Form 10-Q and Form 10-K that we have filed and will file with the SEC. Any forward-looking statement made by us herein speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law. 

Investor Relations Contact:

Rich Cockrell

CG Capital

404-736-3838

govx@cg.capital

Media Contact:

Susan Roberts

sr@roberts-communications.com

202-779-0929

Release – 1-800-FLOWERS.COM, Inc. to Release Results for its Fiscal 2023 Fourth Quarter and Full Year on Thursday, August 31, 2023

Research News and Market Data on FLWS

Aug 10, 2023

JERICHO, N.Y.–(BUSINESS WIRE)– 1-800-FLOWERS.COM, Inc. (NASDAQ: FLWS) (the “Company”),a leading provider of gifts designed to help inspire customers to give more, connect more, and build more and better relationships, today announced that the Company will release financial results for its fiscal 2023 fourth quarter and full year on Thursday, August 31, 2023. The press release will be issued prior to market opening and will be followed by a conference call with members of senior management at 8:00 a.m. (ET).

The conference call will be available via live webcast from the Investors section of the Company’s website at 1800flowersinc.com. A recording of the call will be posted on the website within two hours of the call’s completion. A telephonic replay of the call can be accessed beginning at 2:00 p.m. (ET) on August 31, 2023, through September 7, 2023, at: (US) 1-877-344-7529; (Canada) 855-669-9658; (International) 1-412-317-0088; enter conference ID: #7782036.

Special Note Regarding Forward-Looking Statements:

Some of the statements contained in the Company’s scheduled Thursday, August 31, 2023, press release and conference call regarding its results for its fiscal 2023 fourth quarter and full year, other than statements of historical fact, may be forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the applicable statements. For a more detailed description of these and other risk factors, please refer to the Company’s SEC filings including its Annual Reports and Forms 10K and 10Q available at the Investor Relations section of the Company’s website at 1800flowersinc.com. The Company expressly disclaims any intent or obligation to update any of the forward-looking statements made in the scheduled conference call and any recordings thereof, or in any of its SEC filings, except as may be otherwise stated by the Company.

About 1-800-FLOWERS.COM, Inc.

1-800-FLOWERS.COM, Inc. is a leading provider of gifts designed to help inspire customers to give more, connect more, and build more and better relationships. The Company’s e-commerce business platform features an all-star family of brands, including: 1-800-Flowers.com®, 1-800-Baskets.com®, Cheryl’s Cookies®, Harry & David®, PersonalizationMall.com®, Shari’s Berries®, FruitBouquets.com®, Things Remembered®, Moose Munch®, The Popcorn Factory®, Wolferman’s Bakery®, Vital Choice®, and Simply Chocolate®. Through the Celebrations Passport® loyalty program, which provides members with free standard shipping and no service charge across our portfolio of brands, 1-800-FLOWERS.COM, Inc. strives to deepen relationships with customers. The Company also operates BloomNet®, an international floral and gift industry service provider offering a broad-range of products and services designed to help members grow their businesses profitably; Napco℠, a resource for floral gifts and seasonal décor; DesignPac Gifts, LLC, a manufacturer of gift baskets and towers; and Alice’s Table®, a lifestyle business offering fully digital livestreaming and on demand floral, culinary and other experiences to guests across the country. 1-800-FLOWERS.COM, Inc. was recognized among the top 5 on the National Retail Federation’s 2021 Hot 25 Retailers list, which ranks the nation’s fastest-growing retail companies, and was named to the Fortune 1000 list in 2022. Shares in 1-800-FLOWERS.COM, Inc. are traded on the NASDAQ Global Select Market, ticker symbol: FLWS. For more information, visit 1800flowersinc.com or follow @1800FLOWERSInc on Twitter.

FLWS-COMP
FLWS-FN

Investor Contact:

Andy Milevoj

(516) 237-4617

amilevoj@1800flowers.com

Media Contact:

Cherie Gallarello

cgallarello@1800flowers.com

Source: 1-800-FLOWERS.COM, Inc.

Release – Kelly Reports Second-Quarter 2023 Earnings, Substantial Progress on Business Transformation

Research News and Market Data on KELYA

August 10, 2023

  • Q2 revenue down 3.9%; down 4.5% in constant currency; organic revenue down 2.2% in constant currency
  • Q2 gross profit down 8.3%; GP rate, 19.8%, down 90 bps year-over-year due primarily to lower permanent placement fees as customer full-time hiring decelerates
  • Q2 operating earnings of $6.2 million, including $8.0 million of transformation-related restructuring and impairment charges, or $14.2 million on an adjusted basis
  • Comprehensive business transformation program expected to drive meaningful improvement in EBITDA margin beginning in the second half of 2023

TROY, Mich., Aug. 10, 2023 /PRNewswire/ — Kelly (Nasdaq: KELYA, KELYB), a leading global specialty talent solutions provider, today announced results for the second quarter of 2023.

Peter Quigley, president and chief executive officer, announced revenue for the second quarter of 2023 totaled $1.2 billion, a 3.9% decrease, or 4.5% decrease in constant currency, compared to the corresponding quarter of 2022, with organic, constant currency revenue down 2.2%. Year-over-year revenue trends were impacted by the sale of Russian operations in July 2022 and customers’ more guarded approach to hiring, partially offset by favorable currency impacts.

“In the second quarter, we remained focused on seeking out pockets of demand in more resilient markets, while the effects of ongoing macroeconomic uncertainty became more noticeable in certain parts of our portfolio,” said Quigley. “Our Education segment and higher-margin outcome-based solutions in P&I continued to deliver year-over-year growth, while lower demand for temporary and permanent placement services impacted results in our P&I and SET segments.”

Kelly reported operating earnings in the second quarter of 2023 of $6.2 million, compared to earnings of $8.2 million reported in the second quarter of 2022. Earnings in the second quarter of 2023 include $8.0 million of transformation-related restructuring and impairment charges. Excluding the transformation-related charges, adjusted earnings from operations were $14.2 million. Earnings in the second quarter of 2022 included an $18.5 million asset impairment charge related to our Russian operations and a $4.4 million gain on sale of assets related to underutilized real property and adjusted earnings were $22.3 million. Adjusted earnings declined year-over-year primarily as a result of lower revenues.

Earnings per share in the second quarter of 2023 were $0.20 compared to earnings per share of $0.06 in the second quarter of 2022. Included in the earnings per share in the second quarter of 2023 is an $0.11 loss per share related to transformation-related restructuring charges, net of tax, and a $0.05 loss per share, net of tax, related to an asset impairment charge. Included in the second quarter of 2022 is a $0.48 loss per share, net of tax, asset impairment charge, partially offset by a $0.08 per share gain on sale of real property, net of tax. On an adjusted basis, earnings per share were $0.36 in the second quarter of 2023, a decline of 20% from $0.45 per share in the corresponding quarter of 2022.

Quigley went on to provide an update on the company’s business transformation following the strategic restructuring actions it announced in July. “The change we set out to create through this transformation is no longer hypothetical. The efficiency actions we have implemented to date will deliver an immediate, meaningful improvement to the company’s EBITDA margin, creating a strong foundation for further EBITDA margin expansion going forward. With these actions unlocking additional resources to invest in our future, we are quickly shifting our focus to the growth phase of our transformation to realize the full potential of our specialty strategy.”

As a result of the strategic restructuring and additional cost optimization actions that Kelly will complete in 2023, the Company expects an adjusted EBITDA margin of approximately 3% exiting 2023. Assuming the benefit of a full year of its transformation-related savings and no change in current top-line expectations, the Company would expect to achieve a normalized, adjusted EBITDA margin in the range of 3.3% to 3.5%.

Kelly also reported that on August 9, its board of directors declared a dividend of $0.075 per share. The dividend is payable on September 6, 2023, to shareholders of record as of the close of business on August 23, 2023.

In conjunction with its second-quarter earnings release, Kelly has published a financial presentation on the Investor Relations page of its public website and will host a conference call at 9 a.m. ET on August 10 to review the results and answer questions. The call may be accessed in one of the following ways:

Via the Internet:
Kellyservices.com

Via the Telephone
(877) 692-8955 (toll free) or (234) 720-6979 (caller paid)
Enter access code 5728672
After the prompt, please enter ”#”

A recording of the conference call will be available after 2:30 p.m. ET on August 10, 2023, at (866) 207-1041 (toll-free) and (402) 970-0847 (caller-paid). The access code is 7516480#. The recording will also be available at kellyservices.com during this period.

This release contains statements that are forward looking in nature and, accordingly, are subject to risks and uncertainties. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including statements about Kelly’s financial expectations, are forward-looking statements. Factors that could cause actual results to differ materially from those contained in this release include, but are not limited to, (i) changing market and economic conditions, (ii) disruption in the labor market and weakened demand for human capital resulting from technological advances, loss of large corporate customers and government contractor requirements, (iii) the impact of laws and regulations (including federal, state and international tax laws), (iv) unexpected changes in claim trends on workers’ compensation, unemployment, disability and medical benefit plans, (v) litigation and other legal liabilities (including tax liabilities) in excess of our estimates, (vi) our ability to achieve our business’s anticipated growth strategies, (vii) our future business development, results of operations and financial condition, (viii) damage to our brands, (ix) dependency on third parties for the execution of critical functions, (x) conducting business in foreign countries, including foreign currency fluctuations, (xi) availability of temporary workers with appropriate skills required by customers, (xii) cyberattacks or other breaches of network or information technology security, and (xiii) other risks, uncertainties and factors discussed in this release and in the Company’s filings with the Securities and Exchange Commission. In some cases, forward-looking statements can be identified by words or phrases such as “may,” “will,” “expect,” “anticipate,” “target,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “continue,” “is/are likely to” or other similar expressions. All information provided in this press release is as of the date of this press release and we undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company’s expectations.

About Kelly®

Kelly Services, Inc. (Nasdaq: KELYA, KELYB) helps companies recruit and manage skilled workers and helps job seekers find great work. Since inventing the staffing industry in 1946, we have become experts in the many industries and local and global markets we serve. With a network of suppliers and partners around the world, we connect more than 450,000 people with work every year. Our suite of outsourcing and consulting services ensures companies have the people they need, when and where they are needed most. Headquartered in Troy, Michigan, we empower businesses and individuals to access limitless opportunities in industries such as science, engineering, technology, education, manufacturing, retail, finance, and energy. Revenue in 2022 was $5.0 billion. Learn more at kellyservices.com.

KLYA-FIN

MEDIA CONTACT:ANALYST CONTACT:
Jane StehneyScott Thomas
(248) 765-6864(248) 251-7264
stehnja@kellyservices.com scott.thomas@kellyservices.com 

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SOURCE Kelly Services, Inc.

Release – Largo Reports Second Quarter 2023 Financial Results, Including Further Progress on its Cost Reduction Initiatives and Commissioning of its Ilmenite Production as a By-Product of its Vanadium Operations

Research News and Market Data on LGO

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All dollar amounts expressed are in thousands of U.S. dollars unless otherwise indicated. 

Q2 2023 and Other Highlights

  • Revenues of $53.1 million vs. revenues of $84.8 million Q2 2022; Revenues per pound of V2O5 sold1 of $9.42 vs. $11.69 per pound sold in Q2 2022, mainly driven by a sharp decrease in V2O5 prices during the quarter, which was partially offset by an increase in the Company’s high purity vanadium sales
  • Operating costs of $43.0 million vs. $50.7 million in Q2 2022; Cash operating costs excluding royalties per pound1 of V2O5 equivalent sold of $5.18 vs. $4.23 in Q2 2022
  • Net loss of $6.0 million vs. net income of $18.0 million in Q2 2022; Basic loss per share of $0.09
  • Cash provided before working capital items of $3.8 million vs. $25.4 million in Q2 2022; Cash provided by operating activities of $18.1 million vs. $2.9 million in Q2 2022
  • Cash balance of $64.0 million, net working capital2 surplus of $103.1 million and debt of $65.0 million exiting Q2 2023
  • V2O5 production 2,639 tonnes (5.8 million lbs3) vs. 3,084 tonnes in Q2 2022 and 2,111 tonnes in Q1 2023; V2O5 equivalent sales of 2,557 tonnes vs. 3,291 tonnes in Q2 2022
  • Commissioning of the Company’s ilmenite concentration plant has commenced and is expected to be completed in Q3 2023, at which point a gradual ramp-up of ilmenite production in Q4 2023; Ilmenite concentrate will become a by-product of the Company’s vanadium operations in Brazil
  • Hot commissioning of Largo Clean Energy’s (“LCE”) 6.1 megawatt-hour (“MWh”) Enel Green Power España (“EGPE”) vanadium redox flow battery (“VRFB”) deployment remains ongoing, with provisional acceptance by EGPE expected in Q3 2023
  • The Company published its 2022 Sustainability Report entitled: “Building a low-carbon future together” highlighting the development and improvement of its ongoing sustainability programs
  • Q2 2023 results conference call: Thursday, August 10th at 1:00 p.m. ET 

Vanadium Market Update4

  • The average benchmark price per lb of V2O5 in Europe was $8.46 in Q2 2023, a 19% decrease from the average of $10.39 seen in Q1 2023 and a 24% decrease from the average of $11.08 seen in Q2 2022; The average benchmark price per kg of ferrovanadium in Europe was $33.47 in Q2 2023, a 15% decrease from the average of $39.46 seen in Q1 2023 and a 24% decrease from the average of $43.83 seen in Q2 2022
  • Lower vanadium prices can be attributed to weaker demand in the Chinese construction market; however, these prices been partially offset by higher VRFB deployments in China and increased aerospace demand
  • The average European benchmark V2O5 price at June 30, 2023 was approximately $7.98 per lb, compared with approximately $10.13 per lb at March 31, 2023 and $9.15 per lb at June 30, 2022
  • According to Vanitec, demand in energy storage applications has increased by 141% from Q1 2022 to Q1 2023

TORONTO–(BUSINESS WIRE)– Largo Inc. (“Largo” or the “Company“) (TSX: LGO) (NASDAQ: LGO) today released financial and operating results for the three and six months ended June 30, 2023. The Company reported revenues of $53.1 million from vanadium pentoxide (“V2O5”) equivalent sales of 2,557 tonnes.

Daniel Tellechea, Interim CEO and Director of Largo, stated: “A sharp decrease in V2O5 prices combined with lower sales in Q2 2023 impacted the Company’s financial performance for the quarter. Higher production at the end of the second quarter is positively impacting in-transit inventory and should support higher availability and sales in the coming months. Our primary focus continues to be on delivering production and sales targets safely, optimizing our mine plan, as well as implementing additional cost reduction measures at both the mine site and at LCE to support profit margins going forward. The Company is beginning to see a reduction in key consumable costs at its mine site and has implemented a cost reduction plan at LCE.”

He continued: “Chinese and European steel sector spot demand for vanadium was weaker in Q2 2023, however, strong demand from the aerospace industry offset this during the quarter. Importantly, recent estimates indicate that energy storage demand is expected to increase significantly in the future, driven primarily by new VRFB deployments to 2030, with a CAGR of 14%8.”

Financial Results

(thousands of U.S. dollars, except for basic earnings (loss) per share and diluted earnings (loss) per share)Three months endedSix months ended
June 30, 2023June 30, 2022June 30, 2023June 30, 2022
Revenues53,11084,804110,531127,492
Operating costs(43,029)(50,704)(88,960)(79,662)
Direct mine and production costs(24,976)(23,905)(53,395)(41,465)
Net income (loss) before tax(4,647)22,409(3,932)23,223
Income tax recovery (expense)295(7,115)(38)(7,717)
Deferred income tax (expense) recovery(1,614)2,671(3,203)505
Net income (loss)(5,966)17,965(7,173)16,011
Basic earnings (loss) per share(0.09)0.28(0.11)0.25
Diluted earnings (loss) per share(0.09)0.28(0.11)0.25
     
Cash provided before non-cash working capital items3,84125,40011,99131,151
Net cash provided by (used in) operating activities18,0572,90223,010(1,148)
Net cash (used in) provided by financing activities(1,756)(15,679)23,549(15,294)
Net cash used in investing activities(14,283)(11,383)(37,689)(15,651)
Net change in cash2,405(25,516)9,509(30,912)
 As at
 June 30, 2023December 31, 2022
Cash63,98054,471
Debt65,00040,000
Working capital2103,147115,171
 

Maracás Menchen Mine Operational and Sales Results

 Q2 2023Q2 2022
   
Total Ore Mined (tonnes)489,892378,273
Ore Grade Mined – Effective Grade5 (%)0.861.18
Total Mined – Dry Basis (tonnes)3,671,8422,503,696
   
Concentrate Produced (tonnes)99,083124,317
Grade of Concentrate (%)3.343.28
Global Recovery6 (%)81.081.8
   
V2O5 Produced (Flake + Powder) (tonnes)2,6393,084
High purity V2O5 equivalent produced (tonnes)983587
V2O5 produced (equivalent pounds 3 )5,817,9926,799,048
V2O5 Equivalent Sold (tonnes)2,5573,291
Produced V2O5 equivalent sold (tonnes)2,2682,783
Purchased V2O5 equivalent sold (tonnes)289508
   
Cash Operating Costs Excluding Royalties per pound ($/lb)15.184.23
Revenues per pound sold ($/lb)19.4211.69

Q2 2023 Financial Highlights

  • The Company recognized revenues of $53.1 million from sales of 2,557 tonnes of V2O5 equivalent (Q2 2022 – 2,849 tonnes) in Q2 2023. This represents a 37% decrease in revenues over Q2 2022 ($84.8 million) mainly due to lower sales and vanadium prices for the quarter. Reconciliation of the Company’s revenues per pound sold1 and total quantities sold of each product are provided in the “Non-GAAP7 Measures” section of this press release.
  • Operating costs of $43.0 million (Q2 2022 – $50.7 million) include direct mine and production costs of $25.0 million (Q2 2022 – $23.9 million), conversion costs of $2.2 million (Q2 2022 – $2.3 million), product acquisition costs of $3.8 million (Q2 2022 – $9.6 million), royalties of $2.5 million (Q2 2022 – $3.7 million), distribution costs of $2.5 million (Q2 2022 – $2.9 million), inventory write-down of $0.7 million (Q2 2022 – $2.3 million), depreciation and amortization of $6.2 million (Q2 2022 – $5.5 million) and iron ore costs of $0.2 million (Q2 2022 – $0.2 million). The increase in direct mine and production costs is attributable to an increase in total ore mined and the move to a new mining contractor in Q3 2022. Higher mining costs, the change in production levels across the period and the ramp up following the challenges experienced in the prior quarter negatively impacted costs. In addition, as compared with Q2 2022, the Company continued to experience elevated costs in critical consumables. The Company is actively working to manage its usage of these consumables and is also starting to see a softening in consumable prices.
  • Cash operating costs excluding royalties1 per pound sold were $5.18 per lb, compared with $4.23 for Q2 2022. The increase seen in Q2 2023 compared with Q2 2022 is largely due to the reasons noted above.
  • Professional, consulting and management fees of $5.8 million decreased from Q2 2022 by 9%. The decrease was mainly due to lower expenses incurred in the mine properties segment in Q2 2023 over Q2 2022, which is primarily attributable to additional compensation costs incurred in Q2 2022.
  • Other general and administrative expenses of $3.3 million decreased from Q2 2022 by 35% (or $1.8 million), which is primarily attributable to the increase in legal provisions recognized in Q2 2022 in the mine properties segment.
  • Finance costs of $2.0 million in Q2 2023 increased by $1.7 million from Q2 2022, which is primarily attributable to interest on the increased debt level in Q2 2023 as compared with Q2 2022, as well as a write-down of vanadium assets of $0.2 million.
  • Exploration and evaluation costs of $1.3 million in Q2 2023 increased by $1.1 million from Q2 2022. This was driven by infill drilling and geological model work at the Maracás Menchen Mine and diamond drilling at Campo Alegre de Lourdes.
  • Following the completion of its short-term infill drilling program in the Campbell Pit, the resulting geological model update and the decision to prioritize operating flexibility in the near-term mine planning, the Company has decided to accelerate its pre-stripping mining rates. Accordingly, it has revised its guidance for capitalized waste stripping costs for 2023. Expenditures of $11.7 million were capitalized during the six months ended June 30, 2023, and the Company now plans to incur approximately $15.0 million in the remainder of 2023. The Company believes that increased operating flexibility at its open pit mine will, amongst other things, assist in preventing weather related disruptions at the mine.
  • Cash provided by operating activities continues to be impacted by expenditures at LCE, with a net loss of $5.3 million recognized in Q2 2023 (Q2 2022 – $5.4 million).

Additional Corporate Updates

  • Production: V2O5 production in April, May and June 2023 was 676 tonnes, 945 tonnes and 1,018 tonnes, respectively, for a total of 2,639 tonnes of V2O5 produced in Q2 2023.
    • The Company completed its 2023 infill drilling campaign, which resulted in a further refinement of the Company’s short-term mining model. The Company achieved a normalized production level in June following the completion of upgrades to the crushing circuit and an improvement in mining performance as compared with Q1 2023. These upgrades are expected to reduce operational maintenance costs and provide more flexibility in the blending of ores to stabilize V2O5 production.
    • In Q2 2023, the Company produced 983 V2O5 equivalent tonnes of high purity products, including 706 tonnes of high purity V2O5 and 277 tonnes of high purity vanadium trioxide (“V2O3“). This represented 37% of the Company’s total quarterly production.
    • The global recovery6 achieved in Q2 2023 was 81.0%, a decrease of 1.0% from the 81.8% achieved in Q2 2022 and 2.4% lower than the 83.0% achieved in Q1 2023. The global recovery6 in April, May and June 2023 was 81.3%, 80.4%, 81.3%, respectively.
    • The total material moved in the mine in June was a record 1,349,405 tonnes of waste and 108,104 tonnes of ore (dry basis). In Q2 2023, 489,892 tonnes of ore were mined with an effective grade5 of 0.86% of V2O5. The ore mined in Q2 2023 was 30% higher than in Q2 2022. The Company produced 99,083 tonnes of concentrate with an effective grade5 of 3.34%.
    • Subsequent to Q2 2023, production in July 2023 was 644 tonnes of V2O5 equivalent as a result of process restrictions following the accident in July at its chemical plant. However, the Company accumulated intermediate stocks of vanadium material that is expected to be processed in August, offsetting a portion of weaker July V2O5 output.
  • Sales: In Q2 2023, the Company sold 2,557 tonnes of V2O5 equivalent (Q2 2022 – 3,291 tonnes), including 289 tonnes of purchased products (Q2 2022 – 508 tonnes). Produced V2O5 equivalent sold decreased, with 2,268 tonnes sold in Q2 2023, as compared with 2,783 tonnes in Q2 2022. The Company delivered both standard grade and high purity V2O5, as well as vanadium trioxide (“V2O3”) and ferrovanadium (“FeV”) to customers globally. Subsequent to Q2 2023, sales in July 2023 were 860 tonnes of V2O5 equivalent.
  • Largo Clean Energy: During Q2 2023, LCE continued to make progress on the delivery of the EGPE contract, which remains a priority focus. LCE finalized the pumping of electrolyte for EGPE’s VCHARGE VRFB deployment and completed cold commissioning of the system in June. The battery system was also successfully interconnected with the grid and the system inverter was successfully utilized to form the chemistry. The battery is currently performing charge-discharge cycles as part of the ongoing hot commissioning phase, which is anticipated to be completed in Q3 2023, along with provisional acceptance of the system by EGPE.
    • During Q2 2023, Mr. Francesco D’Alessio was appointed as President of LCE. The Company continues to evaluate all strategic options for LCE in order to fully maximize its unique value proposition in the energy storage sector. This includes but is not limited to the potential strengthening and formalization of existing industry and commercial relationships, developing additional collaborative partnerships, evaluating alternative deployment strategies, and performing a comprehensive review of cost reduction measures.
    • In accordance with this strategic evaluation, LCE has implemented a cost reduction plan and expects to realize savings of approximately 50% in its expenditures at LCE going forward.
  • Ilmenite Plant: Construction of the ilmenite concentration plant was completed in Q2 2023. Commissioning of this new facility has commenced and is expected to be completed in Q3 2023. A gradual ramp-up of ilmenite concentrate production will occur in Q4 2023.
  • Exploration: During Q2 2023, the Company completed approximately 5,000 metres of reverse circulation (“RC”) infill drilling in the Campbell Pit and 3,500 metres of diamond drilling in the near mine deep drilling program. The Campbell Pit geological model was updated in Q2 2023 and delivered to the mine planning team. This model will continue to be updated quarterly and will assist with mine planning activities going forward.
  • Largo Physical Vanadium Corp. (“LPV”): LPV continued its acquisition of vanadium assets, with $1.5 million spent during Q2 2023. LPV has deployed over 90% of its capital and is focussed on marketing and strategic initiatives to establish its business model.

Q2 2023 Webcast and Conference Call Information

The Company will host a webcast and conference call on Thursday, August 10th at 1:00 p.m. ET, to discuss its second quarter 2023 results and progress.

Webcast and Conference Call Details:

Details of the webcast and conference call are listed below:

Conference Call Details
Date:Thursday, August 10, 2023
Time:1:00 p.m. ET
Dial-in Number:Local: +1 (416) 764-8650
North American Toll Free: +1 (888) 664-6383
Conference ID:72903885
Webcast Registration Link:https://app.webinar.net/YkB4eW6Ey1v
RapidConnect Linkhttps://emportal.ink/3rk2Eqz
Replay Number:Local / International: + 1 (416) 764-8677
North American Toll Free: +1 (888) 390-0541
Replay Passcode: 903885#
Website:To view press releases or any additional financial information, please visit the Investor Resources section of the Company’s website at: www.largoinc.com/English/investor-resources

A playback recording will be available on the Company’s website for a period of 60-days following the conference call.

The information provided within this release should be read in conjunction with Largo’s unaudited condensed interim consolidated financial statements for the three and six months ended June 30, 2023 and 2022, and its management’s discussion and analysis for the three and six months ended June 30, 2023, which are available on our website at www.largoinc.com or on the Company’s respective profiles at www.sedar.com and www.sec.gov.

About Largo

Largo has a long and successful history as one of the world’s preferred vanadium companies through the supply of its VPURETM and VPURE+TM products, which are sourced from one of the world’s highest-grade vanadium deposits at the Company’s Maracás Menchen Mine in Brazil. Aiming to enhance value creation at Largo, the Company is in the process of implementing a titanium dioxide pigment plant using feedstock sourced from its existing operations in addition to advancing its U.S.-based clean energy division with its VCHARGE vanadium batteries. Largo’s VCHARGE vanadium batteries contain a variety of innovations, enabling an efficient, safe and ESG-aligned long duration solution that is fully recyclable at the end of its 25+ year lifespan. Producing some of the world’s highest quality vanadium, Largo’s strategic business plan is based on two pillars: 1.) vanadium production from its operations in Brazil and 2.) energy storage business in the U.S. to support a low carbon future through its clean energy division.

Largo’s common shares trade on the Nasdaq Stock Market and on the Toronto Stock Exchange under the symbol “LGO”. For more information, please visit www.largoinc.com.

Cautionary Statement Regarding Forward-looking Information:

This press release contains “forward-looking information” and “forward-looking statements” within the meaning of applicable Canadian and United States securities legislation. Forward‐looking information in this press release includes, but is not limited to, statements with respect to the timing and amount of estimated future production and sales; the future price of commodities; costs of future activities and operations, including, without limitation, the effect of inflation and exchange rates; the effect of unforeseen equipment maintenance or repairs on production; timing and cost related to the commissioning and ramp-up of the ilmenite plan, ilmenite production; the ability to sell ilmenite, V2O5 or other vanadium commodities on a profitable basis, the ability to produce high purity V2O5 and V2O3 according to customer specifications; the extent of capital and operating expenditures; the improvements to mine planning based on the results of drilling campaigns; the affect of the re-assay program results on measured and indicated resource estimates. Forward‐looking information in this press release also includes, but is not limited to, statements with respect to our ability to build, finance and successfully operate a VRFB business, the projected timing and cost of the completion of the EGPE project; our ability to protect and develop our technology, our ability to maintain our IP, the competitiveness of our product in an evolving market, our ability to market, sell and deliver our VCHARGE batteries on specification and at a competitive price, our ability to successfully deploy our VCHARGE batteries in foreign jurisdictions, the affect of the workforce reduction on operating costs, our ability to secure the required resources to build and deploy our VCHARGE batteries, and the adoption of VRFB technology generally in the market.

The following are some of the assumptions upon which forward-looking information is based: that general business and economic conditions will not change in a material adverse manner; demand for, and stable or improving price of V2O5, other vanadium products, ilmenite and titanium dioxide pigment; receipt of regulatory and governmental approvals, permits and renewals in a timely manner; that the Company will not experience any material accident, labour dispute or failure of plant or equipment or other material disruption in the Company’s operations at the Maracás Menchen Mine or relating to Largo Clean Energy, specially in respect of the installation and commissioning of the EGPE project; the availability of financing for operations and development; the availability of funding for future capital expenditures; the ability to replace current funding on terms satisfactory to the Company; the ability to mitigate the impact of heavy rainfall; the reliability of production, including, without limitation, access to massive ore, the Company’s ability to procure equipment, services and operating supplies in sufficient quantities and on a timely basis; that the estimates of the resources and reserves at the Maracás Menchen Mine are within reasonable bounds of accuracy (including with respect to size, grade and recovery and the operational and price assumptions on which such estimates are based); the accuracy of the Company’s mine plan at the Maracás Menchen Mine, the competitiveness of the Company’s VRFB technology; the ability to obtain funding through government grants and awards for the Green Energy sector, the accuracy of cost estimates and assumptions on future variations of VCHARGE battery system design, that the Company’s current plans for ilmenite and VRFBs can be achieved; the Company’s “two-pillar” business strategy will be successful; the Company’s sales and trading arrangements will not be affected by the evolving sanctions against Russia; and the Company’s ability to attract and retain skilled personnel and directors; the ability of management to execute strategic goals.

Forward-looking statements can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. All information contained in this news release, other than statements of current and historical fact, is forward looking information. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Largo or Largo Clean Energy to be materially different from those expressed or implied by such forward-looking statements, including but not limited to those risks described in the annual information form of Largo and in its public documents filed on www.sedar.com and available on www.sec.gov from time to time. Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made. Although management of Largo has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Largo does not undertake to update any forward-looking statements, except in accordance with applicable securities laws. Readers should also review the risks and uncertainties sections of Largo’s annual and interim MD&As which also apply.

Trademarks are owned by Largo Inc.

Q2 2023 Net Income Reconciliation

  Q2 2023 
Total V2O5 equivalent sold000s lbs 5,637A
 Tonnesi 2,557 
    
Produced V2O5 equivalent sold000s lbs 5,000B
 Tonnesi 2,268 
    
Revenues per pound sold$/lb$9.42C
Cash operating costs per pound$/lb$5.67D
Conversion of tonnes to pounds, 1 tonne = 2,204.62 pounds or lbs.
  Q2 2023 
Revenues $53,110A x C 2,557 tonnes of V2O5 equivalent sold (Q2 2022 – 3,291 tonnes), with revenues per pound sold of $9.42 (Q2 2022 – $11.69)
Cash operating costs  (28,365)B x D Global recovery of 81.0% (Q2 2022 – 81.8%), impact of increased mining costs and cost increases for critical consumables
Other operating costs   
Conversion costs (costs incurred in converting V2O5 to FeV that are recognized on the sale of FeV)(2,220) Note 19 579 tonnes of FeV sold
Product acquisition costs (costs incurred in purchasing products from 3rd parties that are recognized on the sale of those products)(3,753) Note 19 289 tonnes of V2O5 equivalent of purchased products sold, compared with 508 tonnes in Q2 2022 with a cost of $9,568
Distribution costs(2,525) Note 19
Depreciation(6,202) Note 19
Inventory write-down(683) Note 19
Attributable to purchased FeV and V2O5 inventory
Increase in legal provisions(230) See “other general and administrative expenses” section on page 5
Iron ore costs(220) Note 19
   (15,833) 
Commercial & Corporate costs   
Professional, consulting and management fees(2,453) Note 15 (Sales & trading plus Corporate)
Other general and administrative expenses(1,332) 
Share-based payments(413) 
   (4,198) 
Largo Clean Energy  (5,236)Note 15 (excluding finance costs and foreign exchange) 2023 guidance between $13,500 and $14,500
 
Largo Physical Vanadium  (332)Note 15 (excluding finance costs and foreign exchange)
Titanium project  (174)Note 15 – “other”
Foreign exchange loss  (817) 
Finance costs  (1,981) 
Interest income  480 
Exploration and evaluation costs  (1,301) 
    
Net income before tax  (4,647) 
    
Income tax expense  295 
Deferred income tax expense  (1,614) 
    
Net income (loss) $(5,966) 

Note references in the table above refer to the note disclosures contained in the Q2 2023 unaudited condensed interim consolidated financial statements.

Non-GAAP Measures

The Company uses certain non-GAAP measures in its press release, which are described in the following section. Non-GAAP financial measures and non-GAAP ratios are not standardized financial measures under IFRS, the Company’s GAAP, and might not be comparable to similar financial measures disclosed by other issuers. These measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.

Revenues Per Pound

The Company’s press release refers to revenues per pound sold, V2O5 revenues per pound of V2O5 sold and FeV revenues per kg of FeV sold, which are non-GAAP financial measures that are used to provide investors with information about a key measure used by management to monitor performance of the Company.

These measures, along with cash operating costs, are considered to be key indicators of the Company’s ability to generate operating earnings and cash flow from its Maracás Menchen Mine and sales activities. These measures differ from measures determined in accordance with IFRS, and are not necessarily indicative of net earnings or cash flow from operating activities as determined under IFRS.

The following table provides a reconciliation of revenues per pound sold, V2O5 revenues per pound of V2O5 sold and FeV revenues per kg of FeV sold to revenues and the revenue information presented in note 18 as per the Q2 2022 unaudited condensed interim consolidated financial statements.

 Three months endedSix months ended
 June 30,
2023
June 30,
2022
June 30,
2023
June 30,
2022
Revenues – V2O5 producedi$30,558$45,976$ 65,084$67,790
V2O5 sold – produced (000s lb) 3,083 4,385  6,881 7,079
V2O5 revenues per pound of V2O5 sold – produced ($/lb)$9.91$10.48$ 9.46$9.58
     
Revenues – V2O5 purchasedi$2,937$1,143$ 5,465$1,529
V2O5 sold – purchased (000s lb) 396 88  705 132
V2O5 revenues per pound of V2O5 sold – purchased ($/lb)$7.42$12.99$ 7.75$11.58
     
Revenues – V2O5i$33,495$47,119$ 70,549$69,319
V2O5 sold (000s lb) 3,479 4,473  7,586 7,211
V2O5 revenues per pound of V2O5 sold ($/lb)$9.63$10.53$ 9.30$9.61
     
Revenues – V2O3i$2,358$47,119$ 3,841$69,319
V2O3 sold (000s lb) 177   311 
V2O3 revenues per pound of V2O3 sold ($/lb)$13.32$$ 12.35$
     
Revenues – FeV producedi$17,230$22,883$ 34,658$41,911
FeV sold – produced (000s kg) 579 550  1,147 1,182
FeV revenues per kg of FeV sold – produced ($/kg)$29.76$41.61$ 30.22$35.46
     
Revenues – FeV purchasedi$27$14,802$ 328$16,262
FeV sold – purchased (000s kg) 1 317  11 357
FeV revenues per kg of FeV sold – purchased ($/kg)$27.00$46.69$ 29.82$45.55
     
Revenues – FeVi$17,256$37,685$ 34,986$58,173
FeV sold (000s kg) 580 867  1,158 1,539
FeV revenues per kg of FeV sold ($/kg)$29.75$43.47$ 30.21$37.80
     
Revenuesi$53,110$84,804$ 110,531$127,492
V2O5 equivalent sold (000s lb) 5,637 7,255  11,918 12,176
Revenues per pound sold ($/lb)$9.42$11.69$ 9.27$10.47
  1. As per note 18 in the Company’s Q2 2023 unaudited condensed interim consolidated financial statements. 

Cash Operating Costs and Cash Operating Costs Excluding Royalties

The Company’s press release refers to cash operating costs per pound and cash operating costs excluding royalties per pound, which are non-GAAP ratios based on cash operating costs and cash operating costs excluding royalties, which are non-GAAP financial measures, in order to provide investors with information about a key measure used by management to monitor performance. This information is used to assess how well the Maracás Menchen Mine is performing compared to plan and prior periods, and also to assess its overall effectiveness and efficiency.

Cash operating costs includes mine site operating costs such as mining costs, plant and maintenance costs, sustainability costs, mine and plant administration costs, royalties and sales, general and administrative costs (all for the Mine properties segment), but excludes depreciation and amortization, share-based payments, foreign exchange gains or losses, commissions, reclamation, capital expenditures and exploration and evaluation costs. Operating costs not attributable to the Mine properties segment are also excluded, including conversion costs, product acquisition costs, distribution costs and inventory write-downs.

Cash operating costs excluding royalties is calculated as cash operating costs less royalties.

Cash operating costs per pound and cash operating costs excluding royalties per pound are obtained by dividing cash operating costs and cash operating costs excluding royalties, respectively, by the pounds of vanadium equivalent sold that were produced by the Maracás Menchen Mine.

Cash operating costs, cash operating costs excluding royalties, cash operating costs per pound and cash operating costs excluding royalties per pound, along with revenues, are considered to be key indicators of the Company’s ability to generate operating earnings and cash flow from its Maracás Menchen Mine. These measures differ from measures determined in accordance with IFRS, and are not necessarily indicative of net earnings or cash flow from operating activities as determined under IFRS.

The following table provides a reconciliation of cash operating costs and cash operating costs excluding royalties, cash operating costs per pound and cash operating costs excluding royalties per pound for the Maracás Menchen Mine to operating costs as per the Q2 2022 unaudited condensed interim consolidated financial statements.

 Three months endedSix months ended
 June 30,
2023
June 30,
2022
June 30,
2023
June 30,
2022
Operating costsi$43,029$50,704$88,960$79,662
Professional, consulting and management feesii 624 1,567 1,468 2,603
Other general and administrative expensesiii 315 209 624 476
Less: iron ore costsi (220) (222) (493) (437)
Less: conversion costsi (2,220) (2,337) (4,138) (4,184)
Less: product acquisition costsi (3,753) (9,568) (7,931) (11,118)
Less: distribution costsi (2,525) (2,851) (3,972) (4,306)
Less: inventory write-down (683) (2,285) (683) (2,285)
Less: depreciation and amortization expense1 (6,202) (5,507) (13,453) (9,812)
Cash operating costs 28,365 29,710 60,382 50,599
Less: royaltiesi (2,450) (3,742) (4,895) (5,768)
Cash operating costs excluding royalties 25,915 25,968 55,487 44,831
Produced V2O5 sold (000s lb) 5,000 6,135 10,741 10,882
Cash operating costs per pound ($/lb)$5.67$4.84$5.62$4.65
Cash operating costs excluding royalties per pound ($/lb)$5.18$4.23$5.17$4.12
  1. As per note 19 in the Company’s Q2 2023 unaudited condensed interim consolidated financial statements.
  2. As per the Mine properties segment in note 15 in the Company’s Q2 2023 unaudited condensed interim consolidated financial statements.
  3. As per the Mine properties segment in note 15, less the increase in legal provisions of $0.2 million (Q2 2023) and $0.3 million (for the six months ended June 30, 2023) as noted in the “other general and administrative expenses” section on page 6 of the Company’s Q2 2023 Management Discussion and Analysis.

______________________________________
1
 Revenues per pound sold and cash operating costs are non-GAAP financial measures, and cash operating costs per pound and cash operating costs excluding royalties per pound are non-GAAP ratios with no standard meaning under IFRS, and may not be comparable to similar financial measures disclosed by other issuers. Refer to the “Non-GAAP Measures” section of this press release.
2 Defined as current assets less current liabilities per the consolidated statements of financial position.
3 Conversion of tonnes to pounds, 1 tonne = 2,204.62 pounds or lbs.
4 Fastmarkets Metal Bulletin.
5 Effective grade represents the percentage of magnetic material mined multiplied by the percentage of V2O5 in the magnetic concentrate.
6 Global recovery is the product of crushing recovery, milling recovery, kiln recovery, leaching recovery and chemical plant recovery.
7 GAAP – Generally Accepted Accounting Principles
8 RBC Capital Markets Vanadium Outlook (2023)

For further information, please contact:
Investor Relations
Alex Guthrie
Senior Manager, External Relations
+1.416.861.9778
aguthrie@largoinc.com

Source: Largo Inc.

Release – Alvopetro Announces Q2 2023 Financial Results and an Operational Update

Research News and Market Data on ALVOF

Aug 09, 2023

CALGARY, AB, Aug. 9, 2023 /CNW/ – Alvopetro Energy Ltd. (TSXV: ALV) (OTCQX: ALVOF) is pleased to announce financial results for the three and six months ended June 30, 2023 and an operational update.  

All references herein to $ refer to United States dollars, unless otherwise stated and all tabular amounts are in thousands of United States dollars, except as otherwise noted.

President & CEO, Corey C. Ruttan commented:

“We continue to post strong results, generating an operating netback of $69.61 per boe and $11 million in funds flow from operations, highlighting the strong profitability of our operations. Our 2023 capital program is focused on adding 100% interest production from our Murucututu natural gas project and our Bom Lugar oil field. We have had exciting early results with the stimulation of our 197(1) Murucututu well and drilling our first oil development well at Bom Lugar.”

Operational Update

Drilling operations continue on the 183-A3 well on our Murucututu natural gas field. The well was spud on July 11th and is targeting shallower exploration potential in the Caruaçu Formation and the Gomo member of the Candeias Formation. We expect drilling to be completed later this quarter. We also expect to complete our recently drilled Bom Lugar well (BL-06) and have the well on production in the third quarter.

Our natural gas price under our long-term gas sales agreement with Bahiagás was adjusted effective August 1st to BRL1.99/m3 or $13.25/Mcf, based on our average heat content to date, the July 31, 2023 BRL/USD foreign exchange rate of 4.74 and enhanced sales tax credits applicable in 2023. This new gas price is effective for all of our natural gas sales from both our Caburé and Murucututu fields as of August 1, 2023.

Financial and Operating Highlights – Second Quarter of 2023

  • Average daily sales decreased to 1,975 boepd (-29% from Q1 2023 and -16% from Q2 2022) due mainly to reduced production from our Caburé natural gas field as a result of higher nominated volumes from our partner.
  • Our average realized natural gas price increased to $12.86/Mcf, an 8% increase from Q2 2022 with the 3% increase in our contracted natural gas price and enhanced sales tax credits available in 2023. Compared to Q1 2023, our realized sales price increased 7% due mainly to the appreciation of the BRL to the USD in Q2. With the higher natural gas price, our overall realized price per boe increased to $77.41 (+6% from Q1 2023 and +5% from Q2 2022), despite lower Brent pricing on condensate sales.
  • Our natural gas, condensate and oil revenue was $13.9 million in Q2 2023, a decrease of $1.9 million compared to Q2 2022 (-12%) due to a 16% decrease in production partially offset by the increase in realized sales prices per boe.
  • Our operating netback improved to $69.61 per boe (+$3.00 per boe from Q1 2023 and +$5.65 per boe from Q2 2022) with a higher realized sales price and lower royalties, partially offset by the impact of fixed operating costs with lower sales volumes.
  • We generated funds flows from operations of $11.0 million ($0.30 per basic share and $0.29 per diluted share), a decrease of $1.4 million compared to Q2 2022 and $3.9 million compared to Q1 2023.
  • We reported net income of $9.9 million in Q2 2023, an increase of $3.2 million (+49%) compared to Q2 2022.
  • Capital expenditures totaled $8.5 million, including drilling cost for our BL-06 well on our Bom Lugar field, stimulation costs for our 197(1) well on our Murucututu field, and long-lead purchases for future capital projects.
  • Our working capital surplus was $18.1 million as of June 30, 2023, a decrease of $2.8 million from March 31, 2023, and an improvement of $3.4 million from December 31, 2022.

The following table provides a summary of Alvopetro’s financial and operating results for three and six months ended June 30, 2023 and June 30, 2022. The consolidated financial statements with the Management’s Discussion and Analysis (“MD&A”) are available on our website at www.alvopetro.com and will be available on the SEDAR+ website at www.sedarplus.ca.

As at and Three Months Ended June 30,As at and Six Months Ended June 30,
20232022Change20232022Change (%)
Financial
($000s, except where noted)
Natural gas, oil and condensate sales13,91415,787(12)32,07429,7598
Net income9,8526,6314922,05417,74624
      Per share – basic ($)(1)0.270.20350.600.5215
      Per share – diluted ($)(1)0.260.18440.590.4920
Cash flows from operating activities13,47312,997427,32921,33028
      Per share – basic ($)(1)0.370.38(3)0.750.6319
      Per share – diluted ($)(1)0.360.3530.730.5924
Funds flow from operations (2)11,04712,434(11)26,01923,33811
      Per share – basic ($)(1)0.300.37(19)0.710.693
      Per share – diluted ($)(1)0.290.34(15)0.690.648
Dividends declared5,1092,7288710,2135,44488
Per share(1)0.140.08750.280.1675
Capital expenditures8,5216,3383411,81210,13817
Cash and cash equivalents25,59813,6728725,59813,67287
Net working capital surplus(2)18,08411,6415518,08411,64155
Working capital, net of debt(2) 18,0849,0969918,0849,09699
Weighted average shares outstanding
      Basic (000s)(1)36,69733,973836,62733,9418
      Diluted (000s)(1)37,75536,637337,65736,4263
Operations
Natural gas, NGLs and crude oil sales:
      Natural gas (Mcfpd)11,26913,546(17)13,52013,940(3)
      NGLs – condensate (bopd)9297(5)1119813
      Oil (bopd)5558(38)
      Total (boepd)1,9752,359(16)2,3692,429(2)
Average realized prices(2):
      Natural gas ($/Mcf)12.8611.90812.4010.9413
      NGLs – condensate ($/bbl)83.35121.93(32)83.79114.11(27)
      Oil ($/bbl)63.9394.47(32)68.0083.90(19)
      Total ($/boe)77.4173.54574.8067.6811
Operating netback ($/boe)(2)
      Realized sales price77.4173.54574.8067.6811
      Royalties(1.97)(5.35)(63)(2.18)(4.84)(55)
      Production expenses(5.83)(4.23)38(4.75)(4.00)19
      Operating netback69.6163.96967.8758.8415
Operating netback margin(2)90 %87 %391 %87 %5
Notes:
(1)  Per share amounts are based on weighted average shares outstanding other than dividends per share, which is based on the number of common shares outstanding at each dividend record date. The weighted average number of diluted common shares outstanding in the computation of funds flow from operations and cash flows from operating activities per share is the same as for net income per share.
(2)  See “Non-GAAP and Other Financial Measures” section within this news release.

Q2 2023 Results Webcast

Alvopetro will host a live webcast to discuss our Q2 2023 financial results at 9:00 am Mountain time on Thursday August 10, 2023. Details for joining the event are as follows:

Date: August 10, 2023 Time: 9:00 AM Mountain/11:00 AM EasternLink:  https://us06web.zoom.us/j/83723796296 Dial-in numbers: https://us06web.zoom.us/u/kcmVqG8cd9 Webinar ID: 837 2379 6296

The webcast will include a question and answer period. Online participants will be able to ask questions through the Zoom portal. Dial-in participants can email questions directly to socialmedia@alvopetro.com.

Corporate Presentation

Alvopetro’s updated corporate presentation is available on our website at: http://www.alvopetro.com/corporate-presentation

Social Media

Follow Alvopetro on our social media channels at the following links: 

Twitter – https://twitter.com/AlvopetroEnergy Instagram – https://www.instagram.com/alvopetro/ LinkedIn – https://www.linkedin.com/company/alvopetro-energy-ltd

Alvopetro Energy Ltd.’s vision is to become a leading independent upstream and midstream operator in Brazil. Our strategy is to unlock the on-shore natural gas potential in the state of Bahia in Brazil, building off the development of our Caburé and Murucututu natural gas fields and our strategic midstream infrastructure.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.

Abbreviations:

$000s                    =thousands of U.S. dollars 
bbls                        barrels
boepd                    =  barrels of oil equivalent (“boe”) per day
bopd                       =   barrels of oil and/or natural gas liquids (condensate) per day
BRL                         =   Brazilian Real
CAD                          =Canadian dollars
m3                                =cubic metre
Mcf                        thousand cubic feet
Mcfpd                     =   thousand cubic feet per day
MMcf                       =   million cubic feet
MMcfpd                    =  million cubic feet per day
NGLs                        =natural gas liquids
Q1 2023                     three months ended March 31, 2023
Q2 2022                      three months ended June 30, 2022
Q2 2023                      =three months ended June 30, 2023

Non-GAAP and Other Financial Measures

This news release contains references to various non-GAAP financial measures, non-GAAP ratios, capital management measures and supplementary financial measures as such terms are defined in National Instrument 52-112 Non-GAAP and Other Financial Measures Disclosure. Such measures are not recognized measures under GAAP and do not have a standardized meaning prescribed by IFRS and might not be comparable to similar financial measures disclosed by other issuers. While these measures may be common in the oil and gas industry, the Company’s use of these terms may not be comparable to similarly defined measures presented by other companies. The non-GAAP and other financial measures referred to in this report should not be considered an alternative to, or more meaningful than measures prescribed by IFRS and they are not meant to enhance the Company’s reported financial performance or position. These are complementary measures that are used by management in assessing the Company’s financial performance, efficiency and liquidity and they may be used by investors or other users of this document for the same purpose. Below is a description of the non-GAAP financial measures, non-GAAP ratios, capital management measures and supplementary financial measures used in this news release. For more information with respect to financial measures which have not been defined by GAAP, including reconciliations to the closest comparable GAAP measure, see the “Non-GAAP Measures and Other Financial Measures” section of the Company’s MD&A which may be accessed through the SEDAR+ website at www.sedarplus.ca.

Non-GAAP Financial Measures

Operating netback

Operating netback is calculated as natural gas, oil and condensate revenues less royalties and production expenses. This calculation is provided in the “Operating Netback” section of the Company’s MD&A using our IFRS measures. The Company’s MD&A may be accessed through the SEDAR+ website at www.sedarplus.ca. Operating netback is a common metric used in the oil and gas industry used to demonstrate profitability from operations.

Non-GAAP Financial Ratios

Operating netback per boe

Operating netback is calculated on a per unit basis, which is per barrel of oil equivalent (“boe”). It is a common non-GAAP measure used in the oil and gas industry and management believes this measurement assists in evaluating the operating performance of the Company. It is a measure of the economic quality of the Company’s producing assets and is useful for evaluating variable costs as it provides a reliable measure regardless of fluctuations in production. Alvopetro calculated operating netback per boe as operating netback divided by total sales volumes (barrels of oil equivalent). This calculation is provided in the “Operating Netback” section of the Company’s MD&A using our IFRS measures. The Company’s MD&A may be accessed through the SEDAR+ website at www.sedarplus.ca. Operating netback is a common metric used in the oil and gas industry used to demonstrate profitability from operations on a per unit basis (boe).

Operating netback margin

Operating netback margin is calculated as operating netback per boe divided by the realized sales price per boe. Operating netback margin is a measure of the profitability per boe relative to natural gas, oil and condensate sales revenues per boe and is calculated as follows:

Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Operating netback – $ per boe69.6163.9667.8758.84
Average realized price – $ per boe       77.4173.5474.8067.68
Operating netback margin90 %87 %91 %87 %

Funds Flow from Operations Per Share

Funds flow from operations per share is a non-GAAP ratio that includes all cash generated from operating activities and is calculated before changes in non-cash working capital, divided by the weighted the weighted average shares outstanding for the respective period. For the periods reported in this news release the cash flows from operating activities per share and funds flow from operations per share is as follows:

Three Months Ended June 30,Six Months Ended June 30,
$ per share2023202220232022
Per basic share:
Cash flows from operating activities0.370.380.750.63
Funds flow from operations0.300.370.710.69
Per diluted share:
Cash flows from operating activities0.360.350.730.59
Funds flow from operations0.290.340.690.64

Capital Management Measures

Funds Flow from Operations 

Funds flow from operations is a non-GAAP capital management measure that includes all cash generated from operating activities and is calculated before changes in non-cash working capital. The most comparable GAAP measure to funds flow from operations is cash flows from operating activities. Management considers funds flow from operations important as it helps evaluate financial performance and demonstrates the Company’s ability to generate sufficient cash to fund future growth opportunities. Funds flow from operations should not be considered an alternative to, or more meaningful than, cash flows from operating activities however management finds that the impact of working capital items on the cash flows reduces the comparability of the metric from period to period. A reconciliation of funds flow from operations to cash flows from operating activities is as follows:

Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Cash flows from operating activities13,47312,99727,32921,330
(Deduct) add back changes in non-cash working capital(2,426)(563)(1,310)2,008
Funds flow from operations11,04712,43426,01923,338

Net Working Capital 

Net working capital is computed as current assets less current liabilities. Net working capital is a measure of liquidity, is used to evaluate financial resources, and is calculated as follows: 

As at June 30,
20232022
Total current assets32,80121,461
Total current liabilities(14,717)(9,820)
Net working capital surplus                                                                                    18,08411,641

Working Capital Net of Debt 

Working capital net of debt is computed as net working capital surplus decreased by the carrying amount of the Credit Facility. Working capital net of debt is used by management to assess the Company’s overall financial position.

As at June 30,
20232022
Net working capital surplus18,08411,641
Credit Facility, balance outstanding                                                                         (2,545)
Working capital, net of debt18,0849,096

Supplementary Financial Measures

Average realized natural gas price – $/Mcf” is comprised of natural gas sales as determined in accordance with IFRS, divided by the Company’s natural gas sales volumes.

Average realized NGL – condensate price – $/bbl” is comprised of condensate sales as determined in accordance with IFRS, divided by the Company’s NGL sales volumes from condensate.

Average realized oil price – $/bbl” is comprised of oil sales as determined in accordance with IFRS, divided by the Company’s oil sales volumes.

Average realized price – $/boe” is comprised of natural gas, condensate and oil sales as determined in accordance with IFRS, divided by the Company’s total natural gas, condensate and oil sales volumes (barrels of oil equivalent).

Dividends per share” is comprised of dividends declared, as determined in accordance with IFRS, divided by the number of shares outstanding at the dividend record date.

Royalties per boe” is comprised of royalties, as determined in accordance with IFRS, divided by the total natural gas, condensate and oil sales volumes (barrels of oil equivalent).

Production expenses per boe” is comprised of production expenses, as determined in accordance with IFRS, divided by the total natural gas, condensate and oil sales volumes (barrels of oil equivalent).

BOE Disclosure

The term barrels of oil equivalent (“boe”) may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet per barrel (6 Mcf/bbl) of natural gas to barrels of oil equivalence is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. All boe conversions in this news release are derived from converting gas to oil in the ratio mix of six thousand cubic feet of gas to one barrel of oil.

Forward-Looking Statements and Cautionary Language 

This news release contains forward-looking information within the meaning of applicable securities laws. The use of any of the words “will”, “expect”, “intend” and other similar words or expressions are intended to identify forward-looking information. Forward‐looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to vary significantly from the expectations discussed in the forward-looking statements. These forward-looking statements reflect current assumptions and expectations regarding future events. Accordingly, when relying on forward-looking statements to make decisions, Alvopetro cautions readers not to place undue reliance on these statements, as forward-looking statements involve significant risks and uncertainties. More particularly and without limitation, this news release contains forward-looking statements concerning concerning plans relating to the Company’s operational activities, proposed exploration development activities and the timing for such activities, exploration and development prospects of Alvopetro, capital spending levels, future capital and operating costs, future production and sales volumes, production allocations from the Caburé natural gas field, the expected natural gas price, gas sales and gas deliveries under Alvopetro’s long-term gas sales agreement, the expected timing of testing the BL-06 well and production commencement from the BL-06 well, anticipated duration of drilling operations for the 183-A3 well, anticipated timing for upcoming drilling and testing of other wells, projected financial results, the expected timing and outcomes of certain of Alvopetro’s testing activities, and sources and availability of capital. Forward-looking statements are necessarily based upon assumptions and judgments with respect to the future including, but not limited to, expectations and assumptions concerning the timing of regulatory licenses and approvals, equipment availability, the success of future drilling, completion, testing, recompletion and development activities and the timing of such activities, the performance of producing wells and reservoirs, well development and operating performance, expectations regarding Alvopetro’s working interest and the outcome of any redeterminations, environmental regulation, including regulation relating to hydraulic fracturing and stimulation, the ability to monetize hydrocarbons discovered, the outlook for commodity markets and ability to access capital markets, foreign exchange rates, general economic and business conditions, forecasted demand for oil and natural gas, the impact of global pandemics, weather and access to drilling locations, the availability and cost of labour and services, the regulatory and legal environment and other risks associated with oil and gas operations. The reader is cautioned that assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be incorrect.  Actual results achieved during the forecast period will vary from the information provided herein as a result of numerous known and unknown risks and uncertainties and other factors. In addition, the declaration, timing, amount and payment of future dividends remain at the discretion of the Board of Directors. Although we believe that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because we can give no assurance that they will prove to be correct. Since forward looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, reliance on industry partners, availability of equipment and personnel, uncertainty surrounding timing for drilling and completion activities resulting from weather and other factors, changes in applicable regulatory regimes and health, safety and environmental risks), commodity price and foreign exchange rate fluctuations, market uncertainty associated with financial institution instability, and general economic conditions. The reader is cautioned that assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be incorrect. Although Alvopetro believes that the expectations and assumptions on which such forward-looking information is based are reasonable, undue reliance should not be placed on the forward-looking information because Alvopetro can give no assurance that it will prove to be correct. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on factors that could affect the operations or financial results of Alvopetro are included in our annual information form which may be accessed on Alvopetro’s SEDAR+ profile at www.sedarplus.ca. The forward-looking information contained in this news release is made as of the date hereof and Alvopetro undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

www.alvopetro.comTSX-V: ALV, OTCQX: ALVOF

SOURCE Alvopetro Energy Ltd.

Aug 09, 2023

CALGARY, AB, Aug. 9, 2023 /CNW/ – Alvopetro Energy Ltd. (TSXV: ALV) (OTCQX: ALVOF) is pleased to announce financial results for the three and six months ended June 30, 2023 and an operational update.  

All references herein to $ refer to United States dollars, unless otherwise stated and all tabular amounts are in thousands of United States dollars, except as otherwise noted.

President & CEO, Corey C. Ruttan commented:

“We continue to post strong results, generating an operating netback of $69.61 per boe and $11 million in funds flow from operations, highlighting the strong profitability of our operations. Our 2023 capital program is focused on adding 100% interest production from our Murucututu natural gas project and our Bom Lugar oil field. We have had exciting early results with the stimulation of our 197(1) Murucututu well and drilling our first oil development well at Bom Lugar.”

Operational Update

Drilling operations continue on the 183-A3 well on our Murucututu natural gas field. The well was spud on July 11th and is targeting shallower exploration potential in the Caruaçu Formation and the Gomo member of the Candeias Formation. We expect drilling to be completed later this quarter. We also expect to complete our recently drilled Bom Lugar well (BL-06) and have the well on production in the third quarter.

Our natural gas price under our long-term gas sales agreement with Bahiagás was adjusted effective August 1st to BRL1.99/m3 or $13.25/Mcf, based on our average heat content to date, the July 31, 2023 BRL/USD foreign exchange rate of 4.74 and enhanced sales tax credits applicable in 2023. This new gas price is effective for all of our natural gas sales from both our Caburé and Murucututu fields as of August 1, 2023.

Financial and Operating Highlights – Second Quarter of 2023

  • Average daily sales decreased to 1,975 boepd (-29% from Q1 2023 and -16% from Q2 2022) due mainly to reduced production from our Caburé natural gas field as a result of higher nominated volumes from our partner.
  • Our average realized natural gas price increased to $12.86/Mcf, an 8% increase from Q2 2022 with the 3% increase in our contracted natural gas price and enhanced sales tax credits available in 2023. Compared to Q1 2023, our realized sales price increased 7% due mainly to the appreciation of the BRL to the USD in Q2. With the higher natural gas price, our overall realized price per boe increased to $77.41 (+6% from Q1 2023 and +5% from Q2 2022), despite lower Brent pricing on condensate sales.
  • Our natural gas, condensate and oil revenue was $13.9 million in Q2 2023, a decrease of $1.9 million compared to Q2 2022 (-12%) due to a 16% decrease in production partially offset by the increase in realized sales prices per boe.
  • Our operating netback improved to $69.61 per boe (+$3.00 per boe from Q1 2023 and +$5.65 per boe from Q2 2022) with a higher realized sales price and lower royalties, partially offset by the impact of fixed operating costs with lower sales volumes.
  • We generated funds flows from operations of $11.0 million ($0.30 per basic share and $0.29 per diluted share), a decrease of $1.4 million compared to Q2 2022 and $3.9 million compared to Q1 2023.
  • We reported net income of $9.9 million in Q2 2023, an increase of $3.2 million (+49%) compared to Q2 2022.
  • Capital expenditures totaled $8.5 million, including drilling cost for our BL-06 well on our Bom Lugar field, stimulation costs for our 197(1) well on our Murucututu field, and long-lead purchases for future capital projects.
  • Our working capital surplus was $18.1 million as of June 30, 2023, a decrease of $2.8 million from March 31, 2023, and an improvement of $3.4 million from December 31, 2022.

The following table provides a summary of Alvopetro’s financial and operating results for three and six months ended June 30, 2023 and June 30, 2022. The consolidated financial statements with the Management’s Discussion and Analysis (“MD&A”) are available on our website at www.alvopetro.com and will be available on the SEDAR+ website at www.sedarplus.ca.

As at and Three Months Ended June 30,As at and Six Months Ended June 30,
20232022Change20232022Change (%)
Financial
($000s, except where noted)
Natural gas, oil and condensate sales13,91415,787(12)32,07429,7598
Net income9,8526,6314922,05417,74624
      Per share – basic ($)(1)0.270.20350.600.5215
      Per share – diluted ($)(1)0.260.18440.590.4920
Cash flows from operating activities13,47312,997427,32921,33028
      Per share – basic ($)(1)0.370.38(3)0.750.6319
      Per share – diluted ($)(1)0.360.3530.730.5924
Funds flow from operations (2)11,04712,434(11)26,01923,33811
      Per share – basic ($)(1)0.300.37(19)0.710.693
      Per share – diluted ($)(1)0.290.34(15)0.690.648
Dividends declared5,1092,7288710,2135,44488
Per share(1)0.140.08750.280.1675
Capital expenditures8,5216,3383411,81210,13817
Cash and cash equivalents25,59813,6728725,59813,67287
Net working capital surplus(2)18,08411,6415518,08411,64155
Working capital, net of debt(2) 18,0849,0969918,0849,09699
Weighted average shares outstanding
      Basic (000s)(1)36,69733,973836,62733,9418
      Diluted (000s)(1)37,75536,637337,65736,4263
Operations
Natural gas, NGLs and crude oil sales:
      Natural gas (Mcfpd)11,26913,546(17)13,52013,940(3)
      NGLs – condensate (bopd)9297(5)1119813
      Oil (bopd)5558(38)
      Total (boepd)1,9752,359(16)2,3692,429(2)
Average realized prices(2):
      Natural gas ($/Mcf)12.8611.90812.4010.9413
      NGLs – condensate ($/bbl)83.35121.93(32)83.79114.11(27)
      Oil ($/bbl)63.9394.47(32)68.0083.90(19)
      Total ($/boe)77.4173.54574.8067.6811
Operating netback ($/boe)(2)
      Realized sales price77.4173.54574.8067.6811
      Royalties(1.97)(5.35)(63)(2.18)(4.84)(55)
      Production expenses(5.83)(4.23)38(4.75)(4.00)19
      Operating netback69.6163.96967.8758.8415
Operating netback margin(2)90 %87 %391 %87 %5
Notes:
(1)  Per share amounts are based on weighted average shares outstanding other than dividends per share, which is based on the number of common shares outstanding at each dividend record date. The weighted average number of diluted common shares outstanding in the computation of funds flow from operations and cash flows from operating activities per share is the same as for net income per share.
(2)  See “Non-GAAP and Other Financial Measures” section within this news release.

Q2 2023 Results Webcast

Alvopetro will host a live webcast to discuss our Q2 2023 financial results at 9:00 am Mountain time on Thursday August 10, 2023. Details for joining the event are as follows:

Date: August 10, 2023 Time: 9:00 AM Mountain/11:00 AM EasternLink:  https://us06web.zoom.us/j/83723796296 Dial-in numbers: https://us06web.zoom.us/u/kcmVqG8cd9 Webinar ID: 837 2379 6296

The webcast will include a question and answer period. Online participants will be able to ask questions through the Zoom portal. Dial-in participants can email questions directly to socialmedia@alvopetro.com.

Corporate Presentation

Alvopetro’s updated corporate presentation is available on our website at: http://www.alvopetro.com/corporate-presentation

Social Media

Follow Alvopetro on our social media channels at the following links: 

Twitter – https://twitter.com/AlvopetroEnergy Instagram – https://www.instagram.com/alvopetro/ LinkedIn – https://www.linkedin.com/company/alvopetro-energy-ltd

Alvopetro Energy Ltd.’s vision is to become a leading independent upstream and midstream operator in Brazil. Our strategy is to unlock the on-shore natural gas potential in the state of Bahia in Brazil, building off the development of our Caburé and Murucututu natural gas fields and our strategic midstream infrastructure.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.

Abbreviations:

$000s                    =thousands of U.S. dollars 
bbls                        barrels
boepd                    =  barrels of oil equivalent (“boe”) per day
bopd                       =   barrels of oil and/or natural gas liquids (condensate) per day
BRL                         =   Brazilian Real
CAD                          =Canadian dollars
m3                                =cubic metre
Mcf                        thousand cubic feet
Mcfpd                     =   thousand cubic feet per day
MMcf                       =   million cubic feet
MMcfpd                    =  million cubic feet per day
NGLs                        =natural gas liquids
Q1 2023                     three months ended March 31, 2023
Q2 2022                      three months ended June 30, 2022
Q2 2023                      =three months ended June 30, 2023

Non-GAAP and Other Financial Measures

This news release contains references to various non-GAAP financial measures, non-GAAP ratios, capital management measures and supplementary financial measures as such terms are defined in National Instrument 52-112 Non-GAAP and Other Financial Measures Disclosure. Such measures are not recognized measures under GAAP and do not have a standardized meaning prescribed by IFRS and might not be comparable to similar financial measures disclosed by other issuers. While these measures may be common in the oil and gas industry, the Company’s use of these terms may not be comparable to similarly defined measures presented by other companies. The non-GAAP and other financial measures referred to in this report should not be considered an alternative to, or more meaningful than measures prescribed by IFRS and they are not meant to enhance the Company’s reported financial performance or position. These are complementary measures that are used by management in assessing the Company’s financial performance, efficiency and liquidity and they may be used by investors or other users of this document for the same purpose. Below is a description of the non-GAAP financial measures, non-GAAP ratios, capital management measures and supplementary financial measures used in this news release. For more information with respect to financial measures which have not been defined by GAAP, including reconciliations to the closest comparable GAAP measure, see the “Non-GAAP Measures and Other Financial Measures” section of the Company’s MD&A which may be accessed through the SEDAR+ website at www.sedarplus.ca.

Non-GAAP Financial Measures

Operating netback

Operating netback is calculated as natural gas, oil and condensate revenues less royalties and production expenses. This calculation is provided in the “Operating Netback” section of the Company’s MD&A using our IFRS measures. The Company’s MD&A may be accessed through the SEDAR+ website at www.sedarplus.ca. Operating netback is a common metric used in the oil and gas industry used to demonstrate profitability from operations.

Non-GAAP Financial Ratios

Operating netback per boe

Operating netback is calculated on a per unit basis, which is per barrel of oil equivalent (“boe”). It is a common non-GAAP measure used in the oil and gas industry and management believes this measurement assists in evaluating the operating performance of the Company. It is a measure of the economic quality of the Company’s producing assets and is useful for evaluating variable costs as it provides a reliable measure regardless of fluctuations in production. Alvopetro calculated operating netback per boe as operating netback divided by total sales volumes (barrels of oil equivalent). This calculation is provided in the “Operating Netback” section of the Company’s MD&A using our IFRS measures. The Company’s MD&A may be accessed through the SEDAR+ website at www.sedarplus.ca. Operating netback is a common metric used in the oil and gas industry used to demonstrate profitability from operations on a per unit basis (boe).

Operating netback margin

Operating netback margin is calculated as operating netback per boe divided by the realized sales price per boe. Operating netback margin is a measure of the profitability per boe relative to natural gas, oil and condensate sales revenues per boe and is calculated as follows:

Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Operating netback – $ per boe69.6163.9667.8758.84
Average realized price – $ per boe       77.4173.5474.8067.68
Operating netback margin90 %87 %91 %87 %

Funds Flow from Operations Per Share

Funds flow from operations per share is a non-GAAP ratio that includes all cash generated from operating activities and is calculated before changes in non-cash working capital, divided by the weighted the weighted average shares outstanding for the respective period. For the periods reported in this news release the cash flows from operating activities per share and funds flow from operations per share is as follows:

Three Months Ended June 30,Six Months Ended June 30,
$ per share2023202220232022
Per basic share:
Cash flows from operating activities0.370.380.750.63
Funds flow from operations0.300.370.710.69
Per diluted share:
Cash flows from operating activities0.360.350.730.59
Funds flow from operations0.290.340.690.64

Capital Management Measures

Funds Flow from Operations 

Funds flow from operations is a non-GAAP capital management measure that includes all cash generated from operating activities and is calculated before changes in non-cash working capital. The most comparable GAAP measure to funds flow from operations is cash flows from operating activities. Management considers funds flow from operations important as it helps evaluate financial performance and demonstrates the Company’s ability to generate sufficient cash to fund future growth opportunities. Funds flow from operations should not be considered an alternative to, or more meaningful than, cash flows from operating activities however management finds that the impact of working capital items on the cash flows reduces the comparability of the metric from period to period. A reconciliation of funds flow from operations to cash flows from operating activities is as follows:

Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Cash flows from operating activities13,47312,99727,32921,330
(Deduct) add back changes in non-cash working capital(2,426)(563)(1,310)2,008
Funds flow from operations11,04712,43426,01923,338

Net Working Capital 

Net working capital is computed as current assets less current liabilities. Net working capital is a measure of liquidity, is used to evaluate financial resources, and is calculated as follows: 

As at June 30,
20232022
Total current assets32,80121,461
Total current liabilities(14,717)(9,820)
Net working capital surplus                                                                                    18,08411,641

Working Capital Net of Debt 

Working capital net of debt is computed as net working capital surplus decreased by the carrying amount of the Credit Facility. Working capital net of debt is used by management to assess the Company’s overall financial position.

As at June 30,
20232022
Net working capital surplus18,08411,641
Credit Facility, balance outstanding                                                                         (2,545)
Working capital, net of debt18,0849,096

Supplementary Financial Measures

Average realized natural gas price – $/Mcf” is comprised of natural gas sales as determined in accordance with IFRS, divided by the Company’s natural gas sales volumes.

Average realized NGL – condensate price – $/bbl” is comprised of condensate sales as determined in accordance with IFRS, divided by the Company’s NGL sales volumes from condensate.

Average realized oil price – $/bbl” is comprised of oil sales as determined in accordance with IFRS, divided by the Company’s oil sales volumes.

Average realized price – $/boe” is comprised of natural gas, condensate and oil sales as determined in accordance with IFRS, divided by the Company’s total natural gas, condensate and oil sales volumes (barrels of oil equivalent).

Dividends per share” is comprised of dividends declared, as determined in accordance with IFRS, divided by the number of shares outstanding at the dividend record date.

Royalties per boe” is comprised of royalties, as determined in accordance with IFRS, divided by the total natural gas, condensate and oil sales volumes (barrels of oil equivalent).

Production expenses per boe” is comprised of production expenses, as determined in accordance with IFRS, divided by the total natural gas, condensate and oil sales volumes (barrels of oil equivalent).

BOE Disclosure

The term barrels of oil equivalent (“boe”) may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet per barrel (6 Mcf/bbl) of natural gas to barrels of oil equivalence is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. All boe conversions in this news release are derived from converting gas to oil in the ratio mix of six thousand cubic feet of gas to one barrel of oil.

Forward-Looking Statements and Cautionary Language 

This news release contains forward-looking information within the meaning of applicable securities laws. The use of any of the words “will”, “expect”, “intend” and other similar words or expressions are intended to identify forward-looking information. Forward‐looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to vary significantly from the expectations discussed in the forward-looking statements. These forward-looking statements reflect current assumptions and expectations regarding future events. Accordingly, when relying on forward-looking statements to make decisions, Alvopetro cautions readers not to place undue reliance on these statements, as forward-looking statements involve significant risks and uncertainties. More particularly and without limitation, this news release contains forward-looking statements concerning concerning plans relating to the Company’s operational activities, proposed exploration development activities and the timing for such activities, exploration and development prospects of Alvopetro, capital spending levels, future capital and operating costs, future production and sales volumes, production allocations from the Caburé natural gas field, the expected natural gas price, gas sales and gas deliveries under Alvopetro’s long-term gas sales agreement, the expected timing of testing the BL-06 well and production commencement from the BL-06 well, anticipated duration of drilling operations for the 183-A3 well, anticipated timing for upcoming drilling and testing of other wells, projected financial results, the expected timing and outcomes of certain of Alvopetro’s testing activities, and sources and availability of capital. Forward-looking statements are necessarily based upon assumptions and judgments with respect to the future including, but not limited to, expectations and assumptions concerning the timing of regulatory licenses and approvals, equipment availability, the success of future drilling, completion, testing, recompletion and development activities and the timing of such activities, the performance of producing wells and reservoirs, well development and operating performance, expectations regarding Alvopetro’s working interest and the outcome of any redeterminations, environmental regulation, including regulation relating to hydraulic fracturing and stimulation, the ability to monetize hydrocarbons discovered, the outlook for commodity markets and ability to access capital markets, foreign exchange rates, general economic and business conditions, forecasted demand for oil and natural gas, the impact of global pandemics, weather and access to drilling locations, the availability and cost of labour and services, the regulatory and legal environment and other risks associated with oil and gas operations. The reader is cautioned that assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be incorrect.  Actual results achieved during the forecast period will vary from the information provided herein as a result of numerous known and unknown risks and uncertainties and other factors. In addition, the declaration, timing, amount and payment of future dividends remain at the discretion of the Board of Directors. Although we believe that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because we can give no assurance that they will prove to be correct. Since forward looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, reliance on industry partners, availability of equipment and personnel, uncertainty surrounding timing for drilling and completion activities resulting from weather and other factors, changes in applicable regulatory regimes and health, safety and environmental risks), commodity price and foreign exchange rate fluctuations, market uncertainty associated with financial institution instability, and general economic conditions. The reader is cautioned that assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be incorrect. Although Alvopetro believes that the expectations and assumptions on which such forward-looking information is based are reasonable, undue reliance should not be placed on the forward-looking information because Alvopetro can give no assurance that it will prove to be correct. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on factors that could affect the operations or financial results of Alvopetro are included in our annual information form which may be accessed on Alvopetro’s SEDAR+ profile at www.sedarplus.ca. The forward-looking information contained in this news release is made as of the date hereof and Alvopetro undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

www.alvopetro.comTSX-V: ALV, OTCQX: ALVOF

SOURCE Alvopetro Energy Ltd.