Sesen Bio announced proposed merger with
Carisma Therapeutics
Combined company will focus on the advancement
of Carisma’s development of engineered macrophages for the
treatment of cancer and other serious disorders
Transaction is expected to close in the next
two to three months, subject to Sesen Bio stockholder approval and
other customary closing conditions
Sesen Bio (Nasdaq: SESN) today reported operating results
for the third quarter ended September 30, 2022, and provided a
business update.
Business Updates
- On September 21, 2022, Sesen Bio announced that it had
entered into a definitive merger agreement with Carisma
Therapeutics (Carisma). The combined company will focus on the
development of Carisma’s chimeric antigen receptor macrophage
(CAR-M) therapies, which are believed to be the only therapies of
their kind with demonstrated proof of mechanism and safety data in
clinical trials.
Immediately following the merger, pre-merger
Sesen Bio stockholders are expected to own approximately 41.7% of
the combined company and pre-merger Carisma stockholders are
expected to own approximately 58.3% of the combined company, in
each case before giving effect to a $30.6 million concurrent
financing by Carisma and the conversion into shares of common stock
of the combined company of a $35.0 million outstanding convertible
note from one of Carisma’s key strategic partners, Moderna.
Immediately prior to the closing of the
merger, Sesen Bio stockholders of record as of a date agreed to by
Sesen Bio and Carisma will be issued a Contingent Value Right (CVR)
for each outstanding share of Sesen Bio common stock held as of
such date, representing the right to receive contingent cash
payments upon the receipt by Sesen Bio of certain proceeds payable
by Roche, if any, related to the asset purchase agreement with
Roche for EBI-031 and all other IL-6 antagonist monoclonal antibody
technology (Roche Asset Purchase Agreement) subject to customary
deductions, including for expenses and taxes.
The combined company is expected to have
approximately $180.0 million in cash, cash equivalents and
marketable securities at the closing of the merger, which is
expected to advance Carisma's pipeline through upcoming catalysts
and development milestones across its clinical programs.
The combined company will be led entirely by
Carisma’s current management team, which has extensive cell therapy
experience and a strong track record in oncology and drug
development. This includes Carisma CEO Steven Kelly, who was named
Ernst & Young Entrepreneur of the Year 2022 Greater
Philadelphia1, and Carisma Chief Scientific Officer and co-founder
Michael Klichinsky, Pharm.D., Ph.D.
- On July 18, 2022, Sesen Bio announced it was voluntarily
pausing further clinical development of Vicineum in the US and that
it intends to seek a partner to continue Vicineum’s
development. Sesen Bio remains focused on closing the proposed
transaction with Carisma while it continues to evaluate potential
opportunities for Vicineum.
- On November 1, 2022, Carisma announced the acceptance of
multiple abstracts to be presented at the upcoming Society for
Immunotherapy of Cancer (SITC) 37th Anniversary Annual Meeting in
Boston, Massachusetts, which is being held November 8 to November
12, 2022. Accepted abstracts include two abstracts of its
clinical trial data, including one for oral presentation, four
abstracts of pre-clinical study data, and one abstract overviewing
the design of a Phase 1 clinical trial for CT-0508.
Third Quarter 2022 Financial Results
- Cash Position: Cash, cash equivalents and marketable
securities were $184.9 million as of September 30, 2022, compared
to cash and cash equivalents of $162.6 million as of December 31,
2021.
- Total Revenue: Total revenue for the three months ended
September 30, 2022 was $40.0 million, which was due to the
execution of the Roche Asset Purchase Agreement.
- R&D Expenses: Research and development expenses were
$2.9 million for the three months ended September 30, 2022,
compared to $5.0 million for the three months ended September 30,
2021. The decrease of $2.0 million was primarily due to a decrease
in costs associated with manufacturing ($1.9 million) and a
decrease in other R&D related costs ($0.1 million), driven by
the strategic decision to voluntarily pause further development of
Vicineum in the US in the third quarter of 2022.
- G&A Expenses: General and administrative expenses
were $8.1 million for the three months ended September 30, 2022,
compared to $8.7 million for the three months ended September 30,
2021. The decrease of $0.6 million was primarily due to a decrease
in marketing and commercialization expenses, which were incurred in
preparation for potential commercial launch of Vicineum but were
discontinued as a result of the Complete Response Letter (CRL) from
the US Food and Drug Administration (FDA) received in August 2021
($2.3 million) and a decrease in professional fees for accounting
services ($0.4 million). This was partially offset by an increase
in legal expense ($1.3 million), driven by legal fees associated
with our assessment of strategic alternatives incurred in the third
quarter of 2022 ($2.2 million), partially offset by a decrease in
legal fees associated with the internal review ($0.4 million) and
other legal expenses ($0.5 million). Additionally, financial
advisor fees increased due to the Company’s assessment of strategic
alternatives in the third quarter of 2022 ($0.8 million).
- Restructuring Charges: Restructuring charges were $10.9
million for the three months ended September 30, 2022, compared to
$5.5 million for the three months ended September 30, 2021.
Restructuring charges for the third quarter of 2022 consisted of
severance and other employee-related costs ($6.9 million) and
termination of certain contracts and other associated costs ($4.0
million) associated with the restructuring plan approved on July
15, 2022, following the decision to voluntarily pause further
development of Vicineum in the US. Restructuring charges for the
third quarter of 2021 consisted of severance and other
employee-related costs ($2.8 million) and termination of certain
contracts ($2.7 million) associated with the restructuring plan
approved on August 30, 2021, following the receipt of the CRL.
- Non-Cash Related Expenses:
- The Company did not record any intangibles impairment charge
for the three months ended September 30, 2022, and the Company
recorded an intangibles impairment charge of $31.7 million in the
three months ended September 30, 2021. In light of the CRL, the
Company performed an interim impairment test for In-Process
Research and Development (IPR&D) assets, which resulted in the
decrease in fair value of Vicineum’s US rights.
- The non-cash change in fair value of contingent consideration
was a gain of $1.8 million for the three months ended September 30,
2022, compared to a gain of $114.0 million for the three months
ended September 30, 2021. The gain from the fair value of
contingent consideration of $1.8 million for the three months ended
September 30, 2022, was due to the Company’s conclusion that it no
longer expects to make earnout payments to Qilu Pharmaceutical Co.,
Ltd. for commercialization of Vicineum in the Greater China region.
Accordingly, the Company reduced the remaining $1.8 million of
contingent consideration liabilities to zero as of September 30,
2022. The gain from the fair value of contingent consideration of
$114.0 million for the three months ended September 30, 2021, was
primarily due to management’s assessment of a lower probability of
regulatory success of Vicineum, and a refinement of associated
timelines, following the CRL.
- Income Tax Benefit: The Company did not record a benefit
or loss for the three months ended September 30, 2022. In the third
quarter of 2021, the Company determined that the fair value of the
Company’s intangible asset of Vicineum US rights was zero, which
resulted in an impairment charge of $31.7 million. In connection
with this impairment charge, in the third quarter of 2021, the
Company reduced the associated deferred tax liability, which
resulted in an income tax benefit of $8.6 million.
- Net Income: Net income was $20.5 million, or $0.10 per
basic and $0.10 per diluted share, for the third quarter of 2022,
compared to $71.7 million, or $0.36 per basic and $0.36 per diluted
share, for the third quarter of 2021. The decrease was primarily
attributable to unfavorable changes in non-cash related expenses of
$89.1 million (including tax benefit) and increased restructuring
charges of $5.4 million. This was partially offset by revenue of
$40.0 million related to the execution of the Roche Asset Purchase
Agreement.
1: Award presented by Ernst & Young; winners are selected by
a panel of independent judges based on their demonstration of
long-term value through entrepreneurial spirit, purpose, growth and
impact, among other core contributions and attributes.
About Sesen Bio
Sesen Bio, Inc. is a late-stage clinical company focused on
targeted fusion protein therapeutics for the treatment of patients
with cancer. Sesen Bio’s most advanced product candidate,
Vicineum™, also known as VB4-845, is a locally-administered
targeted fusion protein composed of an anti-epithelial cell
adhesion molecule antibody fragment tethered to a truncated form of
Pseudomonas exotoxin A for the treatment of non-muscle invasive
bladder cancer. On July 15, 2022, Sesen Bio made the strategic
decision to voluntarily pause further development of Vicineum in
the US. The decision was based on a thorough reassessment of
Vicineum following recent discussions with the FDA, which had
implications on the size, timeline and costs of an additional Phase
3 clinical trial, which the FDA previously confirmed would be
required for a potential resubmission of a BLA for Vicineum for the
treatment of NMIBC. Sesen Bio continues to believe that Vicineum
has benefits for patients and healthcare providers that can be
maximized through a company with a larger infrastructure, and as
such, intends to seek a partner that can execute further
development to realize the full potential of Vicineum. As a result
of this decision, Sesen Bio has turned its primary focus to the
careful assessment of potential strategic alternatives with the
goal of maximizing shareholder value. For more information, please
visit the Company’s website at www.sesenbio.com.
Cautionary Note on Forward-Looking Statements
Any statements in this press release about future expectations,
plans and prospects for Sesen Bio, Carisma or the combined company,
Sesen Bio’s, Carisma’s or the combined company’s strategy or future
operations, and other statements containing the words “anticipate,”
“believe,” “contemplate,” “expect,” “intend,” “may,” “plan,”
“predict,” “target,” “potential,” “possible,” “will,” “would,”
“could,” “should,” “continue,” and similar expressions, constitute
forward-looking statements within the meaning of The Private
Securities Litigation Reform Act of 1995. For example, statements
concerning the proposed merger with Carisma, the concurrent
financing by Carisma, the CVRs and other matters, including without
limitation: statements relating to the satisfaction of the
conditions to and consummation of the proposed transaction, the
expected timing of the consummation of the proposed transaction,
the expected cash balance of the combined company at the closing of
the merger, the expected uses of the cash balance of the combined
company, the expected management team of the combined company, the
expected ownership percentages of the combined company, Sesen Bio’s
and Carisma’s respective businesses, the strategy of the combined
company, future operations, advancement of the combined company’s
product candidates and product pipeline, clinical development of
the combined company’s product candidates, including expectations
regarding timing of initiation and results of clinical trials of
the combined company, the completion of the concurrent financing by
Carisma, the receipt of any payments under the CVRs, Sesen Bio’s
intentions to seek a partner for the further development of
Vicineum and Sesen Bio’s belief that Vicineum has benefits for
patients and healthcare providers that can be maximized through a
company with a larger infrastructure are forward-looking
statements. Actual results may differ materially from those
indicated by such forward-looking statements as a result of various
important factors, including without limitation: (i) the risk that
the conditions to the closing of the proposed transaction are not
satisfied, including the failure to obtain stockholder approval of
matters related to the proposed transaction in a timely manner or
at all; (ii) uncertainties as to the timing of the consummation of
the proposed transaction and the ability of each of Sesen Bio and
Carisma to consummate the proposed transaction, including
completing the concurrent financing; (iii) risks related to Sesen
Bio’s ability to correctly estimate its expected net cash at
closing and Sesen Bio’s and Carisma’s ability to correctly estimate
and manage their respective operating expenses and expenses
associated with the proposed transaction; (iv) risks related to
Sesen Bio’s continued listing on the Nasdaq Stock Market until
closing of the proposed transaction; (v) the risk that as a result
of adjustments to the exchange ratio, Sesen Bio stockholders or
Carisma stockholders could own less of the combined company than is
currently anticipated; (vi) the risk that the conditions to payment
under the CVRs will not be met and that the CVR may otherwise never
deliver any value to Sesen Bio stockholders; (vii) risks associated
with the possible failure to realize certain anticipated benefits
of the proposed transaction, including with respect to future
financial and operating results; (viii) uncertainties regarding the
impact any delay in the closing would have on the anticipated cash
resources of the combined company upon closing and other events and
unanticipated spending and costs that could reduce the combined
company’s cash resources; (ix) the occurrence of any event, change
or other circumstance or condition that could give rise to the
termination of the merger agreement; (x) the effect of the
announcement, pendency or completion of the merger on Sesen Bio’s
or Carisma’s business relationships, operating results and business
generally; (xi) costs related to the merger; (xii) the outcome of
any legal proceedings that may be instituted against Sesen Bio,
Carisma or any of their respective directors or officers related to
the merger agreement or the transactions contemplated thereby;
(xiii) the ability of Sesen Bio or Carisma to protect their
respective intellectual property rights; (xiv) competitive
responses to the proposed transaction and changes in expected or
existing competition; (xv) the success and timing of regulatory
submissions and pre-clinical and clinical trials; (xvi) regulatory
requirements or developments; (xvii) changes to clinical trial
designs and regulatory pathways; (xviii) changes in capital
resource requirements; (xix) risks related to the inability of the
combined company to obtain sufficient additional capital to
continue to advance its product candidates and its preclinical
programs; (xx) legislative, regulatory, political and economic
developments; (xxi) the risk that Sesen Bio may not ultimately be
successful in seeking a partner to continue development of
Vicineum; (xxii) Sesen Bio may become involved in disagreements or
disputes with its licensees, licensors and other counterparties
relating to the development and/or commercialization of Vicineum,
which may be time consuming, costly and could divert Sesen Bio’s
efforts and attention from consummating the proposed merger with
Carisma and harm its efforts to seek a partner to continue
development of Vicineum; and (xxiii) other factors discussed in the
“Risk Factors” section of Sesen Bio’s Annual Report on Form 10-K,
Quarterly Reports on Form 10-Q and other reports filed with the
SEC. In addition, the forward-looking statements included in this
communication represent Sesen Bio’s and Carisma’s views as of the
date hereof. Sesen Bio and Carisma anticipate that subsequent
events and developments will cause the respective company’s views
to change. However, while Sesen Bio may elect to update these
forward-looking statements at some point in the future, Sesen Bio
specifically disclaims any obligation to do so, except as required
under applicable law. These forward-looking statements should not
be relied upon as representing Sesen Bio’s views as of any date
subsequent to the date hereof.
Important Additional Information
In connection with the proposed transaction, on October 14,
2022, Sesen Bio filed with the SEC a registration statement on Form
S-4, which includes a preliminary proxy statement of Sesen Bio and
which also constitutes a prospectus of Sesen Bio with respect to
shares of Sesen Bio’s common stock to be issued in the proposed
transaction (Preliminary Proxy Statement/Prospectus). The
Preliminary Proxy Statement/Prospectus is not final and may be
amended. The definitive proxy statement/prospectus (if and when
available) will be delivered to Sesen Bio’s stockholders. Sesen Bio
may also file other relevant documents regarding the proposed
transaction with the SEC. INVESTORS AND SECURITY HOLDERS ARE URGED
TO READ THESE MATERIALS, INCLUDING THE REGISTRATION STATEMENT, THE
DEFINITIVE PROXY STATEMENT/PROSPECTUS, AND ALL OTHER RELEVANT
DOCUMENTS THAT ARE OR WILL BE FILED WITH THE SEC IN CONNECTION WITH
THE PROPOSED TRANSACTION, INCLUDING ANY AMENDMENTS OR SUPPLEMENTS
TO THESE MATERIALS, BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT
INFORMATION ABOUT THE PROPOSED TRANSACTION AND THE PARTIES TO THE
PROPOSED TRANSACTION. Investors and security holders are able to
obtain the Preliminary Proxy Statement/Prospectus, the definitive
proxy statement/prospectus (when it becomes available) and other
documents that are filed or will be filed by Sesen Bio with the SEC
free of charge from the SEC’s website at www.sec.gov or from Sesen
Bio at the SEC Filings section of www.sesenbio.com.
No Offer or Solicitation
This press release shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be
any sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction.
No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities
Act of 1933, as amended. Subject to certain exceptions to be
approved by the relevant regulators or certain facts to be
ascertained, a public offer will not be made directly or
indirectly, in or into any jurisdiction where to do so would
constitute a violation of the laws of such jurisdiction, or by use
of the mails or by any means or instrumentality (including without
limitation, facsimile transmission, telephone or internet) of
interstate or foreign commerce, or any facility of a national
securities exchange, of any such jurisdiction.
Participants in the Solicitation
Sesen Bio and Carisma and their respective directors, executive
officers and other members of management may be deemed to be
participants in the solicitation of proxies in respect of the
proposed transaction. Information about Sesen Bio’s directors and
executive officers is available in Sesen Bio’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2021, its
definitive proxy statement dated April 28, 2022 for its 2022 Annual
Meeting of Stockholders and its Current Report on Form 8-K filed
with the SEC on August 31, 2022. Other information regarding the
participants in the proxy solicitation and a description of their
interests in the transaction, by security holdings or otherwise, is
included in the Preliminary Proxy Statement/Prospectus and other
relevant materials that are or will be filed with the SEC regarding
the proposed transaction. Investors should read the definitive
proxy statement/prospectus carefully (when it becomes available)
before making any voting or investment decisions. You may obtain
free copies of these documents from Sesen Bio or the SEC’s website
as indicated above.
SESEN BIO, INC. CONDENSED CONSOLIDATED BALANCE
SHEETS (Unaudited; In thousands, except share and per share
data) September 30, 2022 December 31, 2021
Assets Current assets: Cash and cash equivalents
$
71,107
$
162,636
Short term marketable securities
106,427
-
Accounts receivable
-
21,011
Other receivables
14,297
3,482
Prepaid expenses and other current assets
527
18,476
Total current assets
192,358
205,605
Non-current assets: Restricted cash
30
20
Marketable securities
7,336
-
Property and equipment, net
-
43
Intangible assets
-
14,700
Goodwill
-
13,064
Long term prepaid expenses
-
7,192
Other assets
-
123
Total non-current assets
7,366
35,142
Total Assets
$
199,724
$
240,747
Liabilities and Stockholders’ Equity Current
liabilities: Accounts payable
$
514
$
2,853
Accrued expenses
33,800
8,255
Other current liabilities
381
460
Total current liabilities
34,695
11,568
Non-current liabilities: Contingent consideration
-
52,000
Deferred tax liability
-
3,969
Deferred revenue
-
1,500
Total non-current liabilities
-
57,469
Total Liabilities
34,695
69,037
Stockholders’ Equity: Preferred stock, $0.001 par value per
share; 5,000,000 shares authorized at September 30, 2022 and
December 31, 2021; no shares issued and outstanding at September
30, 2022 and December 31, 2021
-
-
Common stock, $0.001 par value per share; 400,000,000 shares
authorized at September 30, 2022 and December 31, 2021; 202,757,012
and 199,463,645 shares issued and outstanding at September 30, 2022
and December 31, 2021, respectively
202
199
Additional paid-in capital
493,629
487,768
Other comprehensive loss
(235
)
-
Accumulated deficit
(328,567
)
(316,257
)
Total Stockholders’ Equity
165,029
171,710
Total Liabilities and Stockholders’ Equity
$
199,724
$
240,747
SESEN BIO, INC. CONDENSED CONSOLIDATED STATEMENTS
OF INCOME (OPERATIONS) (Unaudited; In thousands, except per
share data) Three Months EndedSeptember 30,
Nine Months EndedSeptember 30,
2022
2021
2022
2021
Revenue: License and related revenue
$
40,000
$
-
$
40,000
$
6,544
Total revenue
$
40,000
$
-
$
40,000
$
6,544
Operating expenses: Research and development
$
2,931
$
4,967
$
37,636
$
18,273
General and administrative
8,141
8,699
32,705
20,797
Restructuring charge
10,947
5,522
10,947
5,522
Intangibles impairment charge
-
31,700
27,764
31,700
Change in fair value of contingent consideration
(1,800
)
(114,000
)
(52,000
)
(52,240
)
Total operating expenses
$
20,219
$
(63,112
)
$
57,052
$
24,052
Income (Loss) from Operations
$
19,781
$
63,112
$
(17,052
)
$
(17,508
)
Other income (expense), net
676
1
867
(45
)
Income (Loss) Before Taxes
$
20,457
$
63,113
$
(16,185
)
$
(17,553
)
Benefit from income taxes
-
8,561
3,875
8,273
Net Income (Loss) After Taxes
$
20,457
$
71,674
$
(12,310
)
$
(9,280
)
Net income (loss) attributable to common stockholders -
basic
$
20,442
$
71,622
$
(12,310
)
$
(9,280
)
Net income (loss) attributable to common stockholders - diluted
$
20,442
$
71,623
$
(12,310
)
$
(9,280
)
Net income (loss) per common share - basic
$
0.10
$
0.36
$
(0.06
)
$
(0.05
)
Weighted-average common shares outstanding - basic
200,464
196,778
199,801
176,547
Net income (loss) per common share - diluted
$
0.10
$
0.36
$
(0.06
)
$
(0.05
)
Weighted-average common shares outstanding - diluted
200,947
201,017
199,801
176,547
SESEN BIO, INC. CONDENSED CONSOLIDATED STATEMENTS
OF COMPREHENSIVE INCOME (LOSS) (Unaudited; In thousands,
except per share data) Three Months EndedSeptember
30, Nine Months EndedSeptember 30,
2022
2021
2022
2021
Net income (loss)
$
20,457
$
71,674
$
(12,310
)
$
(9,280
)
Unrealized (gain) loss on marketable securities
(46
)
-
235
-
Total comprehensive income (loss)
$
20,503
$
71,674
$
(12,545
)
$
(9,280
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221107005373/en/
Investors: Erin Clark, Vice President, Corporate Strategy &
Investor Relations ir@sesenbio.com
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