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Concert Pharmaceuticals Reports Third Quarter 2017 Financial Results and Provides Company Update

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Conference Call Scheduled Today at 8:30 a.m. EST

Concert
Pharmaceuticals, Inc.
(NASDAQ:CNCE) today reported financial
results for the third quarter of 2017.

"This is an exciting time for our deuterium-based chemistry as we
continue to demonstrate our technology's ability to meaningfully improve
the clinical properties of existing medicines. The CTP-656 program and
subsequent asset purchase agreement with Vertex Pharmaceuticals is a
great example of leveraging our platform to rapidly create significant
value," said Roger Tung, Ph.D., President and CEO of Concert
Pharmaceuticals. "Our priorities now include advancing CTP-543 through
its Phase 2 program for alopecia areata while assessing indication
expansion opportunities and broadening our pipeline with new proprietary
candidates."

Recent Business Highlights and Upcoming Milestones

  • CTP-543 Phase 2a Trial Underway. The Company began dosing
    patients in the Phase 2a trial in the third quarter of 2017. The
    Phase 2a trial is designed to assess two doses (4 mg and 8 mg twice
    daily) of CTP-543 compared to placebo in patients with
    moderate-to-severe alopecia areata over 24 weeks of dosing. Dosing in
    the 8 mg arm of the trial is expected to begin after an independent
    Data Monitoring Committee completes a planned interim review of the
    safety data from the first dosing cohort in the first quarter of 2018.
    Concert expects to complete the trial in the second half of 2018.
  • CTP-543 Patent Proceedings. In October 2017, the Patent Trial
    and Appeal Board (PTAB) denied Incyte's petition to institute inter
    partes review (IPR) of U.S. Patent No. 9,249,149. The denial of
    Incyte's IPR petition upholds the validity of Concert's composition of
    matter patent claims covering CTP-543.
  • CTP-656 Asset Purchase Agreement Closed. In July 2017, Concert
    received a $160 million cash payment from Vertex Pharmaceuticals under
    an asset purchase agreement whereby Vertex acquired worldwide
    development and commercialization rights to CTP-656 and other assets
    related to the treatment of cystic fibrosis. CTP-656 is an
    investigational cystic fibrosis transmembrane conductance regulator
    (CFTR) potentiator that has the potential to be used as part of future
    once-daily combination regimens of CFTR modulators that treat the
    underlying cause of cystic fibrosis. Concert is eligible to receive up
    to $90 million in additional milestones based on regulatory approval
    in the U.S. and reimbursement in the U.K., Germany or France.
  • Alopecia Areata Patient Focused Drug Development Meeting. In
    September 2017, the U.S. Food and Drug Administration (FDA) hosted a
    patient-focused meeting for alopecia areata as part of its
    Patient-Focused Drug Development Initiative. The meeting's goal was to
    obtain patient input on the impact of alopecia areata, including on
    daily life, patient views and experiences regarding current
    treatments, and decision factors taken into account when selecting a
    treatment. The meeting materials are available on the FDA's website
    at: https://www.fda.gov/ForIndustry/UserFees/PrescriptionDrugUserFee/ucm554443.htm
  • Repayment of Venture Debt. In September 2017, Concert paid
    $30.8 million to Hercules Capital in repayment of the Company's
    outstanding obligations under a Loan Agreement. All outstanding
    obligations under the Loan Agreement were paid in full, and the
    agreement has been terminated.

Third Quarter 2017 Financial Results

  • Cash and Investments Position. Cash, cash equivalents and
    investments as of September 30, 2017, totaled $207.1 million as
    compared to $103.4 million as of June 30, 2017. Concert expects its
    cash, cash equivalents and investments as of September 30, 2017 to be
    sufficient to fund the Company into 2021.
  • Revenues. Revenue was $143.8 million for the quarter ended
    September 30, 2017, compared to $26,000 for the corresponding quarter
    in 2016. The increase in revenue relates to the close of the CTP-656
    asset purchase agreement with Vertex.
  • R&D Expenses. Research and development expenses were $7.1
    million for the quarter ended September 30, 2017, compared to $8.1
    million for the same period in 2016, a decrease of $1.0 million. The
    decrease was primarily due to the discontinuation of development
    related to CTP-656 resulting from the asset purchase agreement.
  • G&A Expenses. General and administrative expenses were $4.9
    million for the quarter ended September 30, 2017, compared to $3.4
    million for the same period in 2016, an increase of $1.5 million. The
    increase in general and administrative expenses was primarily related
    to an increase in stock compensation, professional and legal fees in
    connection with the CTP-656 asset purchase agreement and intellectual
    property matters related to CTP-543.
  • Net Income (Loss). For the quarter ended September 30, 2017,
    net income was $128.1 million, or $5.61 per share, as compared to a
    net loss of $11.4 million, or $0.51 per share for the quarter ended
    September 30, 2016.

Conference Call and Webcast

The Company will host a conference call and webcast today at 8:30 a.m.
EST to provide an update on the company and discuss third quarter
financial results. To access the conference call, please dial (855)
354-1855 (U.S. and Canada) or (484) 365-2865 (International) five
minutes prior to the start time.

A live webcast of Concert's presentation may be accessed in the
Investors section of the Company's website at www.concertpharma.com.
Please log on to the Concert website approximately 15 minutes prior to
the scheduled webcast to ensure adequate time for any software downloads
that may be required. A replay of the webcast will be available on
Concert's website for three months.

– Financial Tables to Follow –

 
Concert Pharmaceuticals, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
           

Three Months Ended
September 30,

Nine Months Ended
September 30,

2017   2016 2017   2016
Revenue:
License and research and development revenue $ 17 $ 26 $ 52 $ 153
Other Revenue 143,827     143,827    
Total revenue 143,844   26   143,879   153  
Operating expenses:
Research and development 7,136 8,054 22,658 28,323
General and administrative 4,875   3,440   15,835   10,845  
Total operating expenses 12,011   11,494   38,493   39,168  
Income (loss) from operations 131,833 (11,468 ) 105,386 (39,015 )
Interest and other income (expense), net (1,591 ) 112   (1,504 ) 338  
Income (loss) before tax provision 130,242 (11,356 ) 103,882 (38,677 )
Provision for income taxes 2,177     2,177    
Net income (loss) $ 128,065   $ (11,356 ) $ 101,705   $ (38,677 )
 
Net income (loss) attributable to common stockholders - basic 127,324 (11,356 ) 101,272 (38,677 )
Net income (loss) attributable to common stockholders - diluted 127,347 (11,356 ) 101,284 (38,677 )
 
Net income (loss) per share applicable to common stockholders:
Basic $ 5.61 $ (0.51 ) $ 4.49 $ (1.74 )
Diluted $ 5.44 $ (0.51 ) $ 4.37 $ (1.74 )

Weighted-average number of common shares used in net
income
(loss) per share applicable to common stockholders:

Basic 22,694 22,229 22,551 22,215
Diluted 23,421 22,229 23,195 22,215
 
 
Concert Pharmaceuticals, Inc.
Summary Balance Sheet Data
(in thousands)
       
September 30, 2017 December 31, 2016
Cash and cash equivalents $ 32,119 $ 40,555
Investments, available for sale 174,993 55,630
Working capital 202,229 92,159
Total assets 212,229 100,395
Deferred revenue 10,309 10,050
Total stockholders' equity $ 195,860 $ 85,594
 

About Concert

Concert
Pharmaceuticals
is a clinical stage biopharmaceutical company
focused on applying its DCE
Platform®
(deuterated chemical entity platform) to create novel
medicines designed to address unmet patient needs. The Company's
approach starts with approved drugs in which deuterium substitution has
the potential to enhance clinical safety, tolerability or efficacy.
Concert has a broad
pipeline
 of innovative medicines targeting autoimmune and
inflammatory diseases and central nervous systems (CNS) disorders. For
more information please visit www.concertpharma.com.

Cautionary Note on Forward Looking Statements

Any statements in this press release about our future expectations,
plans and prospects, including statements about our expectations on the
progress of clinical development of CTP-543, the sufficiency of our
cash, cash equivalents and investments to fund our operations and other
statements containing the words "anticipate," "believe," "continue,"
"could," "estimate," "expect," "intend," "may," "plan," "potential,"
"predict," "project," "should," "target," "would," and similar
expressions, constitute forward-looking statements within the meaning of
The Private Securities Litigation Reform Act of 1995. Actual results may
differ materially from those indicated by such forward-looking
statements as a result of various important factors, including: the
uncertainties inherent in the initiation of future clinical trials,
whether preliminary results from a clinical trial will be predictive of
the final results of that trial or whether results of early clinical
trials will be indicative of the results of later clinical trials,
expectations for regulatory approvals, availability of funding
sufficient for our foreseeable and unforeseeable operating expenses and
capital expenditure requirements and other factors discussed in the
"Risk Factors" section of our most recent Quarterly Report on Form 10-Q
filed with the Securities and Exchange Commission and in other filings
that we make with the Securities and Exchange Commission. In addition,
any forward-looking statements included in this press release represent
our views only as of the date of this release and should not be relied
upon as representing our views as of any subsequent date. We
specifically disclaim any obligation to update any forward-looking
statements included in this press release.

Concert Pharmaceuticals Inc., the CoNCERT Pharmaceuticals Inc. logo and
DCE Platform are registered trademarks of Concert Pharmaceuticals, Inc.

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