Market Overview

Concert Pharmaceuticals Reports First Quarter 2018 Financial Results

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

Concert
Pharmaceuticals, Inc.
(NASDAQ:CNCE) today reported financial
results for the first quarter of 2018.

"Concert has begun 2018 with strong momentum as our pipeline of
first-in-class drug candidates for serious diseases is progressing in
important efficacy trials, with the first data read out later this year
for CTP-543," said Roger Tung, Ph.D., President and Chief Executive
Officer of Concert Pharmaceuticals. "We look forward to the progression
of multiple Concert-discovered compounds over the coming quarters,
including our proprietary drug candidates, CTP-543 for alopecia areata
and CTP-692 for schizophrenia."

Dr. Tung also commented, "As we've demonstrated with our platform, early
clinical studies of well-chosen deuterium-modified drugs can rapidly
create value. Two clear examples of that include VX-561, which Vertex
may advance into Phase 3 development for cystic fibrosis, and AVP-786
which is in Phase 3 evaluation for Alzheimer's agitation under our
collaboration with Avanir Pharmaceuticals. Both VX-561 and AVP-786 have
the potential to provide substantial additional financial upside to
Concert."

Recent Business Highlights and Upcoming Milestones

Autoimmune Dermatology

  • CTP-543 Phase 2a Trial for Alopecia Areata Fully Enrolled.
    In April 2018, the Company completed patient enrollment of its Phase
    2a trial evaluating CTP-543 for the treatment of moderate-to-severe
    alopecia areata. This is a double-blind, randomized,
    placebo-controlled, sequential dose trial to evaluate the safety and
    efficacy of two doses twice daily of CTP-543 in approximately 90
    patients. Topline data from the 4 mg and 8 mg cohorts is expected in
    the fourth quarter of 2018. The primary outcome measure will utilize
    the severity of alopecia tool (SALT) after 24 weeks of dosing. If
    appropriate, the protocol may be amended to explore 12 mg twice daily
    of CTP-543.
  • CTP-543 Granted Fast Track Designation. In January 2018,
    the Company announced that the U.S. Food and Drug Administration (FDA)
    granted Fast Track designation for CTP-543. Fast Track designation is
    intended to facilitate the development and expedite the review process
    for therapies for serious medical conditions which offer the potential
    to significantly advance the existing standard of care.
  • FDA Voice of the Patient: Alopecia Areata. Following the
    U.S. Food and Drug Administration's (FDA) Patient-Focused Drug
    Development meeting held in September 2017 on alopecia areata, the FDA
    summarized the input shared by patients and patient representatives in
    a Voice
    of the Patient
    report. The public meeting on alopecia areata
    provided FDA with patient input on the impact of alopecia areata,
    including on daily life, patient views on treatment approaches, and
    decision factors taken into account when selecting a treatment.
  • PTAB Institutes IPR Proceeding. In April 2018, the
    Patent Trial and Appeal Board (PTAB) granted the request for rehearing
    of the PTAB's decision denying institution of the Inter Partes Review
    (IPR) filed by Incyte Corporation against Concert's U.S. Patent No.
    9,249,149. Concert believes in the validity of its patent claims and
    intends to vigorously defend the patent.

Neuropsychiatry

  • CTP-692 Preclinical Results Support Development in
    Schizophrenia.
    In March 2018, Concert announced the selection
    of CTP-692, a novel drug candidate for adjunctive treatment of
    schizophrenia, as its next development candidate. CTP-692 is a
    deuterated form of D-serine, an endogenous co-agonist of the NMDA
    receptor. Patients with schizophrenia have been shown to have lower
    plasma and cerebrospinal fluid concentrations of D-serine than
    individuals without schizophrenia. Based on early clinical results of
    D-serine and Concert's initial preclinical assessment of CTP-692, the
    Company believes that CTP-692 has the potential to improve clinical
    outcomes in patients with schizophrenia. The Company intends to
    advance CTP-692 into clinical development by year-end 2018.
  • CTP-692 NMDA Receptor Activity Nearly Identical to D-Serine.
    In preclinical testing, Concert demonstrated that CTP-692 and
    D-serine have nearly identical binding and functional activity at the
    human NMDA receptor.

First Quarter 2018 Financial Results

  • Cash and Investments Position: Cash, cash equivalents
    and investments as of March 31, 2018, totaled $191.0 million as
    compared to $203.2 million as of December 31, 2017. Concert expects
    its cash, cash equivalents and investments as of March 31, 2018 to be
    sufficient to fund the Company into 2021.
  • Revenues: Revenue was $10.5 million for the quarter
    ended March 31, 2018, compared to $20,000 for the same period in 2017.
    Revenue recognized in 2018 consists of $10.5 million primarily in
    non-cash consideration received from Processa Pharmaceuticals under a
    licensing agreement whereby Processa has worldwide rights to develop
    and commercialize CTP-499, a deuterated analog of
    1-(S)-5-hydroxyhexyl-3,7-dimethylxanthine, an active metabolite of
    pentoxifylline.
  • R&D Expenses: Research and development expenses were
    $8.7 million for the quarter ended March 31, 2018, compared to $8.2
    million for the same period in 2017. In the first quarter of 2018,
    research and development expenses were primarily associated with the
    development of CTP-543 and CTP-692. In the first quarter of 2017,
    research and development expenses were primarily associated with the
    development of CTP-543 and CTP-656, the Company's product candidate
    for cystic fibrosis which was acquired by Vertex Pharmaceuticals in
    July 2017.
  • G&A Expenses: General and administrative expenses
    were $5.6 million for the quarter ended March 31, 2018, compared to
    $5.3 million for the same period in 2017. The increase in general and
    administrative expenses was primarily related to an increase in
    non-cash stock-based compensation expense.
  • Net Loss: For the quarter ended March 31, 2018, net loss
    applicable to common stockholders was $4.5 million, or $0.19 per
    share, compared with a net loss applicable to common stockholders of
    $13.3 million, or $0.60 per share, for the quarter ended March 31,
    2017.

Conference Call and Webcast
The Company will host a
conference call and webcast
today, Thursday, May 3, 2018, at 8:30 a.m. ET to provide an update on
the Company and discuss first 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)
 
    Quarter Ended
March 31,
2018   2017
Revenue:
License and research and development revenue $ 10,479 $ 20
Operating expenses:
Research and development 8,656 8,237
General and administrative 5,630   5,253  
Total operating expenses 14,286   13,490  
Loss from operations (3,807 ) (13,470 )
Investment income 640 137
Unrealized loss on marketable equity securities (1,296 )  
Net loss $ (4,463 ) $ (13,333 )
 
Net loss per share applicable to common stockholders — basic and
diluted
$ (0.19 ) $ (0.60 )
Weighted-average number of common shares used in net loss per share
applicable to common stockholders— basic and diluted
23,223   22,377  
 
 
Concert Pharmaceuticals, Inc.
Summary Balance Sheet
Data

(in thousands)
    March 31, 2018   December 31, 2017
Cash and cash equivalents $ 35,697 $ 27,665
Investments, available for sale 155,305 175,500
Working capital 212,893 199,289
Total assets 227,646 211,736
Deferred revenue 10,533 10,301
Total stockholders' equity $ 210,397 $ 196,432
 

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 starts with previously studied compounds, including
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
or follow us on Twitter at @ConcertPharma
or on LinkedIn.

Cautionary Note on Forward Looking Statements
Any statements
in this press release about our future expectations, plans and
prospects, including risks related to the clinical development of our
therapeutic candidates and expectations regarding the sufficiency of our
cash balance to fund operating expenses and capital expenditures, 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, availability and timing of data from ongoing and future
clinical trials and the results of such 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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