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Deciphera Pharmaceuticals, Inc. Announces Second Quarter 2018 Financial Results

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- Presented Data at 2018 ASCO Annual Meeting Supporting Potential for
DCC-2618 in Second-Line GIST Patients -

- Completed Enrollment of GIST Expansion Cohorts in Ongoing Phase 1
Clinical Study -

- Pivotal Phase 3 INTRIGUE Study in Second-Line GIST on Track to
Commence Later this Year; Enrollment in Pivotal Phase 3 INVICTUS Study
in Fourth-line and Fourth-Line Plus GIST Ongoing -

- Completed Follow-On Public Offering in June and ended Second
Quarter 2018 with cash and cash equivalents of $346.5 million -

Deciphera Pharmaceuticals, Inc. (NASDAQ:DCPH), a clinical-stage
biopharmaceutical company focused on addressing key mechanisms of tumor
drug resistance, today announced financial results for the second
quarter ended June 30, 2018, and provided an update on recent clinical
and corporate developments.

"The first half of 2018 was marked by exceptional progress, with data
presented at the ASCO Annual Meeting in June demonstrating the potential
of DCC-2618, our lead product candidate, in second- and third-line GIST
patients, and supporting the planned Phase 3 trial, INTRIGUE, in
second-line GIST patients," said Michael D. Taylor, Ph.D., President and
Chief Executive Officer of Deciphera. "In addition, we observed
continued robust clinical activity in heavily pretreated patients. For
the balance of this year, we look forward to presenting additional data
from the Phase 1 DCC-2618 study, as well as to the planned initiation of
the INTRIGUE study."

Dr. Taylor continued, "In addition to our clinical progress, we also
strengthened both our leadership team and balance sheet, and we are well
positioned to advance our pipeline of novel kinase switch control
inhibitors toward key milestones."

Clinical Programs

  • DCC-2618
    • At the American Society of Clinical Oncology (ASCO) Annual Meeting
      in June 2018, Deciphera presented updated data from its ongoing
      Phase 1 clinical trial of DCC-2618 in patients with
      gastrointestinal stromal tumors (GIST). Highlights from the
      presentation included:
      • Initial objective response rates (ORR) and disease control
        rates (DCR) in second-and third-line GIST patients treated
        with DCC-2618 at ≥100mg daily exceeded previously published
        results of registrational trials for currently approved
        therapies, sunitinib in second-line patients and regorafenib
        in third-line patients.
      • Mutational profiling data across second-, third- and
        fourth-line GIST patients demonstrated the breadth of KIT
        mutations in GIST at baseline and the ability of DCC-2618 to
        reduce KIT mutant allele frequency.
    • Deciphera previously announced that following discussions with
      regulatory authorities in the United States and in Europe, it has
      designed the INTRIGUE trial as a randomized, multicenter,
      open-label, Phase 3 trial evaluating DCC-2618 vs. sunitinib in
      second-line GIST patients. The Company plans to initiate this
      trial later this year.
    • Deciphera completed enrollment in the three GIST cohorts in the
      expansion stage of the ongoing Phase 1 study, totaling 130
      patients with second- through fourth-line plus GIST. In addition,
      enrollment is ongoing in the Company's Phase 3 INVICTUS study in
      fourth-line and fourth-line plus GIST.
    • Deciphera will present an update on the GIST patients in the
      ongoing Phase 1 study as a Proffered Paper (oral) presentation at
      the ESMO 2018 Congress. The presentation titled "Initial Results
      of Phase 1 Study of DCC-2618, a Broad-spectrum KIT and PDGFRa
      Inhibitor, in Patients (pts) with Gastrointestinal Stromal Tumor
      (GIST) by Number of Prior Regimens" will be presented on October
      19, 2018 in Munich.
    • In April 2018, the Company reported preclinical data at the Annual
      Meeting of the American Association for Cancer Research (AACR)
      demonstrating that compared to the in vitro profiles of the
      FDA-approved kinase inhibitors imatinib, sunitinib, regorafenib,
      and midostaurin, and the investigational agent avapritinib
      (BLU-285), DCC-2618 demonstrated the broadest profile of
      inhibition of primary and secondary KIT mutations and primary
      PDGFRα mutations.
    • The Company also reported updated clinical data at the 2018 AACR
      Annual Meeting demonstrating the safety and tolerability profile
      of DCC-2618 in 100 GIST patients treated at the recommended Phase
      2 dose of 150 mg QD, which supports the selection of this dose for
      the ongoing pivotal, randomized Phase 3 INVICTUS study.
  • Rebastinib
    • Deciphera expects to initiate a company-sponsored open-label,
      multicenter Phase 1b study of rebastinib in combination with
      paclitaxel to assess safety, tolerability and pharmacokinetics in
      patients with locally advanced or metastatic solid tumors later
      this year.
  • DCC-3014
    • Deciphera continues to enroll patients in the Phase 1 dose
      escalation study of DCC-3014, a selective CSF1R immunokinase
      inhibitor, and expects to provide an update from this study later
      this year.

Corporate Updates

  • In June 2018, Deciphera announced the closing of an underwritten
    public offering of 4,945,000 shares at a public offering price of
    $40.00 per share, which included the exercise in full by the
    underwriters of their option to purchase up to 645,000 additional
    shares of common stock. Total net proceeds to Deciphera were
    approximately $185.3 million, after deducting underwriting discounts
    and commissions and other offering expenses.
  • In May 2018, the Company announced the appointment of Stephen B.
    Ruddy, Ph.D. as Chief Technical Officer. Dr. Ruddy brings to Deciphera
    more than 25 years of global pharmaceutical management and leadership
    experience in small-molecule and biologics development and
    manufacturing. He will be responsible for establishing and leading a
    world-class manufacturing and supply chain organization.
  • In May 2018, the Company also announced the appointment of Steven L.
    Hoerter, Chief Commercial Officer at Agios Pharmaceuticals, Inc., to
    its Board of Directors. Mr. Hoerter has more than 25 years of global
    pharmaceutical and biotechnology experience, having held senior
    positions at leading oncology companies. He will serve as an
    independent director and a member of the Nominating and Corporate
    Governance Committee.

Second Quarter 2018 Financial Results

  • Cash Position: As of June 30, 2018, cash and cash equivalents
    were $346.5 million compared to cash and cash equivalents of $196.8
    million as of December 31, 2017. This increase was primarily related
    to proceeds obtained through the Company's recent underwritten public
    offering offset by cash used in operating activities.
  • R&D Expenses: Research and development expenses for the
    second quarter of 2018 were $18.0 million compared to $8.4 million for
    the same period in 2017. The increase was primarily due to an increase
    in spending on the DCC-2618 program of $5.5 million as a result of
    clinical trial costs related to the pivotal Phase 3 INVICTUS study
    that began enrollment in January 2018 and the ongoing Phase 1 trial.
    Clinical costs also increased as a result of start-up activities
    related to the pivotal Phase 3 INTRIGUE study in second-line GIST,
    which is expected to be initiated in the second half of 2018.
    Manufacturing costs increased for DCC-2618 as a result of new process
    development to support anticipated greater drug requirements for
    commercialization as well as the manufacture of registration lots
    required to support the submission of a new drug application. Expenses
    related to our rebastinib program increased approximately $0.6 million
    primarily as a result of start-up activities related to our planned
    clinical trials. In addition, personnel-related, facility-related and
    other costs increased an aggregate of $3.6 million as the result of an
    increase in costs associated with an increase in headcount and
    incurred in connection with our early-stage drug discovery programs.
    Personnel costs for each of the second quarters of 2018 and 2017
    included non-cash share-based compensation expense of $1.0 million and
    $0.2 million, respectively.
  • G&A Expenses: General and administrative expenses for the
    second quarter of 2018 were $4.5 million, compared to $2.2 million for
    the same period in 2017. The increase was primarily due to an increase
    in non-cash share-based compensation expense related to additional
    employee stock options and a higher value of our common stock and to
    an increase in legal and professional fees as a result of various
    advisory fees related to ongoing operations as a public company as
    well as costs incurred for pre-commercialization activities.
    Non-cash share-based compensation was $1.2 million and $0.4 million
    for each of the second quarters of 2018 and 2017, respectively.
  • Net Loss: For the second quarter of 2018, Deciphera reported a
    net loss of $21.7 million, or $0.65 per share, compared with a net
    loss of $10.6 million, or $0.91 per share for the same period in 2017.

About Deciphera Pharmaceuticals

Deciphera Pharmaceuticals is a clinical-stage biopharmaceutical company
focused on improving the lives of cancer patients by tackling key
mechanisms of drug resistance that limit the rate and/or durability of
response to existing cancer therapies. Our small molecule drug
candidates are directed against an important family of enzymes called
kinases, known to be directly involved in the growth and spread of many
cancers. We use our deep understanding of kinase biology together with a
proprietary chemistry library to purposefully design compounds that
maintain kinases in a "switched off" or inactivated conformation. These
investigational therapies comprise tumor-targeted agents designed to
address therapeutic resistance causing mutations and immuno-targeted
agents designed to control the activation of immunokinases that suppress
critical immune system regulators, such as macrophages. We have used our
platform to develop a diverse pipeline of tumor-targeted and
immuno-targeted drug candidates designed to improve outcomes for
patients with cancer by improving the quality, rate and/or durability of
their responses to treatment.

Forward-Looking Statements

This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995, as
amended, including, without limitation, statements regarding the
anticipated use of proceeds from the offering, the potential for our
drug candidates to treat cancers and our strategy, business plans and
focus. The words "may," "will," "could," "would," "should," "expect,"
"plan," "anticipate," "intend," "believe," "estimate," "predict,"
"project," "potential," "continue," "target" and similar expressions are
intended to identify forward-looking statements, although not all
forward-looking statements contain these identifying words. Any
forward-looking statements in this press release are based on
management's current expectations and beliefs and are subject to a
number of risks, uncertainties and important factors that may cause
actual events or results to differ materially from those expressed or
implied by any forward-looking statements contained in this press
release, including, without limitation, risks and uncertainties related
to the delay of any current or planned clinical trials or the
development of our drug candidates, including DCC-2618, our advancement
of multiple early-stage efforts, our ability to successfully demonstrate
the efficacy and safety of our drug candidates, the preclinical and
clinical results for our drug candidates, which may not support further
development of such drug candidates, actions of regulatory agencies,
which may affect the initiation, timing and progress of clinical trials
and other risks identified in our SEC filings, including our Prospectus
filed with the SEC on June 7, 2018, as amended, our Annual Report on
Form 10-K for the year ended December 31, 2017, our Quarterly Report on
Form 10-Q for the quarter ended March 31, 2018, and subsequent filings
with the SEC. We caution you not to place undue reliance on any
forward-looking statements, which speak only as of the date they are
made. We disclaim any obligation to publicly update or revise any such
statements to reflect any change in expectations or in events,
conditions or circumstances on which any such statements may be based,
or that may affect the likelihood that actual results will differ from
those set forth in the forward-looking statements. Any forward-looking
statements contained in this press release represent our views only as
of the date hereof and should not be relied upon as representing its
views as of any subsequent date. We explicitly disclaim any obligation
to update any forward-looking statements.

           
Deciphera
 
 
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
 
 
 
June 30, 2018 December 31, 2017
Assets
Cash and cash equivalents $ 346,527 $ 196,754
Prepaid expenses and other current assets 2,221 1,428
Long-term investment restricted 1,069
Property and equipment, net (1) 18,264 838
Other assets   75   75
Total assets $ 368,156 $ 199,095
 
Liabilities and Stockholders' Equity
Accounts payable, accrued expenses and other

liabilities

$ 18,775 $ 13,641
Debt obligations 1,388 1,481
Lease liability, net of current portion(1)   16,896  
Total liabilities   37,059   15,122
 
Total stockholders' equity   331,097   183,973
Total liabilities and stockholders' equity $ 368,156 $ 199,095
 
(1)   In May 2018, we entered into a lease for office space in Waltham,
MA. We are not the legal owners of the leased space, however, we are
deemed to be the owner during the construction phase beacuse of
certain provisions within the lease. As a result, we recorded a
$17.0 million build-to-suit asset in property and equipment and a
corresponding build-to-suit facility lease financing obligation.
               
Deciphera
 
 
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In thousands, except share and per share data)
(Unaudited)
 
 
 
 
Three Months Ended Six Months Ended
June 30, June 30,
  2018     2017     2018     2017  
 
Revenue $   $   $   $  
Operating expenses:
Research and development 17,976 8,446 34,901 14,105
General and administrative   4,453     2,244     9,479     4,311  
Total operating expenses   22,429     10,690     44,380     18,416  
Loss from operations   (22,429 )   (10,690 )   (44,380 )   (18,416 )
Other income (expense):
Interest expense (21 ) (24 ) (43 ) (49 )
Interest and other income, net   760     89     1,303     131  
Total other income (expense), net   739     65     1,260     82  
Net loss and comprehensive loss $ (21,690 ) $ (10,625 ) $ (43,120 ) $ (18,334 )
Net loss per share—basic and diluted $ (0.65 ) $ (0.91 ) $ (1.30 ) $ (1.58 )
Weighted average common shares outstanding—basic and diluted   33,567,314     11,626,287     33,083,383     11,626,287  
 

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