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Arsanis Reports Financial Results for Second Quarter 2018

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WALTHAM, Mass. and VIENNA, Austria, Aug. 13, 2018 (GLOBE NEWSWIRE) -- Arsanis, Inc. (NASDAQ:ASNS), a clinical-stage biopharmaceutical company focused on applying monoclonal antibody (mAb) immunotherapies to address serious infectious diseases, today reported financial results for the second quarter ended June 30, 2018.

"While we remain disappointed regarding the outcome of the interim analysis of our ASN100 Phase 2 clinical trial, our team is working diligently to evaluate the complete dataset from the 154 patients that were enrolled in the trial to better understand the basis for this result," said René Russo, President and Chief Executive Officer of Arsanis. "We expect to complete this evaluation in the fourth quarter of this year and have ceased further clinical development of ASN100, pending the results of this analysis."

Dr. Russo continued, "In addition to the ongoing review of the ASN100 clinical trial data and the continued development of our ASN500 program, we intend to continue to support our collaborators across our ASN200 and ASN300 programs, both of which were outlicensed to subsidiaries of Bravos Biosciences, LLC during the first half of 2018. We are also working with our Board of Directors to consider strategic options that may potentially result in changes to our business strategy and future operations."

"We believe that the approximately $50 million in cash and cash equivalents on-hand at June 30, 2018 provides for sufficient resources to fund our planned operations into the first quarter of 2020," said Mike Gray, Chief Operating and Chief Financial Officer of Arsanis. "We believe that this cash position will allow us to continue to pursue the development of our ASN500 program while concurrently considering potential strategic options for Arsanis."

Recent Key Business Developments

  • In June 2018, Arsanis announced the discontinuation of its Phase 2 clinical trial of ASN100 for the prevention of S. aureus pneumonia in high-risk, mechanically ventilated patients following the completion of a planned interim analysis by an independent data review committee, or DRC, of unblinded trial data for the first 118 patients enrolled in the trial.  Based on the results of this analysis, the DRC determined that the trial was futile, meaning that it was not likely to meet its primary end-point upon completion, and recommended that the trial be discontinued.  Arsanis intends to complete follow-up visits on all patients dosed in the trial per the study protocol and to evaluate the complete dataset from the 154 patients that were enrolled in the trial upon discontinuation to better understand the basis for this result.  Arsanis has ceased further clinical development of ASN100 pending the completion of this data review and currently does not expect to incur material costs for this program beyond the fourth quarter of 2018. 
     
  • On August 10, 2018, Arsanis' board of directors approved a reduction in workforce to reduce operating costs and better align the company's workforce with the needs of its business following Arsanis' discontinuation of the clinical development of ASN100.  As part of this reduction in workforce, Arsanis plans to eliminate 19 positions across the company, representing approximately 44% of its workforce. Arsanis anticipates that it will substantially complete the implementation of the reduction in workforce by the fourth quarter of 2018.       

    Arsanis currently estimates that it will incur total expenses relating to the reduction in workforce of approximately $0.6 million, which is comprised of notice and severance payments. Arsanis expects to record these charges in the third and fourth quarters of 2018.
  • In June 2018, Arsanis outlicensed mAbs targeting K. pneumoniae discovered by Arsanis in its ASN300 program to a subsidiary of Bravos Biosciences LLC, which will have the exclusive right to conduct further preclinical development activities on the licensed mAbs, with an option to enter into an exclusive global development and commercial license.
     
  • In August 2018, Arsanis entered into an amended and restated grant agreement with the Bill & Melinda Gates Foundation (the "Gates Foundation"), replacing the existing February 2017 grant agreement in its entirety.  The update conforms the agreement to the current Gates Foundation audit, reporting, and other administrative requirements and makes the perpetual license that is granted to the Gates Foundation with respect to any funded developments resulting from the grant agreement irrevocable. All other material terms of the February 2017 grant agreement remain unchanged, including the agreement to provide Arsanis up to $9.3 million to conduct preclinical development of mAbs for the prevention of respiratory syncytial virus ("RSV") infection in newborns (the "RSV project"). 
     
  • In August 2018, Arsanis entered into a separate grant agreement with the Gates Foundation granting Arsanis up to $1.1 million in additional funding to conduct preclinical development activities for the RSV project that were not included in the existing February 2017 grant agreement. 

Second Quarter 2018 Financial Results

For the second quarter ended June 30, 2018, Arsanis reported a net loss of $12.1 million, or $0.85 loss per share, as compared to a net loss of $5.7 million, or $11.13 loss per share for the second quarter of 2017.

Operating expenses for the second quarter of 2018 were $12.6 million, as compared to $5.6 million for the second quarter of 2017, and were comprised of the following:

Research and development expenses were $8.9 million for the second quarter of 2018, as compared to $3.9 million for the second quarter of 2017. The increase of $5.0 million was primarily due to an increase of $3.6 million in direct costs for Arsanis' ASN100 program, an increase of $0.1 million in direct costs for its ASN500 program, and an increase of $1.4 million in unallocated research and development expenses.

General and administrative expenses were $3.7 million for the second quarter of 2018, compared to $1.7 million for the second quarter of 2017. The increase of $1.9 million was primarily related to additional costs associated with operating as a public company, including increases of $0.9 million in personnel costs, primarily due to an increase in headcount and employee compensation, $0.1 million in Board of Directors fees, $0.2 million in insurance fees and $0.7 million in professional fees primarily due to legal and accounting costs.

Other income, net was $0.5 million for the second quarter of 2018, compared to $0.1 million of other expense, net for the second quarter of 2017.

Year-to-Date 2018 Financial Results

For the six months ended June 30, 2018, Arsanis reported a net loss of $22.8 million, or $1.59 loss per share, as compared to a net loss of $11.1 million, or $21.62 loss per share for the six months ended June 30, 2017.

Operating expenses for the six months ended June 30, 2018 were $23.6 million, as compared to $11.5 million for the six months ended June 30, 2017, and were comprised of the following:

Research and development expenses were $17.1 million for the six months ended June 30, 2018, compared to $8.3 million for the six months ended June 30, 2017. The increase of $8.8 million was primarily due to an increase of $6.3 million in direct costs for Arsanis' ASN100 program, an increase of $0.3 million in direct costs for the Company's ASN500 program, and an increase of $2.1 million in unallocated research and development expenses.

General and administrative expenses were $6.5 million for the six months ended June 30, 2018, compared to $3.2 million for the six months ended June 30, 2017. The increase of $3.3 million was primarily related to additional costs associated with operating as a public company, including increases of $1.3 million in personnel costs, primarily due to an increase in headcount and employee compensation, $0.3 million in Board of Directors fees, $0.3 million in insurance fees and $1.3 million in professional fees primarily due to legal and accounting costs associated with being a public company.

Other income, net was $0.8 million for the six months ended June 30, 2018, compared to $0.4 million for the six months ended June 30, 2017.

As of June 30, 2018, cash and cash equivalents totaled $49.9 million, with approximately 14.32 million shares of common stock outstanding.

About Arsanis

Arsanis, Inc. is a clinical-stage biopharmaceutical company focused on applying monoclonal antibody (mAb) immunotherapies to address serious infectious diseases. A deep understanding of the pathogenesis of infection, paired with access to some of the most advanced mAb discovery techniques and platforms available today, has positioned Arsanis to further its goal of building and advancing a pipeline of novel mAbs with multiple mechanisms of action and high potency against their intended targets. Arsanis' pipeline is comprised of mAbs targeting multiple serious bacterial and viral pathogens, including respiratory syncytial virus.

Arsanis is a U.S. company headquartered in Waltham, Massachusetts, with a wholly owned subsidiary that is primarily focused on discovery research in Vienna, Austria (Arsanis Biosciences GmbH).

For more information, please visit the Arsanis website at www.arsanis.com.


ARSANIS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)

    June 30, 2018     December 31, 2017
Assets              
Cash and cash equivalents   $ 49,940     $ 76,793
Restricted cash     346       355
Grant and incentive receivables     2,178       1,608
Property and equipment, net     353       421
Prepaid expenses and other assets     4,393       2,077
Total assets   $ 57,210     $ 81,254
Liabilities, and stockholders' equity              
Accounts payable, accrued expenses and other liabilities   $ 6,023       7,681
Unearned income     2,231       2,630
Loans payable, net of discount     11,192       12,236
Total liabilities     19,446       22,547
               
               
Stockholders' equity     37,764       58,707
Total liabilities and stockholders' equity   $ 57,210     $ 81,254



ARSANIS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except share and per share amounts)
(Unaudited)

    Three Months Ended June 30,     Six Months Ended June 30,  
    2018     2017     2018     2017  
Operating expenses:                                
Research and development   $ 8,930     $ 3,906     $ 17,063     $ 8,297  
General and administrative     3,686       1,738       6,503       3,174  
Total operating expenses     12,616       5,644       23,566       11,471  
Loss from operations     (12,616 )     (5,644 )     (23,566 )     (11,471 )
Other income (expense):                                
Grant and incentive income     516       862       961       1,562  
Interest expense     (259 )     (444 )     (526 )     (1,463 )
Interest income     225             441        
Change in fair value of warrant liability           11             11  
Change in fair value of derivative liability    
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