Zosano Pharma Reports Fourth Quarter and Fiscal Year 2018 Financial Results

March 14, 2019 Off By BusinessWire

FREMONT, Calif.–(BUSINESS WIRE)–Zosano Pharma Corporation (NASDAQ:ZSAN), a clinical-stage
biopharmaceutical company, today announced financial results for the
fourth quarter and year ended December 31, 2018, as well as recent
business highlights.

“Following the completion of our Phase 3 clinical program for Qtrypta^TM(M207), we see a clear path to the filing of our NDA in the fourth
quarter of this year,” commented John Walker, Chairman and CEO. “We are
very proud of the manner in which our entire team pulled together to
conclude our long-term safety study, and to facilitate the scaling up of
our manufacturing capability, completing our registration batches and
successfully transferring our proprietary manufacturing processes to our
contract manufacturer.” Mr. Walker further added, “as we look to 2019,
we plan to build on these accomplishments with the initiation of
partnering discussions for the marketing and distribution of Qtrypta,
the expansion of our pipeline and the further development of our unique
intracutaneous microneedle system for the delivery of biologic agents,
where we can offer an alternative to intravenous (IV), intramuscular
(IM), and subcutaneous (SC) injections.”

Recent Business Highlights

Achieved the final milestone in the Phase 3 long-term safety study of
Qtrypta, with a cohort of patients completing 12 months on study drug
Received patent covering the use of Qtrypta as an acute treatment for
migraine and cluster headache, providing protection through 2037
Welcomed both Steve Elms, Managing Partner of Aisling Capital and
Linda Grais, MD, JD, an experienced founder, investor and CEO of
biotechnology companies to our Board of Directors
Appointed Greg Kitchener, a seasoned financial executive, as our Chief
Financial Officer
Announced the treatment of nearly 6,000 migraines in our long-term
safety study
Published clinical data in Headache: The Journal of Head and Face
Pain demonstrating the potential of Qtrypta as an acute treatment
for patients that present with difficult to treat migraines, defined
as morning migraine, delayed treatment, severe pain and those
accompanied by nausea
Completed contracts for the outsourcing of manufacturing to
established and FDA experienced contract manufacturers
Published data from the pivotal efficacy study of Qtrypta on Most
Bothersome Symptom Relief in Headache: The Journal of Head and Face
Pain
Completed the registration batches of Qtrypta under GMP guidelines as
part of the preparation for the filing of the NDA

Expected Upcoming Milestones

File NDA for Qtrypta in acute migraine in the fourth quarter of 2019
In concert with our anticipated NDA filing, put in place a partnership
for the marketing and distribution of Qtrypta
Initiate the clinical development program for Qtrypta in patients with
cluster headaches with the filing of an IND in the second quarter of
2019 and initiating a Phase 2 clinical study in the third quarter of
2019
Initiate the clinical development program of a 5-HT₃
antagonist in the anti-emetics market with the filing of an IND or
equivalent in the third quarter of 2019 and completing a Phase 1
clinical study in the fourth quarter of 2019
Initiate a pre-clinical development program in biologics in the second
half of 2019

Financial Results for the Fourth Quarter Ended December 31, 2018

Zosano reported a net loss for the fourth quarter of 2018 of $10.1
million, or $0.85 per share on a basic and diluted basis, compared with
a net loss of $7.5 million, or $3.80 per share on a basic and diluted
basis, for the same quarter in 2017.

Research and development expenses for the fourth quarter of 2018 were
$7.3 million, compared with $5.4 million for the same quarter in 2017.
The increase of $1.9 million was primarily due to the scale up and
transfer of technology to our contract manufacturers, along with costs
associated with our long-term safety study.

General and administrative (G&A) expenses for the fourth quarter of 2018
were $2.5 million, compared with $1.8 million in 2017. The increase of
$0.7 million was primarily due to higher stock compensation and
personnel expense, and taxes.

As of December 31, 2018, cash, cash equivalents and marketable
securities were $23.0 million, compared with $11.7 million as of
December 31, 2017.

Financial Results for the Fiscal Year Ended December 31, 2018

Zosano reported a net loss for the full year 2018 of $35.4 million, or
$3.74 per share on a basic and diluted basis, compared with a net loss
of $29.1 million, or $16.82 per share on a basic and diluted basis, for
the full year 2017.

Research and development expenses for the full year 2018 were $25.5
million, compared with $20.1 million in 2017. The increase was primarily
due to costs associated with our long-term safety study, the scale up
and transfer of technology to our contract manufacturers, personnel and
stock compensation expense.

General and administrative expenses for the full year 2018 were $9.4
million, compared with $8.2 million in 2017. The increase was primarily
due to higher taxes, professional services related to our ERP
implementation, personnel and stock compensation expense.

Conference Call

The Company will host a conference call with the investment community
today, March 14^th, at 4:30 p.m. Eastern Time. The dial-in
numbers for the conference call are (844) 379-5311 (U.S.) or (209)
905-5963 (international). The conference ID number is 9986631. To access
the live webcast, please visit the Investor Relations page of the Zosano
Pharma website at http://ir.zosanopharma.com/events.cfm.
Please allow extra time prior to the call to visit the site and download
any necessary software to listen to the live broadcast.

For interested individuals unable to join the live call, an archived
webcast will be available on the Company’s website at http://ir.zosanopharma.com/events.cfm
approximately three hours after the call and available through April 14,
2019.

About Zosano Pharma

Zosano Pharma Corporation is a clinical stage biopharmaceutical company
focused on providing administration of therapeutics to patients using
its intracutaneous delivery system, which consists of titanium
microneedles coated with drug that can enable rapid systemic
administration to patients. The company’s lead product candidate is
Qtrypta^TM (M207), which is Zosano’s proprietary formulation
of zolmitriptan delivered via its intracutaneous delivery technology for
the treatment of migraine disease. In February 2017, the company
announced statistically significant results from the ZOTRIP pivotal
study and in February 2019, Zosano announced the completion of the final
milestone in its long-term safety study and its expectations to file an
NDA for Qtrypta in the fourth quarter of 2019. Learn more at www.zosanopharma.com.

Forward-Looking Statements

This press release contains forward-looking statements regarding the
expected timing of a New Drug Application (NDA) for Qtrypta (M207),
partnering discussions, expansion of our pipeline, development of our
intracutaneous delivery system and other future events and expectations
described under “Expected Upcoming Milestones” and elsewhere in this
press release. Readers are urged to consider statements that include the
words “may,” “will,” “would,” “could,” “should,” “might,” “believes,”
“estimates,” “projects,” “potential,” “expects,” “plans,” “anticipates,”
“intends,” “continues,” “forecast,” “designed,” “goal,” “unaudited,”
“approximately” or the negative of those words or other comparable words
to be uncertain and forward-looking. These statements are subject to
risks and uncertainties that are difficult to predict, and actual
outcomes may differ materially. These include risks and uncertainties,
without limitation, associated with the Company’s ability to obtain
additional cash resources to continue operations for the remainder of
2019, the process of discovering, developing and commercializing
products that are safe and effective for use as human therapeutics,
risks inherent in the effort to build a business around such products
and other risks and uncertainties described under the heading “Risk
Factors” in the Company’s most recent annual report on Form 10-K and
quarterly reports on Form 10-Q. Although Zosano believes that the
expectations reflected in these forward-looking statements are
reasonable, we cannot in any way guarantee that the future results,
level of activity, performance or events and circumstances reflected in
forward-looking statements will be achieved or occur. All
forward-looking statements are based on information currently available
to Zosano and Zosano assumes no obligation to update any such
forward-looking statements.

ZOSANO PHARMA CORPORATION
STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)

	Three Months Ended December 31,						Year Ended December 31,
		2018			2017			2018			2017
	(unaudited)			(unaudited)			(unaudited)
Revenue:	$	–		$	–		$	–		$	–
Operating expenses:
Research and development		7,270			5,446			25,508			20,118
General and administrative		2,470			1,836			9,357			8,182
Impairment loss		511			70			511			70
Total operating expenses		10,251			7,352			35,376			28,370
Loss from operations		(10,251	)		(7,352	)		(35,376	)		(28,370	)
Other income (expenses):
Interest income		134			19			381			75
Interest expense		(33	)		(153	)		(379	)		(817	)
Other income (expense), net		3			(3	)		16			7
Net loss	$	(10,147	)	$	(7,489	)	$	(35,358	)	$	(29,105	)

Net loss per common share ̶ basic and diluted	$	(0.85	)	$	(3.80	)	$	(3.74	)	$	(16.82	)

Weighted-average shares used in computing net loss per common share ̶ basic and diluted		11,973,039			1,970,326			9,452,491			1,730,388


ZOSANO PHARMA CORPORATION
BALANCE SHEETS
(in thousands, except share and per share amounts)

	December 31,			December 31,
	2018			2017
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	9,140		$	11,651
Marketable securities at fair value		13,862			–
Prepaid expenses and other current assets		358			1,742
Total current assets		23,360			13,393
Restricted cash		455			455
Property and equipment, net		11,916			4,152
Other long-term assets		49			–
Total assets	$	35,780		$	18,000

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	4,450		$	1,511
Accrued compensation		2,092			1,571
Capital lease obligation, current portion		5			–
Build-to-suit obligation, current portion		2,326			–
Secured promissory note (including accrued interest), net of issuance costs		–			6,687
Other accrued liabilities		2,414			688
Total current liabilities		11,287			10,457
Capital lease obligation, long-term portion		18			–
Build-to-suit obligation, long-term portion, net of debt issuance costs and discount		4,478			–
Deferred rent		1,287			495
Total liabilities		17,070			10,952
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.0001 par value, 5,000,000 shares authorized; none issued and outstanding as of December 31, 2018 and 2017		–			–
Common stock, $0.0001 par value; 250,000,000 and 100,000,000 shares authorized as of December 31, 2018 and 2017, respectively; 11,973,039 and 1,973,039 shares issued and outstanding as of December 31, 2018 and 2017, respectively		1			–
Additional paid-in capital		279,946			232,922
Accumulated deficit		(261,232	)		(225,874	)
Accumulated other comprehensive loss		(5	)		–
Stockholders’ equity		18,710			7,048
Total liabilities and stockholders’ equity	$	35,780		$	18,000