Stealth BioTherapeutics Reports Fiscal Year 2019 Financial Results And Recent Business Highlights – BioSpace

BOSTON, April 1, 2020 /PRNewswire/ --Stealth Biotherapeutics Corp (NASDAQ: MITO), a clinical-stage biotechnology company focused on the discovery, development and commercialization of novel therapies for diseases involving mitochondrial dysfunction, today reported financial results for the year ended December 31, 2019 and announced recent business highlights.

"We are off to a strong start in 2020, having honed our focus on Barth and our planned expansion into other rare metabolic cardiomyopathies, while continuing to execute on the significant promise of our ophthalmic and other pipeline programs. By decisively reducing expenses in January, our cash and cash equivalents are sufficient through key Barth regulatory interactions in the second half of 2020, bringing us closer to a potential approval with an opportunity for a rare pediatric voucher and expedited regulatory review," said Reenie McCarthy, Chief Executive Officer at Stealth. "We hope to complete enrollment of our Phase 2b study in dry AMD during the second half of this year, keeping us on-track for a second half of 2021 top-line read-out. We are actively planning development initiatives in other rare metabolic cardiomyopathies, on which we hope to engage with the FDA this year. We are also rapidly advancing our pipeline of novel mitochondrial medicines, with SBT-272 being assessed in a Phase 1 clinical trial, preclinical data read-outs expected this year for SBT-272 in amyotrophic lateral sclerosis and multiple system atrophy and SBT-259 in Charcot-Marie-Tooth, and lead optimization underway for our SBT-550 series, targeting the ferroptosis pathway of cell death implicated in neurodegenerative diseases such as Parkinson's."

Fourth Quarter 2019 and Recent Highlights

Key Upcoming Milestones

2019 Financial Results

Revenue: In 2019, the Company recognized $21.1 million in revenue associated with the Alexion arrangement. The revenue represents the portion of the non-refundable upfront payments that were recognized in full upon the delivery of the topline data for the Company's MMPOWER-3 trial. Alexion terminated the arrangement and as such, no additional revenue will be recognized.

Research and Development (R&D) Expenses:R&D expenses decreased by $8.5 million to $44.6 million for the year ended December 31, 2019, from $53.1 million for the year ended December 31, 2018. This decrease was primarily from a net decrease of $8.5 million in clinical trial costs due to the timing of trials that ended in 2018, a $2.8 million decrease in contract manufacturing, and a $0.9 million decrease in discovery related expenses due to timing of activities. These decreases were offset in part by increases of $3.6 million in employee and consultant related expenses driven by continued build-out of clinical, medical affairs and regulatory functions and $0.1 million in other costs.

General and Administrative (G&A) Expenses: G&A expenses increased by $0.1 million to $22.3 million for the year ended December 31, 2019, from $22.2 million for the year ended December 31, 2018. The increase was primarily attributable to a net $2.3 million increase in pre-commercial activities including building market disease awareness, a $1.8 million increase in professional services for activities attributable to operating as a public company, an increase of $3.2 million in employee related costs offset by a decrease of $6.7 million in costs associated with 2018 financing efforts and a decrease in IP legal fees of $0.5 million.

Other Expenses: Other expenses increased by $4.5 million to $25.9 million for the year ended December 31, 2019 from $21.4 million for the year ended December 31, 2018. The increase in other expenses is primarily attributable to a $22.7 million loss on extinguishment of debt recorded with respect to convertible debt conversion into ordinary shares in conjunction with the Company's 2019 initial public offering and a $0.7 million change period over period in the fair value adjustments of the warrant liability. These increases were offset by a $3.4 million change in period over period fair value adjustments of the derivative liability associated with the convertible debt, a decrease in interest expense mostly related to the convertible debt of $14.7 million and an increase in interest income of $0.8 million.

Cash Position: Cash and cash equivalents were $50.8 million at December 31, 2019, compared to $10.9 million at December 31, 2018.

Conference Call

Management will host a conference call today at8:30 am ETto discuss the financial results and provide a general business update. The call can be accessed by dialing (877) 407-0989 or (201) 389-0921 (international) and referencing conference ID 13701108. A live audio webcast of the event can be accessed by visiting the Investors & News section of Stealth's Investor website,https://investor.stealthbt.com/. A replay of the webcast will be archived on Stealth's website for 30 days following the event.

About Stealth

We are a clinical-stage biotechnology company focused on the discovery, development and commercialization of novel therapies for diseases involving mitochondrial dysfunction. Mitochondria, found in nearly every cell in the body, are the body's main source of energy production and are critical for normal organ function. Dysfunctional mitochondria characterize a number of rare genetic diseases and are also involved in many common age-related diseases, typically involving organ systems with high energy demands such as the heart, the eye, and the brain. We believe our lead product candidate, elamipretide, has the potential to treat both rare metabolic cardiomyopathies, such as Barth, Duchenne and Becker muscular dystrophies and Friedreich's ataxia, as well as ophthalmic diseases entailing mitochondrial dysfunction, such as dry age-related macular degeneration and Leber's hereditary optic neuropathy. We are evaluating our second-generation clinical stage candidate, SBT-272, for rare neurodegenerative disease indications following promising preclinical data in amyotrophic lateral sclerosis, or ALS. Our pipeline compounds include SBT-259, which we are evaluating for rare peripheral neuropathies, and the SBT-550 series of compounds, which we plan to evaluate for rare neurodegenerative and ophthalmic indications. We have optimized our discovery platform to identify novel mitochondria-targeted compounds, which may be nominated as therapeutic product candidates or utilized as scaffolds to deliver other compounds to mitochondria. We have assembled a highly experienced management team, board of directors and group of scientific advisors to help us achieve our mission of leading mitochondrial medicine.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. Such forward-looking statements include those regarding Stealth BioTherapeutics' plans, strategies and expectations for its preclinical and clinical advancement of its drug development programs, including its ongoing clinical trials of elamipretide and planned clinical trial of SBT-272; the potential benefits of Stealth BioTherapeutics' product candidates; its key milestones for 2020; its plans regarding future data presentations; and its financial guidance regarding the period in which it will have capital available to fund its operations. Statements that are not historical facts, including statements about Stealth BioTherapeutics' beliefs, plans and expectations, are forward-looking statements. The words "anticipate," "expect," "hope," "plan," "potential," "possible," "will," "believe," "estimate," "intend," "may," "predict," "project," "would" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Stealth BioTherapeutics may not actually achieve the plans, intentions or expectations disclosed in these forward-looking statements, and you should not place undue reliance on these forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements as a result of known and unknown risks, uncertainties and other important factors, including: Stealth BioTherapeutics' ability to obtain additional funding and to continue as a going concern; the impact of the COVID-19 pandemic; the ability to successfully demonstrate the efficacy and safety of Stealth BioTherapeutics' product candidates and future product candidates; the preclinical and clinical results for Stealth BioTherapeutics' product candidates, which may not support further development and marketing approval; the potential advantages of Stealth BioTherapeutics' product candidates; the content and timing of decisions made by the U.S. FDA, the EMA or other regulatory authorities, investigational review boards at clinical trial sites and publication review bodies, which may affect the initiation, timing and progress of preclinical studies and clinical trials of Stealth BioTherapeutics product candidates; Stealth BioTherapeutics' ability to obtain and maintain requisite regulatory approvals and to enroll patients in its planned clinical trials; unplanned cash requirements and expenditures; competitive factors; Stealth BioTherapeutics' ability to obtain, maintain and enforce patent and other intellectual property protection for any product candidates it is developing; and general economic and market conditions. These and other risks are described in greater detail under the caption "Risk Factors" included in the Stealth BioTherapeutics' most recent Annual Report on Form 20-F filed with the Securities and Exchange Commission ("SEC"), as well as in any future filings with the SEC. Forward-looking statements represent management's current expectations and are inherently uncertain. Except as required by law, Stealth BioTherapeutics does not undertake any obligation to update forward-looking statements made by us to reflect subsequent events or circumstances.

Investor Relations Stern Investor Relations Lauren Stival, 212-362-1200 IR@StealthBT.com

STEALTH BIOTHERAPEUTICS CORP

Condensed Consolidated Balance Sheets

(inthousands)

December 31,

December 31,

2019

2018

Assets

Current assets:

Cash and cash equivalents

$ 50,768

$ 10,855

Prepaid expenses and other current assets

1,630

2,438

Total current assets

52,398

13,293

Property and equipment, net

345

499

Deferred offering costs

1,325

Other non-current assets

406

Total assets

$ 52,743

$ 15,523

Liabilities, convertible preferred shares and shareholders' equity (deficit)

Current liabilities:

Accounts payable

$ 9,520

$ 11,023

Accrued expenses and other current liabilities

8,495

13,826

Accrued interest payable

1,219

7,297

Current portion of long-term debt

14,716

8,465

Total current liabilities

33,950

40,611

Long-term debt, less current portion

1,526

10,317

Convertible notes payable

103,257

Derivative liability

36,567

Warrant liability

100

Total liabilities

35,476

190,852

Series A convertible preferred shares

211,377

Total shareholders' equity (deficit)

17,267

(386,706)

Total liabilities, convertible preferred shares and shareholders' equity (deficit)

$ 52,743

$ 15,523

STEALTH BIOTHERAPEUTICS CORP

Condensed Consolidated Statements of Operations

(inthousands,exceptshareandpersharedata)

Year Ended December 31,

2019

2018

Revenue

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Stealth BioTherapeutics Reports Fiscal Year 2019 Financial Results And Recent Business Highlights - BioSpace