On August 11, 2015 Bio-Path Holdings, Inc., (NASDAQ: BPTH) ("Bio-Path"), a biotechnology company leveraging its proprietary liposomal delivery technology to develop a portfolio of targeted nucleic acid cancer drugs, reported operational and financial results for the quarter ended June 30, 2015 (Filing, 8-K, Bio-Path Holdings, AUG 12, 2015, View Source [SID:1234507219]).

SECOND QUARTER 2015 AND RECENT OPERATIONAL AND FINANCIAL HIGHLIGHTS

o The data package for the monotherapy portion of the Phase 1 clinical trial of Bio-Path’s lead compound, Liposomal Grb-2 ("BP-1001"), in blood cancers was finalized during the quarter. Liposomal Grb-2 was well tolerated with the drug showing signs of anti-leukemia activity and no drug related toxicities. Among 21 evaluable patients, more than half experienced at least a fifty percent (50%) reduction in peripheral or bone marrow blasts from baseline. Additionally, several patients demonstrated transient improvement and/or stable disease. Notably, one patient with Chronic Myelogenous Leukemia (CML) blast phase showed a significant reduction in blasts. The patient data from the Phase I clinical trial also demonstrated significant reductions in the target Grb-2 protein and its downstream proteins, providing positive evidence that Bio-Path’s DNAbilizeTM neutral lipid delivery with proprietary antisense technology successfully delivers an antisense drug substance to a diseased cell to knock down the target protein, which is an industry-first for antisense systemic therapeutics.

o Enrollment continues into the safety portion of the Phase 2 combination trial evaluating Liposomal Grb-2 and low dose Ara-C frontline therapy in patients with Acute Myeloid Leukemia (AML). The safety portion of the Phase 2 trial is designed to assess two cohorts with three patients each: 60 mg/m2 of Liposomal Grb-2 and frontline Ara-C and 90 mg/m2 of Liposomal Grb-2 and frontline Ara-C in its intended use in combination with an existing chemotherapeutic agent. Bio-Path expects this portion of the program will be completed in the second half of 2015.

The Phase 2 combination trial will target older AML patients who are unfit for intense treatment. The average age of diagnosis for AML is 66 years old. However, older patients do not tolerate intense chemotherapy well and treatment related mortality is a major concern among AML patients greater than 65 years old, representing approximately sixty percent (60%) of AML patients. This patient segment represents an unmet need for an approach that provides quality of life and provides an excellent opportunity for clinical development of Liposomal Grb-2.

o An abstract has been submitted by Jorge Cortes, M.D., Professor and Deputy Chair, Department of Leukemia, The University of Texas MD Anderson Cancer Center (MD Anderson Cancer Center) and staff for presentation of the specific data from the Phase 1 clinical trial monotherapy testing of Liposomal Grb-2, which is planned to be reviewed at the Annual Society of Hematology (ASH) (Free ASH Whitepaper) meeting in December. In addition, the available data from the safety portion of the Phase 2 trial combination therapy evaluating Liposomal Grb-2 and low dose Ara-C frontline therapy in patients with AML is also to be included in the data package for presentation at the ASH (Free ASH Whitepaper) meeting.

o Bio-Path commenced development during the quarter of a protocol for a Phase 2 clinical trial evaluating Liposomal Grb-2 and frontline therapy in patients with CML in blast crisis, which is an unmet need. The Company expects to complete preparations to initiate the toxicity portion of this Phase 2 trial by the end of 2015.

o Product candidate vetting and development continued during the quarter to support efforts to broaden the Company’s product pipeline. These product candidates include opportunities in the cancer area as well as candidates outside of cancer such as autoimmune disease.

o Preclinical testing of its lead product candidate, Liposomal Grb-2, is continuing, into two additional indications: triple negative breast cancer (TNBC) and inflammatory breast cancer (IBC), two cancers characterized by the formation of aggressive tumors and relatively high mortality rates. The Company is working in collaboration with a leading researcher working in the The University of Texas MD Anderson Cancer Center (MD Anderson) breast cancer program. The Company completed testing of a monotherapy in vivo segment of the preclinical program and is evaluating the results. The preclinical program may be expanded to include a combination therapy evaluation.

o Bio-Path has retained a public relations firm specializing in biotech and large pharmaceutical company public relations. Key among the goals will be increasing industry and investor awareness of Bio-Path’s DNAbilizeTM neutral lipid delivery of p-ethoxy antisense technology and Bio-Path as a multi-product candidate company.

o Bio-Path established an "at-the-market" ("ATM") program during the quarter through which it may offer and sell up to $25 million of common stock from time to time, at Bio-Path’s discretion, through an investment banker, acting as sales agent. Sales of Bio-Path common stock under the ATM program may be made directly on or through the Nasdaq Capital Market, among other methods.

· Second Quarter 2015 Financial Highlights

o The Company reported a net loss of $1.1 million for the three months ended June 30, 2015, compared to a net loss of $1.3 million for the three months ended June 30, 2014. The decrease was primarily due to decreased management and administrative personnel costs. The Company reported a net loss per share of $0.01 for both the three months ended June 30, 2015 and June 30, 2014. Net loss for the six months ended June 30, 2015 was $2.5 million, or $0.03 per share, compared to a net loss of $1.8 million, or $0.02 per share, for the six months ended June 30, 2014. The increase was primarily due to increased manufacturing development and preclinical study costs as well as personnel costs associated with the addition of research and development support staff in the latter half of 2014.

o Research and development expenses for the three months ended June 30, 2015 increased to $0.6 million compared to $0.5 million for the three months ended June 30, 2014. For the six months ended June 30, 2015, research and development expenses increased to $1.2 million compared to $0.6 million for the six months ended June 30, 2014.

o General and administrative expenses for the three months ended June 30, 2015 decreased to $0.6 million compared to $0.8 million for the three months ended June 30, 2014. For the six months ended June 30, 2015, general and administrative expenses increased to $1.4 million compared to $1.1 million for the six months ended June 30, 2014.

o As of June 30, 2015, the Company had cash of $11.1 million, compared to $13.9 million at December 31, 2014. Net cash used in operating activities for the six months ended June 30, 2015 was $2.8 million compared to $1.6 million for the comparable period in 2014.

"Completion of the data package for the monotherapy portion of the Phase 1 trial of Liposomal Grb-2 in blood cancers was a significant milestone in wrapping up that portion of the trial," said Peter Nielsen, President and Chief Executive Officer of Bio-Path. "The data demonstrates that Liposomal Grb-2 is a targeted therapy treatment that does not have treatment side effects, which greatly enhances its potential for combination therapy with other frontline treatments. The safety portion of our Phase 2 combination therapy trial is gaining momentum. The submission of the abstract to the ASH (Free ASH Whitepaper) meeting for a presentation of both the monotherapy portion of the Phase 1 plus the early cohorts from the Phase 2 combination therapy trial presents an early opportunity to highlight the potential of Liposomal Grb-2 combination therapy with Ara-C to treat an important, unmet need of the AML population. We believe development of Liposomal Grb-2 with AML fragile patient population is an exciting development opportunity. We continue to make significant progress in building a solid pipeline of cancer therapies, which is a key goal for Bio-Path. We recently initiated plans and development for a Phase 2 trial of Liposomal Grb-2 combination therapy in CML blast crisis patients. This is another unmet patient area with a high priority. Preparation of the Liposomal Bcl-2 package to initiate a trial in follicular lymphoma is also on track. Development of our preclinical pipeline has increased, adding product candidate opportunities outside of cancer that could benefit from our unique delivery technology."

Mr. Nielsen continued, "Operationally, the retention of a top firm to work with Bio-Path to build and implement a comprehensive public relations program is an important corporate development step. Bio-Path’s technology, clinical development and organization have progressed far enough now that we expect this be a very effective communications and media program. Our balance sheet continues to be strong, with sufficient cash to continue our development programs through 2015 and into 2016. In addition, the establishment of a $25 million ATM financing program provides us the ability to raise additional capital in the short term if needed."

About Bio-Path’s Delivery Technology

Bio-Path’s drug delivery technology involves microscopic-sized liposome particles that distribute nucleic acid drugs systemically and safely throughout the human body, via simple intravenous infusion. The delivery technology is applied to proprietary, single stranded (antisense) nucleic acid compounds with the potential to revolutionize the treatment of cancer and other diseases where drugable targets of disease are well characterized. The Company is currently focused on developing liposomal antisense drug candidates. Bio-Path also anticipates developing liposome tumor targeting technology, representing next-generation enhancements to the Company’s core liposome delivery technology.

About Growth Receptor Bound protein-2 (Grb-2)

The adaptor protein Growth Receptor Bound protein-2 (Grb-2) is essential to cancer cell signaling because it is utilized by oncogenic tyrosine kinases to induce cancer progression. Suppressing the function or expression of Grb-2 should interrupt its vital signaling function and have a therapeutic application in cancer. BP-1001 is a neutral-charge, liposome-incorporated antisense drug substance designed to inhibit Grb-2 expression.

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On August 12, 2015 Immune Design (Nasdaq:IMDZ), a clinical-stage immunotherapy company focused on oncology, reported financial results and a corporate update for the second quarter ended June 30, 2015, which included the announcement of three new immuno-oncology clinical collaborations and a cash position of $129.0 million, inclusive of net proceeds from a public offering in April 2015 (Press release, Immune Design, AUG 12, 2015, View Source [SID:1234507218]).

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Corporate Update and Recent Highlights
On August 10, 2015, Immune Design reported it had entered into two clinical trial collaborations with Merck (NYSE:MRK) to evaluate two immuno-oncology investigational agents, G100 and LV305, each separately combined with KEYTRUDA (pembrolizumab), Merck’s anti-PD-1therapy, in Phase 1 trials in patients with non-Hodgkin’s lymphoma (NHL) and melanoma, respectively.

Earlier today, Immune Design announced it had entered into a clinical trial collaboration with Genentech, a member of the Roche Group, to evaluate the safety and efficacy of Immune Design’s CMB305 prime-boost immuno-oncology investigational agent combined with the investigational cancer immunotherapy, atezolizumab (MPDL3280A; anti-PD-L1), in a randomized Phase 2 trial in patients with soft tissue sarcoma.

In May 2015, Immune Design announced the presentation of positive clinical data from three immuno-oncology Phase 1 studies at the 2015 American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) Annual Meeting. The three trials provide first-in-human clinical data with the company’s immuno-oncology agents that are designed to generate anti-tumor immunity, LV305 and G305 which target the tumor-associated antigen, NY-ESO-1 and are the two components of CMB305 and G100, which in contrast, is a potent toll-like receptor-4 (TLR4) agonist that is being administered intratumorally to activate local and systemic immunity.

In April 2015, Immune Design closed an underwritten public offering of 3,000,000 shares of common stock at a price of $26.50 per share. In May 2015, the company sold an additional 47,409 shares when the underwriters exercised a portion of their overallotment option. Immune Design received aggregate net proceeds of $75.4 million, after underwriting discounts and commissions and offering expenses totaling $5.4 million.

Financial Results and Guidance

Second Quarter

Immune Design ended the second quarter of 2015 with $129.0 million in cash and cash equivalents, compared to $75.4 million as of December 31, 2014.

Net loss and net loss per share for the second quarter of 2015 were $10.5 million and $0.54, respectively, compared to $6.1 million and $16.57, respectively, for the second quarter of 2014.

Revenue for the second quarter of 2015 was $1.8 million and was attributable primarily to collaboration revenue associated with the Sanofi G103 collaboration established in the fourth quarter of 2014. Revenue for the second quarter of 2014 was $1.1 million and related primarily to license revenue associated with the company’s collaboration with MedImmune.

Research and development expenses for the second quarter of 2015 were $8.5 million, compared to $3.9 million for the second quarter of 2014. The $4.6 million increase was primarily attributable to contract manufacturing and clinical trials for LV305 and CMB305, as well as activities related to the company’s HSV-2 collaboration with Sanofi Pasteur. Expenses incurred under the collaboration are predominantly reimbursed by Sanofi Pasteur and reflected in revenue. Additionally, there was an increase in personnel-related expenses, including stock-based compensation, as a result of growth in research and development headcount to support Immune Design’s advancing research and clinical pipeline. Research and development stock-based compensation (a non-cash expense), was $0.5 million for the current quarter compared to $0.1 million for the same quarter in 2014.

General and administrative expenses for the second quarter of 2015 were $3.8 million, compared to $1.9 million for the second quarter of 2014. The $1.9 million increase was primarily attributable to increases in personnel-related expenses, including stock based compensation, primarily related to an increase in administrative headcount to support the growth and expansion of the business. General and administrative expenses for stock-based compensation (a non-cash expense), was $1.3 million for the current quarter compared to $0.1 million for the same quarter in 2014.

Year-to-Date

Net operating cash used in operations through June 2015 was $21.7 million, which excludes the $75.4 million in net proceeds received from the company’s follow-on offering.

Net loss and net loss per share for the six months ended June 30, 2015 were $19.9 million and $1.10, respectively, compared to $14.3 million and $38.81, respectively, for the same period in 2014.

Revenue for the six months ended June 30, 2015 was $3.7 million and was attributable primarily to collaboration revenue associated with the Sanofi G103 collaboration established in the fourth quarter of 2014. Revenue for the same period in 2014 was $1.1 million related primarily to Immune Design’s collaboration with MedImmune.

Total operating expenses for the six months ended June 30, 2015 were $23.6 million, compared to $11.3 million for the same period in 2014. The increase in the current period relates primarily to contract manufacturing and clinical trials for LV305 and CMB305, as well as activities related to the company’s HSV-2 collaboration with Sanofi Pasteur. Expenses incurred under the collaboration are predominantly reimbursed by Sanofi Pasteur and reflected in revenue. Additionally, there was an increase in personnel-related expenses, including stock based compensation, as a result of growth and expansion of the business following Immune Design’s initial public offering in July 2014, in professional service fees and legal fees to support operations as a public company and to defend ongoing litigation, and in facility and office costs.

Updated Financial Guidance

In consideration of the funds raised through Immune Design’s follow-on equity offering in April 2015 and investment in the company’s clinical development pipeline, revised 2015 financial guidance is as follows:

Anticipate ending fiscal 2015 with a cash and investments balance of at least $110.0 million.
Estimate net cash used in operating activities of $36.0 to $40.0 million for the year-ending December 31, 2015. This is an increase from beginning of the year guidance, which was an estimated range of $33.0 to $37.0 for net cash used in operating activities.

On August 12, 2015 Roche (SIX: RO, ROG; OTCQX: RHHBY) reported positive results today from the Phase II M13-982 study of venetoclax, an investigational medicine being developed in partnership with AbbVie (Press release, Hoffmann-La Roche , AUG 12, 2015, View Source [SID:1234507215]). The study met its primary endpoint, showing that venetoclax monotherapy resulted in a clinically meaningful reduction in the number of cancer cells (overall response rate, ORR) in a pre-defined proportion of people with previously treated (relapsed or refractory) chronic lymphocytic leukemia (CLL) harboring the 17p deletion. No unexpected safety signals were reported for venetoclax.

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"Approximately 30 to 50 percent of people with relapsed or refractory chronic lymphocytic leukemia have the 17p deletion that makes their disease difficult to treat," said Sandra Horning, MD, Roche’s Chief Medical Officer and Head of Global Product Development. "Venetoclax may help restore the natural process that allows these leukemic cells to self destruct, representing a potential new way of helping people with this form of CLL who typically have a poor prognosis and limited treatment options."
Venetoclax was recently granted Breakthrough Therapy Designation (BTD) by the U.S. Food and Drug Administration (FDA) for the treatment of previously treated CLL with the 17p deletion. This designation is designed to expedite the development and review of medicines intended to treat serious diseases. People with this type of CLL typically have a median life expectancy of less than three years.1 This is the eighth BTD granted for a Roche medicine, and the second one in hematology.

Data from the pivotal M13-982 study will be submitted for presentation at an upcoming medical meeting. AbbVie plans to submit these data to the FDA, European Medicines Agency (EMA) and other health authorities around the world for approval consideration.

About Study M13-982
M13-982 (NCT01889186) is a Phase II, open label, single arm, multicenter study evaluating the efficacy and safety of venetoclax in people with relapsed or refractory CLL harboring the 17p deletion. The main study cohort included 107 patients and approximately 50 patients will be enrolled in the safety expansion cohort. The primary endpoint of the study is overall response rate (ORR) as determined by an independent review committee, and secondary endpoints include complete response (CR), partial response (PR) and progression free survival (PFS).

About Chronic Lymphocytic Leukemia (CLL)
CLL is a slow-growing cancer of the blood and bone marrow that is generally considered incurable and is one of the most common adult leukemias worldwide.2,3 Most cases of CLL (95 percent) start in white blood cells called B-cells.2 In certain cases of CLL, a part of chromosome 17 is lost and along with it an important gene that controls apoptosis called p53.4 The 17p deletion is found in 3 to 10 percent of previously untreated cases and approximately 30 to 50 percent of relapsed or refractory cases.5 People with 17p deletion CLL have poor results with conventional chemotherapy regimens and a median life expectancy of less than three years.1

About Venetoclax (RG7601, GDC-0199/ABT-199)
Venetoclax is an investigational small molecule designed to selectively bind and inhibit the BCL-2 protein, which plays an important role in a process called apoptosis (programmed cell death). It is believed that blocking BCL-2 may restore the signaling system that tells cancer cells to self-destruct. The BCL-2 protein is linked to the development of resistance in certain blood cancers and is expressed in chronic lymphocytic leukemia (CLL) and non-Hodgkin’s lymphoma (NHL). In collaboration with AbbVie, venetoclax is being evaluated in a robust development program as a single agent or in combination with other medicines. There are ongoing Phase II and III studies for venetoclax in CLL, and Phase I and II studies are also ongoing in several other blood cancers, including indolent NHL, diffuse large B-cell lymphoma (DLBCL), acute myeloid leukemia (AML) and multiple myeloma (MM).

On August 12, 2015 RXi Pharmaceuticals Corporation (NASDAQ: RXII), a biotechnology company focused on discovering and developing innovative therapeutics primarily in the areas of dermatology and ophthalmology, reported its financial results for the quarter ended June 30, 2015 and provided a business update (Press release, RXi Pharmaceuticals, AUG 12, 2015, View Source;FID=30674060 [SID:1234507211]).

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"In the second quarter, RXi reached a major milestone in our shareholder structure with the elimination of the preferred shares and their associated dilutive quarterly dividend. In addition, several investment funds became new shareholders in our recently completed financing," said Dr. Geert Cauwenbergh, President and CEO of RXi Pharmaceuticals. He added, "This financing provides us with at least an additional year of cash. This cash and time will allow us to focus on rebuilding our share price, which was significantly affected in the last 18 months by the conversion and sale of the preferred into common shares. We will aim to: (1) advance our preclinical and clinical pipeline, (2) generate partnership deals, and (3) deploy our sd-rxRNA technology platform in a portfolio approach akin to the way venture capital firms deploy their capital, through establishing equity positions in young biotechnology companies to create value for our investors."

The Company will host a conference call today at 4:30 p.m. EDT to discuss financial results and provide an update on the Company. The webcast link will be available under the "Investors" section of the Company’s website, www.rxipharma.com. The event may also be accessed by dialing toll-free in the United States and Canada: +1 888-669-0684. International participants may access the event by dialing: +1 862-225-5361. An archive of the webcast will be available on the Company’s website approximately two hours after the presentation.

Selected Second Quarter 2015 Financial Highlights

Preferred Shares

The Company’s capital structure has been simplified with the full conversion of all remaining outstanding shares of Series A and Series A-1 convertible preferred stock during the second quarter of 2015 and with the acceleration of the next quarterly dividend payment date from June 30, 2015 to May 27, 2015, at which time the dividend shares were immediately converted into common stock. As a result, no shares of preferred stock remain outstanding and no further dividends on those preferred shares will accrue.

Cash Position

At June 30, 2015, the Company had cash, cash equivalents and short-term investments of approximately $14.0 million, compared with cash and cash equivalents of $8.5 million at December 31, 2014.

The Company enhanced its balance sheet with the completion of a public offering of common stock and warrants. The Company sold a total of 26 million units at a price per unit of $0.40 in the public offering that included both institutional and retail investors. Each unit consisted of one share of common stock, a 13-month overallotment purchase right to purchase one-half of one share of common stock at a price of $0.455 per full share and a 5-year warrant to purchase one-half of one share of common stock at a price of $0.52 per full share. The Company received gross proceeds of $10.4 million and net proceeds of $9.2 million after payment of placement agent fees and other offering expenses, and assuming the overallotment purchase rights and warrants are not exercised.

The Company believes that its existing cash, cash equivalents and short-term investments should be sufficient to fund operations for at least one year.

Research and Development Expenses

Research and development expenses for the quarter ended June 30, 2015 were $1.4 million, which included $0.2 million of non-cash stock-based compensation expense, as compared with $1.2 million for the quarter ended June 30, 2014, which included $0.2 million of non-cash stock-based compensation expense. The increase in research and development expenses in the second quarter of 2015 as compared to the second quarter of 2014 was primarily due to subject and trial-related fees for the Company’s ongoing three clinical trials, mainly Study 1402.

General and Administrative Expenses

General and administrative expenses for the quarter ended June 30, 2015 were $0.8 million, which included $0.2 million of non-cash stock-based compensation expense, as compared with $0.9 million for the quarter ended June 30, 2014, which included $0.3 million of non-cash stock-based compensation expense. The decrease in general and administrative expenses in the second quarter of 2015 as compared to the second quarter of 2014 was primarily due to a reduction in legal fees.

Net Loss Applicable to Common Stockholders

Net loss applicable to common stockholders for the quarter ended June 30, 2015 was $2.2 million, compared with $3.2 million for the quarter ended June 30, 2014. The decrease in net loss applicable to common stockholders in the second quarter of 2015 as compared to the second quarter of 2014 was due to the change in operating expenses, as described above, and a decrease in the Company’s preferred stock dividends related to decreases in the Company’s closing common stock price on the dividend payment dates and the number of preferred shares earning dividends each quarter.

Second Quarter 2015 and Recent Corporate Highlights

Positive Advancements within our Ophthalmology Franchise

As projected in the Company’s 2015 corporate goals, RXi submitted an IND application to the U.S. Food and Drug Administration (FDA) for RXI-109 as a potential therapeutic for the scarring component of retinal diseases in the eye, such as wet age-related macular degeneration. Following the FDA 30-day review period for the IND, the Company plans to initiate a Phase 1 / 2 clinical trial before the end of 2015.

Positive Advancements within our Dermatology Franchise

The Company continues to advance additional preclinical and discovery programs using our sd-rxRNA technology. In particular, the Company has selected collagenase and tyrosinase as new discovery stage targets for our self-delivering RNAi platform. Collagenase, or MMP1, is a matrix metalloproteinase involved in the breakdown of extracellular matrix. Selected reduction of MMP1 may be beneficial in the treatment of skin aging disorders, arthritis, acne scarring, blistering skin disorders, corneal erosions, endometriosis and possible cancer metastasis. Tyrosinase is the key enzyme in the synthesis of melanin. Melanin is produced by melanocytes and is the pigment that gives human skin, hair and eyes their color. The inhibition of tyrosinase can play a key role in the management of diseases such as cutaneous hyperpigmentation disorders such as lentigines (freckles, age spots and liver spots), and possibly melanoma.

These two discovery targets were selected because they have great potential as clinically relevant pharmaceutical gene targets, however, they also have great potential as cosmeceutical targets. The term ‘cosmeceuticals’ refers to compounds that can affect the appearance of the skin. For example, by targeting tyrosinase, a superficial reduction of melanin could potentially change the appearance of the darkened skin spots known as age spots and freckles or lighten the skin overall. Cosmeceuticals that make no therapeutic claims can be developed more rapidly than pharmaceutical drugs, and the path to market could be much shorter and less expensive.

The Company presented promising new data in June at the 74th Annual Meeting of the Society for Investigative Dermatology with its self-delivering RNAi (sd-rxRNA) compounds developed to target tyrosinase (TYR) and collagenase (MMP1). sd-rxRNA compounds developed to target TYR lead to a visible reduction of pigmentation in melanocytes in a 3-dimensional tissue culture model of human epidermis. Results from experiments in this model show that sd-rxRNA compounds targeting TYR are at least one hundred times more potent than kojic acid, a well-characterized skin lightening agent. sd-rxRNA compounds developed to target MMP1 resulted in a reduction in MMP1 mRNA levels that correspond to a similar reduction in MMP1 enzyme activity in cell culture in vitro. In addition, silencing of MMP1 expression in an in vitro scratch assay resulted in reduced migration of A549 cells, a clinically relevant non-small cell lung cancer cell line. Reduced migration in a scratch assay may indicate a reduction in the invasive nature of the cancer cell due to MMP1 reduction as a result of sd-rxRNA treatment.

In our clinical program with RXI-109, an sd-rxRNA compound developed for the reduction of dermal scar formation, there are currently three ongoing Phase 2a clinical trials evaluating the effect of RXI-109 on scar formation at surgical revision sites for either hypertrophic scars or keloids. Two of the three studies are fully enrolled and the subjects are being followed to completion. Preliminary data from these two trials helped to amend the initial design of Study 1402 to include an extended dosing regimen for longer coverage of the proliferation phase of wound healing in order to better reduce the excess collagen production that can lead to hypertrophic scars or keloids. Additional cohorts are being designed for Study 1402 that will be submitted in the near future, which will further extend the dosing regimen.

Samcyprone, RXi’s second clinical candidate, is a proprietary topical formulation of diphenylcyclopropenone (DPCP), which is an immunomodulator that works by initiating a T-cell response. Samcyprone is initially being developed for the treatment of such disorders as alopecia areata, warts, and cutaneous metastases of melanoma. The Company expects to initiate a Phase 2 trial evaluating the effect of Samcyprone on warts before the end of the year.

In April of this year, the FDA granted Orphan Drug Designation to RXi for Samcyprone for the treatment of Malignant Melanoma Stage IIb to IV. A number of patients with Stage IIb to IV malignant melanoma develop cutaneous metastases. Samcyprone is being studied for treatment of these metastases in an ongoing investigator-sponsored trial.

Intellectual Property

The Company has strengthened its patent portfolio by securing protection for its novel RNAi platform through three granted patents from the United States Patent and Trademark Office (USPTO).

A core patent that covers methods of use of the Company’s VEGF-targeting and CTGF-targeting sd-rxRNAs, including RXI-109, for use in the eye has been issued. A therapeutic, such as RXI‑109, that is effective in reducing the activity of CTGF could have great benefit for patients whose ocular condition has an active scarring component.

The second issued patent expands the scope of coverage to RXi’s novel, self-delivering RNAi platform (sd-rxRNA). Importantly, this patent incorporates novel oligonucleotide chemical modifications which result in improved biodistribution following systemic administration and may be beneficial for local delivery applications in the central nervous system.

In addition, RXi was also issued a patent covering the composition and methods of use for rxRNAori compounds targeting Mitogen-activated protein kinase kinase kinase kinase 4 (MAP4K4). These compounds may be beneficial for the treatment of inflammatory diseases and/or metabolic diseases. RXi’s rxRNAori platform are highly potent RNAi compounds which will require delivery vehicles to facilitate transport to the tissues of interest and to be taken up by cells.

On August 12, 2015 Evotec AG (Frankfurt Stock Exchange: EVT, TecDAX, ISIN: DE0005664809) reported financial results and corporate updates for the first half of 2015 (Press release, Evotec, AUG 12, 2015, View Source [SID:1234507209]).

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EVT Execute reports excellent revenue growth, EVT Innovate shows significant transaction success and accelerates investments

– EVT Execute revenues up 49% compared to the prior-year period; Group revenues grew by 37% to EUR 55.0 m (2014: EUR 40.1 m); EVT Innovate initiates two significant Pharma alliances (after period-end) and increased R&D investments by 48% to EUR 10.4 m

– Strong EBITDA before contingent considerations of EUR 9.8 m for EVT Execute; Group EBITDA (adjusted for changes in contingent consideration as well as for one-time effects with regards to the bargain purchase resulting from the acquisition of Evotec (France) SAS) positive at EUR 0.8 m and increased compared to the same period of the previous year (2014: EUR 0.6 m)

– Strongest liquidity position in the Company history at EUR 140.9 m

– One-time positive effect on operating result due to income from bargain purchase

EVT Execute
Excellent performance of service business provides strong basis for future growth

– Drug discovery collaboration with Facio Therapies

– Strong screening pipeline of new deals and continued success in ongoing collaborations

– Milestones achieved in endometriosis collaboration with Bayer HealthCare

– Research initiative with Gladstone Institutes and Dolby Family Ventures in Alzheimer’s disease (after period-end)

EVT Innovate
Despite clinical failure, business model works, first-in-class drug discovery to create long-term value

– Phase IIb study of Sembragiline (EVT302) conducted by Roche did not meet primary endpoint

– Successful partnering of TargetBCD (Diabetes) with Sanofi and TargetImmuniT (Immuno-oncology) with Apeiron and Sanofi, two Cure X/Target X initiatives which combined have the potential to deliver more than EUR 500 m in upfront and milestone payments plus high royalties in addition to significant research payments (after period-end)

Revenue guidance 2015 raised

– All elements of financial guidance as of 12 May 2015 confirmed

1. Operational performance

EVT Execute reports excellent revenue growth, EVT Innovate shows significant transaction success and accelerates investments

Revenues from the EVT Execute segment amounted to EUR 59.2 m in the first half of 2015, an increase of 49% compared to the same period of the previous year (first six months of 2014: EUR 40.0 m). This increase is primarily attributable to growth of the base business, supported by a positive development of the anti-infectives business unit and foreign exchange rate effects. Included in this amount are EUR 12.4 m of intersegment revenues (first six months of 2014: EUR 8.2 m). The EVT Innovate segment generated revenues in the amount of EUR 8.2 m consisting entirely of third-party revenues (first six months of 2014: EUR 8.6 m). Gross margin at EVT Execute was 23.8% while EVT Innovate generated a gross margin of 45.7%. R&D expenses for the EVT Innovate segment increased from EUR 7.0 m in the first six months of 2014 to EUR 10.4 m in the first six months of 2015 due to investments in projects in the oncology space at the Toulouse site as well as increased investments in existing Cure X and Target X initiatives. In the first six months of 2015, the adjusted EBITDA (before changes in contingent consideration) of the EVT Execute segment was high at EUR 9.8 m and significantly improved compared to the same period of the previous year (first six months of 2014: EUR 5.5 m) due to the strong increase in revenues. The EVT Innovate segment reported an EBITDA before changes in contingent consideration of EUR (9.0) m (first six months of 2014: EUR (4.9) m).

Evotec’s Group revenues for the first half of 2015 grew to EUR 55.0 m, an increase of 37% compared to the same period of the previous year (2014: EUR 40.1 m). This increase is due to growth in the core EVT Execute business, the contribution of the Sanofi collaboration, milestone achievements and favourable foreign exchange rate effects. Excluding milestones, upfronts and licences and revenue contributions from the acquired businesses of Bionamics, Euprotec and Sanofi, Evotec’s revenues for the first half of 2015 were EUR 41.1 m and increased by 3% over the same period of the previous year (2014: EUR 39.9 m).

Adjusted Group EBITDA in the first six months of 2015 amounted to EUR 0.8 m (first six months of 2014: EUR 0.6 m). EBITDA was adjusted for changes in contingent consideration as well as for one-time effects with regards to the bargain purchase resulting from the acquisition of Evotec (France) in 2015 and Bionamics GmbH in 2014. Evotec’s operating income for the first half of 2015 amounted to EUR 12.9 m (2014: operating loss of EUR 3.6 m) and is mainly due to the preliminary income from bargain purchase resulting from the acquisition of Evotec (France).

Liquidity including cash and cash equivalents and investments amounted to EUR 140.9 m at the end of June 2015, marking the strongest liquidity position in the Company’s history. This increase in liquidity is mainly attributable to the cash inflow resulting from the Sanofi transaction.

2. EVT Execute and EVT Innovate

EVT Execute
Excellent performance of service business provides strong basis for future growth

Drug discovery collaboration with Facio Therapies

At the end of April 2015, Evotec and Facio Therapies announced the start of an agreement aimed at the identification of compounds showing activity as a potential treatment to stop the progression of Facioscapulohumeral dystrophy ("FSHD"), a muscle wasting disease. The compounds that show promising activity in this screen are expected to be available in the first half of 2016. These compounds will require extensive further testing to produce compounds that are suitable for the development of a therapeutic for the treatment of FSHD.

Strong screening pipeline of new deals and continued success in ongoing collaborations

The EVT Execute segment continued its strong performance in the first half of 2015. Many new alliances were signed with companies such as Spero, Padlock and C4X Discovery. The screening pipeline grew substantially with screens initiated by, amongst others, UCB and Biogen. Established collaborations with Navitor and Active Biotech were extended and a major work order was agreed through our long-term compound management partnership with NIH. Furthermore, the build-up of the new protein production facility in Princeton (USA) is proceeding according to plan and has already delivered on its first projects to a major US Pharma client.

Milestones achieved in endometriosis collaboration with Bayer HealthCare

In the first half of 2015, Evotec reached two important milestones in its multi-target collaboration with Bayer for the transition of early lead candidate molecules into lead-structure optimisation for two key targets. These milestones were achieved under the five-year agreement between Evotec and Bayer signed in October 2012. The goal of this collaboration is to identify three pre-clinical candidates for the treatment of endometriosis within the five-year alliance which Bayer will then bring to the IND stage. Both parties contribute innovative drug targets and high-quality technology infrastructures and share the responsibility for early research and pre-clinical characterisation of potential clinical candidates in the disease area of endometriosis.

Research initiative with Gladstone Institutes and Dolby Family Ventures in Alzheimer’s disease (after period-end)
After period-end, Evotec announced that it is going to be part in a research initiative initiated by Gladstone Institutes and Dolby Family Ventures, called the Cure Network Ventures, Inc., a newly established for-profit company. This initiative bridges the gap between basic science and advanced drug discovery by combining a highly innovative scientific research programme with state-of-the-art drug discovery capabilities and a funding source interested in identifying new therapeutic avenues for Alzheimer’s disease.

EVT Innovate
Despite clinical failure, business model works, first-in-class drug discovery to create long-term value

Phase IIb study of Sembragiline (EVT302) conducted by Roche did not meet primary endpoint
At the end of June 2015, Roche analysed the initial results of the Phase IIb trial with Sembragiline (RG1577, EVT302), a MAO-B inhibitor for the treatment of Alzheimer’s disease. In this study, Sembragiline failed to demonstrate benefit on the primary endpoint (Alzheimer’s Disease Assessment Scale – Cognitive Behaviour Subscale, ADAS-cog-11) after 52 weeks of treatment. Preliminary safety analyses showed that Sembragiline was well tolerated with no safety signals identified.

Successful partnering of TargetBCD (Diabetes) with Sanofi and TargetImmuniT (Immuno-oncology) with Apeiron and Sanofi, two Cure X/Target X initiatives which combined have the potential to deliver more than EUR 500 m in upfront and milestone payments plus high royalties in addition to significant research payments (after period-end)

In August 2015, Evotec and Sanofi announced a strategic risk-shared collaboration in the field of diabetes (TargetBCD). The goal of this collaboration will be to develop a beta cell replacement therapy based on functional human beta cells derived from human stem cells. In addition, Sanofi and Evotec will also use human beta cells for high-throughput drug screening to identify beta cell active small molecules or biologics. The agreement between Evotec and Sanofi triggers an upfront payment of EUR 3 m, potential pre-clinical, clinical, regulatory and commercial milestones which could total over EUR 300 m as well as significant royalties and research payments.

Effective after period-end, Evotec, Apeiron Biologics and Sanofi entered into a strategic collaboration to develop novel small molecule-based cancer immunotherapies (TargetImmuniT). This collaboration includes major research and development efforts to advance a first-in-class small molecule approach to treat solid and haematopoietic cancers by enhancing the anti-tumour activity of human lymphocytes. The agreement triggers two years of substantial research payments for Evotec and Apeiron Biologics with the opportunity to receive pre-clinical, clinical, regulatory and commercial milestones which could total over EUR 200 m as well as royalties upon commercialisation.

JingXin Pharmaceuticals shows good progress of Phase II study with EVT201
In the first half of 2015, JingXin Pharmaceuticals Co., Ltd. (China) informed Evotec about positive development progress of EVT201 for the treatment of insomnia in China.

3. Sanofi transaction – Accelerator for EVT Execute and EVT Innovate segments

On 31 March 2015, Evotec closed a five-year, major multi-component strategic alliance with Sanofi effective 01 April 2015. One of the major cornerstones of this alliance is the acquisition of Sanofi’s research site in Toulouse, France, including more than 200 highly experienced employees to support the expansion of Evotec’s drug discovery capabilities and capacities.

The integration of the new research site is proceeding successfully and the first small third-party projects were launched in the second quarter of 2015, ahead of expectations. The bargain purchase resulting from the acquisition was not allocated to segments. The initial accounting is provisional with regard to the fair values used to measure the assets and liabilities of the combination. It may therefore be subject to material changes.

4. Revenue guidance 2015 raised

Evotec’s financial guidance was updated in March 2015 and May 2015 due to the financial impact of the Sanofi transaction.

In 2015, total Group revenues excluding milestones, upfronts and licences are expected to increase more than 35%.

Evotec’s Group EBITDA before changes in contingent considerations is expected to be positive. EBITDA is defined as earnings before interest, taxes, depreciation and amortisation of intangibles. EBITDA excludes impairments on other intangibles, tangible assets and goodwill as well as the total non-operating result.

Evotec expects research and development (R&D) expenses to grow to EUR 15 m – EUR 20 m in 2015.

In 2015, Evotec will continue to invest in its technology platforms and capacities in order to drive its long-term growth strategy. It is therefore planned that up to EUR 10 m will be invested in further capacity increases and the upgrade of Evotec’s technological capabilities.

Liquidity is expected to be well in excess of EUR 100 m at 31 December 2015. This forecast excludes any potential cash outflow from M&A or similar transactions.

The Company’s mid-term financial plan does not envisage the need for any additional external financing for Evotec’s operating business. However, all strategically desirable moves such as potential company or product acquisitions will need to be considered on a case by case basis.

The statements on business direction and strategy, expected research and development, business opportunities and dividends continue to be valid as published in Evotec’s Annual Report 2014 on pages 68 to 70.