On August 8, 2017 Loxo Oncology, Inc. (Nasdaq:LOXO), a biopharmaceutical company innovating the development of highly selective medicines for patients with genetically defined cancers, reported financial results for the quarter ended June 30, 2017 (Press release, Loxo Oncology, AUG 8, 2017, View Source [SID1234520187]). Loxo Oncology will not be conducting a conference call in conjunction with this earnings release.

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"I am very proud of the Loxo Oncology team for delivering a great second quarter," said Josh Bilenker, M.D., chief executive officer of Loxo Oncology. "The larotrectinib (LOXO-101) presentations at ASCO (Free ASCO Whitepaper) and the simultaneous LOXO-195 publication in Cancer Discovery illustrate what can be accomplished for patients when a focused management team brings together the disparate disciplines of medicinal chemistry, comprehensive tumor testing and clinical-regulatory execution. In addition, the LOXO-292 IND moves the company into an exciting second target and third clinical-stage program. We look forward to the second half of 2017, when we plan to prepare the larotrectinib NDA submission, advance our TRK fusion diagnostics strategy with third party collaborators, and advance LOXO-292 efficiently through a dose escalation. We hope to be able to share initial clinical data from the LOXO-292 program by the end of the year."

Recent Highlights

Larotrectinib Adult and Pediatric Interim Clinical Data Presented at the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) Annual Meeting: In June, interim clinical data from three ongoing larotrectinib trials were reported in two oral presentations at ASCO (Free ASCO Whitepaper). The data demonstrated a 76 percent confirmed objective response rate (ORR) in 50 patients for whom follow-up was sufficiently long to include a confirmatory scan. Responses were observed across 17 unique tumor types harboring TRK fusions. The ASCO (Free ASCO Whitepaper) presentation included adult and pediatric patients with Response Evaluation Criteria In Solid Tumors (RECIST)-evaluable TRK fusion cancers, with an April 14, 2017 data cut-off. See the presented data here.
Larotrectinib Regulatory Updates: In May, the U.S. Food and Drug Administration (FDA) granted orphan drug designation to larotrectinib for the "treatment of solid tumors with NTRK-fusion proteins." Loxo Oncology remains on track to submit a New Drug Application (NDA) for larotrectinib to the FDA in late 2017 or early 2018. The primary analysis for the NDA will rely upon central, independent radiology review. The company plans to announce these data, which will also include additional patient follow-up from the data set presented at ASCO (Free ASCO Whitepaper), before the end of 2017.
LOXO-195: In May, the FDA cleared the IND application for LOXO-195, Loxo Oncology’s next-generation TRK inhibitor. On June 3, 2017, a research brief was published in Cancer Discovery outlining the preclinical rationale for LOXO-195 and clinical proof-of-concept data from the first two patients treated. The Phase 1 trial is currently open for enrollment.
LOXO-292: In May, the first patient was enrolled in the Phase 1 clinical trial of LOXO-292, a highly selective RET inhibitor. This first-in-human, global, multi-center Phase 1 trial is evaluating LOXO-292 as a single agent in patients with advanced solid tumors.
LOXO-305: In July, Loxo Oncology announced the acquisition of the Redx Pharma Plc BTK inhibitor program, including lead candidate LOXO-305 (formerly RXC005). Under the terms of the agreement, Loxo Oncology has made a $40 million payment to Redx Pharma Plc. Loxo Oncology is not subject to milestone or royalty obligations. Lead candidate LOXO-305 was designed to reversibly bind BTK and preserve activity in the presence of the C481S acquired resistance mutation. Additionally, it was designed to avoid off-target kinases that have complicated the development of both covalent and reversible BTK inhibitors. LOXO-305 is expected to enter clinical development in 2018.
Equity Financing: In June, Loxo Oncology announced the closing of an underwritten public offering of 3,622,500 shares of common stock at a public offering price of $72.00 per share, which included the exercise in full by the underwriters of their option to purchase 472,500 additional shares of common stock. Gross proceeds to Loxo Oncology from this offering were approximately $260.8 million.
Second Quarter 2017 Financial Results

As of June 30, 2017, Loxo Oncology had aggregate cash, cash equivalents and investments of $467.6 million, compared to $141.8 million as of December 31, 2016.

Research and development expenses were $24.4 million for the second quarter of 2017 compared to $12.3 million for the second quarter of 2016. This increase was primarily due to expanded larotrectinib development activities including clinical costs and costs related to the companion diagnostics agreement with Roche, as well as additional development expenses related to LOXO-292 and increases in employment costs primarily due to increased headcount. Loxo Oncology also recognized research and development-related stock-based compensation expense of $3.5 million during the second quarter of 2017 compared to $0.2 million for the second quarter of 2016.

Research and development expenses were $44.6 million for the six months ended June 30, 2017, compared to $20.7 million for the six months ended June 30, 2016. This increase was primarily due to expanded larotrectinib development activities including clinical costs and costs related to the companion diagnostics agreement with Roche, as well as additional development expenses related to LOXO-292 and LOXO-195 and increases in employment costs primarily due to increased headcount. Loxo Oncology also recognized research and development-related stock-based compensation expense of $5.9 million during the six months ended June 30, 2017, compared to $0.5 million for the six months ended June 30, 2016.

General and administrative expenses were $6.5 million for the second quarter of 2017 compared to $3.8 million for the second quarter of 2016. The increase was primarily due to increases in preparation activities for the potential commercialization of larotrectinib, headcount and employment costs and general and administrative professional fees. Loxo Oncology also recognized general and administrative-related stock-based compensation expense of $2.0 million during the second quarter 2017 compared to $1.1 million for the second quarter of 2016.

General and administrative expenses were $11.3 million for the six months ended June 30, 2017, compared to $7.2 million for the six months ended June 30, 2016. The increase was primarily due to increases in preparation activities for the potential commercialization of larotrectinib, headcount and employment costs and general and administrative professional fees. Loxo Oncology also recognized general and administrative-related stock-based compensation expense of $3.5 million during the six months ended June 30, 2017, compared to $2.1 million for the six months ended June 30, 2016.

Net loss was $30.4 million and $54.9 million for the three and six months ended June 30, 2017, respectively, compared to $15.9 million and $27.5 million for the three and six months ended June 30, 2016, respectively.

On August 8, 2017 Kite Pharma, Inc. (Nasdaq:KITE), a leading cell therapy company, reported second quarter 2017 financial results and provided a corporate update for the period ended June 30, 2017 (Press release, Kite Pharma, AUG 8, 2017, View Source [SID1234520184]).

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"We’ve continued to make significant progress on key clinical and commercial milestones in the last six months alone," said Arie Belldegrun, M.D., FACS, Chairman, President, and Chief Executive Officer of Kite. "With the anticipated events on the horizon for the remainder of 2017, the potential for CAR-T to become one of the most powerful anti-cancer agents for certain patients may finally be realized."

Second Quarter 2017 Financial Results

Revenue was $10.1 million for the second quarter of 2017.
Research and development expenses were $70.9 million for the second quarter of 2017, including $13.1 million of non-cash stock-based compensation expense.
General and administrative expenses were $41.1 million for the second quarter of 2017, including $12.1 million of non-cash stock-based compensation expense.
Net loss was $109.8 million, or $1.94 per share, for the second quarter of 2017.
Non-GAAP net loss for the second quarter of 2017 was $84.7 million, or $1.50 per share, excluding non-cash stock-based compensation expense of $25.2 million.
As of June 30, 2017, Kite had $781.1 million in cash, cash equivalents, and marketable securities.
Recent Highlights

Axicabtagene Ciloleucel (axi-cel) Regulatory and Clinical Development

The submission of axi-cel to the U.S. Food and Drug Administration (FDA) remains under review with a PDUFA Action Date of November 29, 2017.
Submitted a Marketing Authorization Application to the European Medicines Agency (EMA) for axi-cel as a treatment for patients with relapsed/refractory diffuse large B-cell lymphoma (DLBCL), transformed follicular lymphoma (TFL), and primary mediastinal B-cell lymphoma (PMBCL) who are ineligible for autologous stem cell transplant. This application represents the first chimeric antigen receptor (CAR) T-cell therapy submitted to the EMA.
Patients are now being treated in ZUMA-5, the Phase 2 trial of axi-cel in indolent B-Cell Non-Hodgkin lymphoma.
Patients in the European Union (EU) are now being treated with axi-cel. Kite is currently enrolling adult patients with relapsed/refractory DLBCL, PMBCL and TFL in certain EU medical centers.
A publication from researchers at the National Cancer Institute reported complete remissions up to 56+ months in patients with chemorefractory aggressive non-Hodgkin’s lymphoma (NHL) after receiving anti-CD19 CAR T-cells in a clinical trial.
KTE-C19 Development

At the 2017 American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) annual meeting, Kite reported 73 percent minimum residual disease (MRD) negative complete remission rate in an updated analysis of the Phase 1 ZUMA-3 trial of KTE-C19 in adults with high burden relapsed/refractory acute lymphoblastic leukemia (ALL). Adverse events included cytokine release syndrome and neurologic events, and were generally reversible.
CAR-T Pipeline

Submitted an investigational new drug (IND) application for KITE-585, a CAR-T therapy candidate that targets BCMA expressed in multiple myeloma.
TCR Pipeline

Opened a Phase 1 clinical trial of KITE-718, a T-cell receptor (TCR) cell therapy candidate that targets MAGE A3/A6 antigen expressed in solid tumors, including non-small cell lung cancer, bladder cancer and head and neck cancer.
Axi-cel Commercial Preparation

Completed recruitment and training of cell therapy account managers to support customer service and logistical coordination.
Conducted test runs of technical operations for ordering, scheduling, processing and shipment of cell therapy product at key major medical institutions in preparation for potential approval and launch.
Intellectual Property

Favorable outcome at the United States Patent and Trademark Office (USPTO) in an ex parte reexamination of Kite’s seminal Eshhar ‘465 CAR-T patent (U.S. Patent No. 7,741,465) that confirmed the patentability of its amended claims. The Eshhar ‘465 patent term continues to June 2027, not including certain potential extensions.
Second Half 2017 Milestones

Axi-cel

Commercial launch of axi-cel in the United States, if approved.
One year follow-up data from ZUMA-1 study of axi-cel in patients with aggressive NHL.
Preliminary data from ZUMA-6 combination study of axi-cel and atezolizumab (PD-L1 checkpoint inhibitor) in refractory DLBCL.
KTE-C19

Preliminary follow-up Phase 1 data from ZUMA-3 and ZUMA-4 studies of pediatric and adult ALL, respectively.
Advance ZUMA-3 and ZUMA-4 studies into Phase 2.
KITE-585

Initiate Phase 1 KITE-585 trial in multiple myeloma.

On August 8, 2017 Karyopharm Therapeutics Inc. (Nasdaq:KPTI), a clinical-stage pharmaceutical company, reported financial results for the second quarter 2017 and commented on recent accomplishments and clinical development plans for its lead, novel, oral Selective Inhibitor of Nuclear Export (SINE) compound selinexor (KPT-330), and other pipeline assets verdinexor (KPT-335), and KPT-9274, its oral, dual inhibitor of p21-activated kinase 4 (PAK4) and nicotinamide phosphoribosyltransferase (NAMPT) (Filing, Q2, Karyopharm, 2017, AUG 8, 2017, View Source [SID1234520182]).

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"Our second quarter achievements marked significant progress across several of our development programs, and especially for selinexor," said Michael G. Kauffman, MD, PhD, Chief Executive Officer of Karyopharm. "At the 2017 European Hematology Association (EHA) (Free EHA Whitepaper) Annual Meeting, we reported updated data from the Phase 2b SADAL study investigating selinexor in patients with relapsed or refractory diffuse large B-cell lymphoma (DLBCL). The overall response rate (ORR) increased to 33.3% for the overall trial population with similar response rates in patients with double- or triple-hit DLBCL, indicating clear activity in this population which usually has a particularly poor prognosis. As we move to the second half of the year, our focus remains on execution of key later-stage trials in our lead indications of multiple myeloma (MM), DLBCL and liposarcoma. In myeloma, the pivotal Phase 3 BOSTON study is now underway. The Phase 2b STORM study, for possible accelerated approval, continues to enroll well with top-line data expected by April 2018. In liposarcoma, the Phase 2 portion of the blinded, randomized Phase 2/3 SEAL study recently completed enrollment and we look forward to reporting the hazard ratio for progression-free survival (PFS) and providing an update regarding the planned development path in this indication during September or October 2017."

Second Quarter 2017 and Recent Events, Highlights and Milestones:

Selinexor in Multiple Myeloma

Pivotal Phase 3 BOSTON Study Initiated. Karyopharm initiated the pivotal, randomized Phase 3 BOSTON (Bortezomib, Selinexor and dexamethasone) study, evaluating once weekly selinexor 100mg in combination with the proteasome inhibitor Velcade (bortezomib, once weekly) and dexamethasone (SVd), compared to standard dose Velcade (twice weekly) and low-dose dexamethasone (Vd) in patients with MM who have had one to three prior lines of therapy. The primary endpoints of the study are PFS and ORR. The BOSTON study is expected to enroll approximately 360 patients at over 100 clinical sites internationally. Karyopharm is projecting to complete enrollment in 2018, with top-line data anticipated in 2019.

Selinexor Named Among the "Top 5 Oncology R&D Products Worldwide in 2022" by EvaluatePharma. In EvaluatePharma’s recent report, World Preview 2017, Outlook to 2022, selinexor was projected to be one of the top five selling oncology research and development products worldwide in 2022, with the potential to generate estimated revenues of $920 million in worldwide annual sales and capture 0.5% of the worldwide oncology market share in the same timeframe. This analysis is based on EvaluatePharma’s coverage of the world’s 6,500 leading pharmaceutical and biotech companies and highlights certain important industry trends by therapy area.

Ongoing Phase 2b STORM Study Expansion in Patients with Penta-refractory MM. The Phase 2b STORM study, which was recently expanded to include 122 additional patients with penta-refractory MM, continues to enroll on track. Karyopharm expects to report top-line data from the expanded cohort by April 2018, and, assuming a positive outcome, intends to use the data from the expanded STORM study to support a request for accelerated approval for selinexor in heavily pretreated MM.

Ongoing Phase 1b/2 STOMP Study Evaluating Selinexor in Combination with Several Key MM Drugs. Enrollment is complete in the Phase 1b/2 STOMP arm evaluating selinexor in combination with Velcade and low-dose dexamethasone (SVd) in heavily pretreated patients with MM. The SVd arm of the STOMP study enrolled 42 patients. Dose escalation is complete and expansion is ongoing in the arms evaluating oral selinexor plus immunomodulatory drug (IMID) combinations, including selinexor + Revlimid (lenalidomide) + dexamethasone (SRd), and selinexor + Pomalyst (pomalidomide) and dexamethasone (SPd). The Company expects to report updated data on these convenient, all oral regimens by year end 2017.

New Study Arm Initiated in Phase 1b/2 STOMP Study Evaluating Selinexor in Combination with Darzalex (daratumumab). Karyopharm has dosed patients in a new Phase 1b/2 STOMP study arm designed to evaluate selinexor in combination with the anti-CD38 monoclonal antibody Darzalex and low-dose dexamethasone (SDd) in heavily pretreated patients with MM. The SDd arm of the STOMP study is expected to enroll up to 16 patients and the Company expects to report top-line data in the first half of 2018.
Selinexor in Diffuse Large B-Cell Lymphoma

Updated Data from Phase 2b SADAL Study in DLBCL Presented at EHA (Free EHA Whitepaper) 2017. At the 2017 EHA (Free EHA Whitepaper) Annual Meeting in June, an oral presentation was given that highlighted updated data from the ongoing Phase 2b SADAL study evaluating single-agent selinexor in patients with relapsed or refractory DLBCL. This latest data demonstrated that selinexor achieved an ORR of 33.3% and a duration of response (DOR) of > 7 months in the first 63 patients, as adjudicated by an independent central radiological committee. Patients were randomized to one of two single-agent selinexor arms, a higher dose arm of 100 mg twice weekly and a lower dose arm of 60 mg twice weekly. The median overall survival was 8 months for all patients, consistent with published data in this population which has a very poor prognosis. As of the data cutoff date, the median survival for the responders had not been reached and was over 9 months. Most responses occurred at the first response evaluation (~2 months). As of the data cutoff date, 9 of the 21 responding patients remained on treatment, including 6 patients who had a complete response (CR). Selinexor also showed robust, single-agent activity against GCB and non-GCB subtypes of DLBCL. Of the 32 patients with DLBCL of the GCB-subtype, 9 responded (4 patients with a CR, 5 patients with a partial response (PR)) for an ORR of 28.1%. Of the 31 patients with DLBCL of the non-GCB (or ABC)-subtype, 12 responded (5 patients with a CR, 7 patients with a PR) for an ORR of 38.7%. Amongst the 14 patients with "double-" or "triple-hit" DLBCL, the ORR was consistent with the ORR across the SADAL patient population, indicating anti-cancer activity in this population, which usually has a particularly poor prognosis. Side effects were consistent with those previously reported with selinexor, and no new safety signals were identified. Importantly, side effects were reduced in the 60mg cohort in comparison with the 100mg cohort.

In consultation with the U.S. Food and Drug Administration (FDA), Karyopharm amended the SADAL study, removing the 100mg arm and continuing enrollment only in the 60mg twice weekly arm. The FDA has agreed that the single-arm trial design appears appropriate for accelerated approval in DLBCL, though eligibility for accelerated approval will depend on the complete trial results and available therapies at the time of regulatory action. The SADAL study is expected to enroll up to a total of 130 patients in the 60mg single-arm cohort and Karyopharm plans to report top-line results in the second half of 2018.
Selinexor in Other Hematologic Malignancies

Published Phase 1 Data Demonstrating Selinexor’s Activity in Patients with Relapsed/Refractory Non-Hodgkin’s Lymphoma (NHL) in the Journal Blood. A paper describing results from the first in human Phase 1 clinical study assessing safety and preliminary activity of selinexor in patients with relapsed or refractory NHL was recently published in the journal Blood. In the paper, authored by John Kuruvilla, et al., titled "Selective inhibition of nuclear export with selinexor in patients with non-Hodgkin’s lymphoma," Karyopharm collaborators reported that selinexor was generally well tolerated. Of the 70 evaluable patients, 22 (31%) achieved an objective response (OR), including 4 CRs and 18 PRs, which were observed across a spectrum of NHL subtypes, including DLBCL, Richter’s transformation, mantle cell lymphoma, follicular lymphoma and chronic lymphocytic leukemia. All four CRs were in patients with DLBCL, and two of the four patients are believed to have remained relapse-free as of the publication date, greater than 3 years since initiation of single agent selinexor therapy. Tumor biopsies showed decreases in cell signaling pathways, reduced proliferation, nuclear localization of XPO1 cargos and increased apoptosis after treatment. The most common grade 3-4 drug-related AEs were thrombocytopenia (47%), neutropenia (32%), anemia (27%), leukopenia (16%), fatigue (11%) and hyponatremia (10%). A maximum tolerated dose was not defined, but the highest allowable dose was ~120 mg twice weekly. Based on both tolerability and antitumor activity, the recommended Phase 2 dose of selinexor in NHL is 35 mg/m2 (~60 mg) twice weekly.

Selinexor in Solid Tumors

Ongoing Phase 2/3 SEAL Study in Liposarcoma. Enrollment is now complete in the Phase 2 portion of the blinded, randomized Phase 2/3 SEAL study evaluating single-agent selinexor versus placebo in patients with advanced liposarcoma. Karyopharm expects to report the hazard ratio for PFS from the Phase 2 portion of the SEAL study and providing an update regarding the planned development path in this indication during September or October 2017. The primary endpoint of the SEAL study is PFS and both the trial design and endpoints have been accepted by the FDA and the European Medicines Agency.

Oral Presentation Highlighting Efficacy, Safety and Intratumoral Pharmacokinetic Data for Selinexor in Glioblastoma at the 2017 World Federation of Neuro-Oncology Societies (WFNOS) Meeting. Clinical data from a Phase 2 study evaluating selinexor in patients with recurrent glioblastoma was highlighted in an oral presentation at the 2017 WFNOS meeting by Andrew Lassman, MD, Columbia University Medical Center. The data demonstrated that oral selinexor achieved responses and sufficient intratumoral penetration, with a manageable tolerability profile when accompanied by standard supportive care. Importantly, disease control rates using selinexor dosed at 80 mg once weekly were as high or higher than those observed with more intensive dosing, and tolerability was improved.
Verdinexor

Signed Global License Agreement with Anivive Lifesciences for Verdinexor for Animal Health Applications. Karyopharm and Anivive, a privately-held biotech company, executed a licensing agreement under which Anivive licensed from Karyopharm exclusive worldwide rights to research, develop and commercialize verdinexor for the treatment of cancer in companion animals. Under the terms of the agreement, Anivive made a one-time upfront payment of $1 million to Karyopharm. Anivive also agreed to pay up to an additional $43.5 million based on technology transfer and achievement of specified regulatory, clinical and commercial milestones, assuming approval in both the U.S. and the European Union. In addition, Anivive agreed to pay Karyopharm a low double-digit royalty based on future net sales of verdinexor.
KPT-9274

Preclinical Efficacy Highlighting KPT-9274’s Anti-Cancer Activity in Dogs with Spontaneous Lymphomas Presented as a Late-Breaking Poster at the American Association of Cancer Research (AACR) (Free AACR Whitepaper) 2017 Annual Meeting. At the AACR (Free AACR Whitepaper) 2017 Annual Meeting in April, Karyopharm collaborator Cheryl London of Tufts University presented a late-breaking poster highlighting preclinical data demonstrating the activity and synergy of KPT-9274, the Company’s oral dual inhibitor of PAK4/NAMPT, with doxorubicin to treat dogs with lymphoma. KPT-9274 is currently being evaluated in a Phase 1 safety and tolerability study in patients with advanced solid malignancies (including sarcoma, colon and lung cancer) or non-Hodgkin’s lymphoma (NHL) whose disease has relapsed after standard therapy(s). Top-line data from this clinical study are expected later this year.
Other Corporate and Clinical Developments

Generated $52.3 Million in Equity Financings. In April 2017, the Company sold approximately 3.9 million shares of common stock in an underwritten public offering at a price to the public of $10.25 per share, resulting in net proceeds to the Company of approximately $37.9 million after deducting underwriting discounts and commissions and other offering expenses, and sold approximately 1.3 million shares under its ATM offering facility for net proceeds of approximately $14.4 million.
Second Quarter 2017 Financial Results

Cash, cash equivalents and investments as of June 30, 2017, including restricted cash, totaled $181.2 million, compared to $175.5 million as of December 31, 2016.

On April 28, 2017, Karyopharm completed an underwritten public offering of 3,902,439 shares of its common stock at a price to the public of $10.25 per share. The net proceeds to Karyopharm from the offering, after deducting the underwriting discounts and commissions and offering expenses, were approximately $37.9 million. In addition, during April 2017, the Company sold approximately 1.3 million shares under its ATM offering facility for net proceeds of approximately $14.4 million.

For the quarter ended June 30, 2017, research and development expense was $23.1 million compared to $24.6 million for the quarter ended June 30, 2016. For the quarter ended June 30, 2017, general and administrative expense was $6.6 million compared to $6.0 million for the quarter ended June 30, 2016.

Karyopharm reported a net loss of $29.4 million, or $0.64 per share, for the quarter ended June 30, 2017, compared to a net loss of $30.2 million, or $0.84 per share, for the quarter ended June 30, 2016. Net loss includes stock-based compensation expense of $5.1 million and $6.4 million for the quarters ended June 30, 2017 and June 30, 2016, respectively.

On August 8, 2017 Jazz Pharmaceuticals plc (Nasdaq: JAZZ) reported financial results for the second quarter of 2017 and affirmed financial guidance for 2017 (Press release, Jazz Pharmaceuticals, AUG 8, 2017, View Source;p=RssLanding&cat=news&id=2292679 [SID1234520180]).

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"Thus far, 2017 has been a highly productive year. We have executed on and delivered results of key clinical development programs, advanced multiple global regulatory efforts and received U.S. approval of Vyxeos for the treatment of adults with newly-diagnosed therapy-related AML or AML with myelodysplasia-related changes," said Bruce Cozadd, chairman and chief executive officer of Jazz Pharmaceuticals. "We continue to invest in our key products, product launches, R&D and corporate development activities to fuel our future growth and create long-term value."

GAAP net income for the second quarter of 2017 was $105.6 million, or $1.72 per diluted share, compared to $114.5 million, or $1.85 per diluted share, for the second quarter of 2016.

Adjusted net income for the second quarter of 2017 was $157.4 million, or $2.56 per diluted share, compared to $165.8 million, or $2.67 per diluted share, for the second quarter of 2016. Reconciliations of applicable GAAP reported to non-GAAP adjusted information are included at the end of this press release.

Financial Highlights

Three Months Ended
June 30,

Six Months Ended
June 30,

(In thousands, except per share amounts and percentages)
2017

2016

Change

2017

2016

Change
Total revenues
$
394,386

$
381,161

3%

$
770,439

$
717,171

7%

GAAP net income
$
105,604

$
114,502

(8)%

$
192,115

$
190,314

1%

Adjusted net income
$
157,354

$
165,804

(5)%

$
298,576

$
300,372

(1)%

GAAP EPS
$
1.72

$
1.85

(7)%

$
3.13

$
3.05

3%

Adjusted EPS
$
2.56

$
2.67

(4)%

$
4.87

$
4.82

1%

Total Revenues

Three Months Ended
June 30,

Six Months Ended
June 30,
(In thousands)
2017

2016

2017

2016
Xyrem (sodium oxybate) oral solution
$
298,026

$
280,968

$
570,352

$
530,505

Erwinaze / Erwinase (asparaginase Erwinia chrysanthemi)
49,024

49,748

100,412

100,921

Defitelio (defibrotide sodium) / defibrotide
30,238

33,246

66,138

51,143

Prialt (ziconotide) intrathecal infusion
5,656

8,073

13,373

14,282

Other
6,711

7,075

13,058

16,175

Product sales, net
389,655

379,110

763,333

713,026

Royalties and contract revenues
4,731

2,051

7,106

4,145

Total revenues
$
394,386

$
381,161

$
770,439

$
717,171

Net product sales increased 3% in the second quarter of 2017 compared to the same period in 2016 due to higher net product sales of Xyrem.

Xyrem net product sales increased 6% in the second quarter of 2017 compared to the same period in 2016.

Erwinaze/Erwinase net product sales in the second quarter of 2017 were consistent with net product sales in the same period in 2016. During the 2017 quarter, the company continued to experience supply challenges that resulted in temporary supply disruptions in certain markets, which the company expects will continue for the remainder of 2017.

Defitelio/defibrotide net product sales decreased 9% in the second quarter of 2017 compared to the same period in 2016 primarily due to inventory stocking in the second quarter of 2016, following the U.S. launch in that quarter, and the impact of unfavorable foreign exchange rates. The company continues to expect inter-quarter variability in Defitelio net sales given that veno-occlusive disease is an ultra-rare disease.

Operating Expenses

Three Months Ended
June 30,

Six Months Ended
June 30,
(In thousands, except percentages)
2017

2016

2017

2016
GAAP:

Cost of product sales
$
28,672

$
23,980

$
53,737

$
47,419

Gross margin
92.6%

93.7%

93.0%

93.3%

Selling, general and administrative
$
132,328

$
122,618

$
276,583

$
251,383

% of total revenues
33.6%

32.2%

35.9%

35.1%

Research and development
$
40,157

$
39,091

$
85,085

$
70,343

% of total revenues
10.2%

10.3%

11.0%

9.8%

Three Months Ended
June 30,

Six Months Ended
June 30,
(In thousands, except percentages)
2017

2016

2017

2016
Non-GAAP adjusted:

Cost of product sales
$
27,145

$
23,017

$
50,964

$
45,657

Gross margin
93.0%

93.9%

93.3%

93.6%

Selling, general and administrative
$
111,454

$
99,488

$
229,904

$
202,099

% of total revenues
28.3%

26.1%

29.8%

28.2%

Research and development
$
35,298

$
35,562

$
76,084

$
63,524

% of total revenues
9.0%

9.3%

9.9%

8.9%

Operating expenses changed over the prior year period primarily due to the following:

Selling, general and administrative (SG&A) expenses increased in the second quarter of 2017 compared to the same period in 2016 on a GAAP and on a non-GAAP adjusted basis due to higher headcount and other expenses resulting from the expansion of the company’s business, the company’s narcolepsy disease awareness campaign and pre-launch activities related to the U.S. launch of VyxeosTM (daunorubicin and cytarabine) liposome for injection.
Research and development (R&D) expenses were consistent on a GAAP and on a non-GAAP adjusted basis in the second quarter of 2017 compared to the same period in 2016. The 2017 quarter included expenses related to regulatory activities for Vyxeos, increased expenses for continued investments in sleep-related R&D programs, an increase in headcount to support these activities and a decrease in costs related to JZP-110 studies for excessive sleepiness associated with obstructive sleep apnea and with narcolepsy due to the completion of three Phase 3 studies.
Cash Flow and Balance Sheet

As of June 30, 2017, cash, cash equivalents and investments were $319.2 million, and the outstanding principal balance of the company’s long-term debt was $1.8 billion. During the six months ended June 30, 2017, the company repaid $350.0 million of borrowings under the company’s revolving credit facility and used $30.9 million to repurchase approximately 230,000 ordinary shares under the company’s share repurchase program at an average cost of $134.10 per ordinary share.

Recent Developments

In June 2017, the company presented positive efficacy results from its global multi-center studies evaluating Xyrem for the treatment of cataplexy in pediatric patients with narcolepsy and JZP-110 in adult patients with excessive sleepiness associated with obstructive sleep apnea and with narcolepsy.

In July 2017, the company entered into a license agreement with XL-protein GmbH (XLp) for the rights to develop, manufacture and commercialize products using XLp’s PASylation technology to extend the plasma half-life of selected asparaginase product candidates.

On August 3, 2017, the U.S. Food and Drug Administration (FDA) approved Vyxeos for the treatment of adults with newly-diagnosed therapy-related AML or AML with myelodysplasia-related changes.

2017 Financial Guidance

Jazz Pharmaceuticals is affirming its full year 2017 financial guidance as follows (in millions, except per share amounts and percentages):

Revenues
$1,625-$1,700
Total net product sales
$1,617-$1,692
-Xyrem net sales
$1,200-$1,230
-Erwinaze/Erwinase net sales
$205-$225
-Defitelio/defibrotide net sales
$130-$150
-Vyxeos net sales
$10-$20
GAAP gross margin %
93%
Non-GAAP adjusted gross margin %1,4
93%
GAAP SG&A expenses
$521-$556
Non-GAAP adjusted SG&A expenses2,4
$440-$460
GAAP R&D expenses
$185-$216
Non-GAAP adjusted R&D expenses3,4
$165-$180
GAAP net income per diluted share
$6.55-$7.55
Non-GAAP adjusted net income per diluted share4
$10.70-$11.30

1.
Excludes $5 million of share-based compensation expense from estimated GAAP gross margin.
2.
Excludes $75-$90 million of share-based compensation expense and $6 million of expenses related to certain legal proceedings and restructuring from estimated GAAP SG&A expenses.
3.
Excludes $20-$25 million of share-based compensation expense and $0-$11 million of milestone payments from estimated GAAP R&D expenses.
4.
See "Non-GAAP Financial Measures" below. Reconciliations of non-GAAP adjusted guidance measures are included above and in the table titled "Reconciliation of GAAP to Non-GAAP Adjusted 2017 Net Income Guidance" at the end of this press release.
Conference Call Details

On August 8, 2017 Inovio Pharmaceuticals, Inc. (NASDAQ:INO) reported financial results for the quarter ended June 30, 2017 (Press release, Inovio, AUG 8, 2017, View Source [SID1234520178]).

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Total revenue was $20.4 million for the three months ended June 30, 2017, compared to $6.2 million for the same period in 2016. Total operating expenses were $30.0 million for the current year quarter compared to $24.4 million for the prior year quarter.

The net loss attributable to common stockholders for the quarter ended June 30, 2017 was $9.5 million, or $0.13 per share, compared to $18.7 million, or $0.26 per share, for the quarter ended June 30, 2016. The decrease in net loss for the quarter resulted primarily from higher revenue recognized related to Inovio’s license and collaboration agreement with MedImmune entered into in 2015.

Revenue

The increase in revenue was primarily due to $13.8 million in revenue recognized from MedImmune, as the previously deferred revenue from the up-front payment received in September 2015 for MEDI0457 (INO-3112) was recognized during the three months ended June 30, 2017. This revenue recognition occurred upon MedImmune’s definitive selection of a new cancer product candidate to be tested in clinical trials against an undisclosed cancer target from our on-going research collaboration. The successful advancement of this new product candidate by MedImmune could also trigger future milestone payments and sales-based royalties payable to Inovio.

Operating Expenses

Research and development expenses for the second quarter of 2017 were $23.9 million compared to $19.6 million for the second quarter of 2016. The increase in R&D expenses was related to increased investment in all of Inovio’s product development programs, including its recently commenced phase 3 trial for VGX-3100. General and administrative expenses were $6.2 million for the second quarter of 2017 versus $5.8 million for the second quarter of 2016. The increase in G&A expenses primarily related to an increase in non-cash stock based compensation.

Capital Resources

As of June 30, 2017, cash and cash equivalents and short-term investments were $92.0 million compared with $104.8 million as of December 31, 2016. At quarter end the company had 77.6 million shares outstanding and 87.2 million shares outstanding on a fully diluted basis. During the three months ended June 30, 2017, Inovio sold 2,917,725 shares of common stock under its ATM common stock sales agreement for net proceeds of $24.1 million, with an average sale price of $8.41 per share.

On July 25, 2017, the company closed an underwritten public offering of 12,500,000 shares of common stock at a public offering price of $6.00 per share, for gross proceeds of $75.0 million. The net proceeds, after deducting the underwriters’ discounts and commissions and other estimated offering expenses payable by Inovio, were approximately $70.2 million. Inovio has granted the underwriters an option until August 18, 2017 to purchase up to 1,875,000 additional shares of its common stock on the same terms and conditions.

Inovio’s balance sheet and statement of operations are provided below. The Form 10-Q providing the complete 2017 second quarter financial report can be found at: View Source

Corporate Update

Clinical Developments

VGX-3100: Cervical Pre-Cancer (Phase 3)

In June, Inovio commenced its phase 3 clinical program to evaluate the efficacy of Inovio’s DNA-based immunotherapy, VGX-3100, to treat cervical dysplasia caused by human papillomavirus (HPV). Initiating Inovio’s first phase 3 program marks a significant milestone for the company, for the next generation of DNA-based immunotherapies, and for women’s health. In the phase 3 trial, Inovio will assess the efficacy of VGX-3100 in regressing cervical HSIL (high-grade squamous intraepithelial lesions; also called CIN2 or CIN3), a direct precursor to cervical cancer, and in eliminating the HPV infection that causes these lesions. The pivotal data from this program, if positive, could support the licensure of VGX-3100 as the first immunotherapy for this disease. HPV is the most common sexually transmitted infection, with over 14 million new infections annually.
Inovio satisfied the FDA’s request for information relating to its CELLECTRA 5PSP delivery device, resulting in the FDA removing a previously imposed clinical hold on this program. During the hold period, Inovio prepared investigational sites for the phase 3 study, resulting in the company opening 27 sites in just over the first month since the hold was removed. Inovio is on track to open at least 50 sites by the end of the year.
VGX-3100: Vulvar Pre-Cancer (Phase 2)

In April, Inovio commenced a randomized, open-label phase 2 trial to evaluate the efficacy of VGX-3100 in 36 women with high-grade HPV-related pre-cancerous lesions of the vulva, or vulvar intraepithelial neoplasia, a disease with a high unmet medical need. This is a new therapeutic indication for VGX-3100. The primary endpoint of the study is histologic clearance of high-grade lesions and virologic clearance of the HPV virus in vulvar tissue samples. The study will also evaluate safety and tolerability.
MEDI0457: HPV-Related Head & Neck Cancer (Phase 1/2)

In May, Inovio announced that MedImmune, AstraZeneca’s global biologics research and development arm, commenced a new clinical trial investigating the combination of MEDI0457 (formerly INO-3112) in-licensed from Inovio, an immunotherapy designed to generate antigen-specific killer T cell responses targeting HPV-associated tumors, and durvalumab, MedImmune’s PD-L1 checkpoint inhibitor. The combination trial will enroll patients with metastatic HPV-associated squamous cell carcinoma of the head & neck (SCCHN) with persistent or recurrent disease after chemotherapy treatment. This study marks a significant moment for Inovio as it transitions into a late-stage biotechnology company. MedImmune is investigating the possibility of elevating the response rate of checkpoint inhibitors by using durvalumab in combination with a DNA plasmid vaccine originally licensed from Inovio, which has shown the ability to generate killer T cells.
Combining the company’s first phase 3 program with the previously announced phase 2 clinical trial of VGX-3100 for treating HPV-related vulvar neoplasia, and the MEDI0457 checkpoint inhibitor-based combination study with MedImmune/AstraZeneca targeting HPV-associated, metastatic head and neck cancers, Inovio is well positioned to comprehensively treat HPV-associated diseases across the continuum of HPV infection through to cancer in both women and men.
Infectious Disease Studies

Inovio reported that its HIV vaccine, PENNVAX-GP, produced amongst the highest overall levels of immune response rates (cellular and humoral) ever observed in a human study by an HIV vaccine. The vaccine candidate, PENNVAX-GP, consists of a combination of four HIV antigens designed to cover multiple global HIV strains and generate both an antibody (humoral) immune response as well as a T cell (cellular) immune response to both potentially prevent and treat HIV. These significant results are consistent with Inovio’s recent data reported from its Ebola, Zika and MERS clinical trials in terms of achieving nearly 100% vaccine response rates with favorable safety profiles. Furthermore, Inovio’s newer and more tolerable intradermal vaccine delivery device showed that Inovio can elicit very high immune responses at a much lower dose.
Inovio and its academic and industry collaborators received a multi-year $6.95 million grant in March from the NIH’s National Institute of Allergy and Infectious Diseases to develop a single or combination therapy using Inovio’s PENNVAX-GP, with the goal of attaining long-term HIV remission in the absence of antiviral drugs. Development of Inovio’s PENNVAX-GP immunotherapy, which widely targets multiple major clades of HIV — providing global coverage — has been funded through a $25 million NIAID contract awarded to Inovio and its collaborators. In addition, Inovio and its collaborators were awarded a five-year $16 million Integrated Preclinical/Clinical AIDS Vaccine Development (IPCAVD) grant in 2015 from NIAID. PENNVAX-GP is currently being studied in a phase 1 clinical trial (HVTN-098) to evaluate its safety and immunogenicity in 94 healthy volunteers as a preventive vaccine (see above). The newly funded study will assess the impact of this vaccine approach in a therapeutic setting.
In preliminary results from the expanded stage of Inovio’s phase 1 clinical trial, EBOV-001, 95% (170 of 179) of evaluable subjects generated an Ebola-specific antibody immune response, with the mean antibody titer comparable or superior to those reported from viral vector-based Ebola vaccines, along with a more safety profile than those vaccines. This study was funded by a $45 million contract from DARPA.

Corporate Developments

In May, Inovio and Regeneron entered into an immuno-oncology clinical study agreement for glioblastoma (GBM) combination therapy. The planned Phase 1b/2a clinical trial will combine Regeneron’s PD-1 inhibitor REGN2810 and Inovio’s T cell activator INO-5401 and immune activator INO-9012 for the potential treatment of brain cancer. INO-5401 includes Inovio’s SynCon antigens for WT1, hTERT and PSMA and has the potential to be a powerful cancer immunotherapy in combination with checkpoint inhibitors. The National Cancer Institute previously highlighted WT1, hTERT and PSMA among a list of attractive cancer antigens, designating them as high priorities for cancer immunotherapy development, and placing WT1 at the top of the antigen list. The hTERT antigen is expressed in 85% of cancers; the WT1 and PSMA antigens are also widely prevalent in many cancers. The open-label trial, which is expected to begin later this year, is designed to evaluate the safety and efficacy of the combination therapy in approximately 50 patients. GBM is the most aggressive form of brain cancer, and its prognosis is extremely poor, despite a limited number of new therapies approved over the last ten years. Under the terms of the agreement, the trial will be solely conducted and funded by Inovio, based upon a mutually agreed upon study design, and Regeneron will supply REGN2810. Inovio and Regeneron will jointly conduct immunological analyses in support of the study. Regeneron, in collaboration with Sanofi, is developing REGN2810 both alone and in combination with other therapies for the treatment of various cancers.
In June, Inovio entered into a collaboration agreement with Genentech to commence a clinical trial to evaluate the combination of Inovio’s T cell immunotherapy INO-5401 and Genentech’s PD-L1 checkpoint inhibitor atezolizumab in patients with advanced bladder cancer. The phase 1b/2 immuno-oncology trial will evaluate Genentech’s atezolizumab (TECENTRIQ) in combination with Inovio’s INO-5401, a T cell activating immunotherapy encoding multiple antigens, and INO-9012, an immune activator encoding IL-12. The planned clinical trial is anticipated to start later this year, and is designed to evaluate the safety, immune response and clinical efficacy of the combination therapy in approximately 80 patients with advanced bladder cancer. Combining INO-5401/INO-9012 with atezolizumab may provide a synergistic therapeutic effect as a result of generating higher levels of activated T cells and simultaneously inhibiting PD-L1.
In July, Inovio completed an underwritten public offering of common stock, raising net proceeds of $70.2 million after underwriters’ discounts and commissions and estimated offering expenses. Inovio expects that with the net proceeds of the offering it will be able to advance its ongoing REVEAL 1 and 2 phase 3 trials and four phase 2 immuno-oncology trials and to fund other pipeline advancements. The financing also added new institutional investors to Inovio’s shareholder base.

The recent financing transaction will also support the following expected near-term events:
VGX-3100 phase 3 (cervical pre-cancer) trial – initiated
MEDI0457 phase 1/2 combination (head & neck cancer) study – initiated
INO-5401 Glioblastoma multiforme (brain cancer) phase 1/2 combination study with Regeneron — initiate 2H 2017
INO-5401 Bladder cancer phase 1/2 combination study with Genentech — initiate 2H 2017
INO-5150 Prostate cancer study (phase 1) report data – 3Q 2017
INO-1800 Hepatitis B therapy study (phase 1) report data — 4Q 2017
INO-1400 (hTERT) report interim immune response and safety data — 4Q2017
Vaccine clinical study publications (Zika, Ebola and MERS) – 4Q 2017

As previously announced in February, Inovio entered into a collaboration and license agreement with ApolloBio Corporation. If the agreement receives the requisite approvals from ApolloBio’s stock exchange, its board and its shareholders, the agreement will become effective, at which time Inovio expects to receive up to $50 million in payments from Apollo — $15 million in an upfront cash payment for the license of VGX-3100 in greater China and up to $35 million in the form of an equity investment in Inovio’s common stock.
Preclinical Developments

Nature Communications published a paper entitled "DNA Vaccination Protects Mice Against Zika Virus-Induced Damage to the Testes," reporting the results of a preclinical study in which Inovio’s Zika vaccine prevented the persistence of virus and damage in the male reproductive tract. This published data suggests another avenue of potential protection against the Zika virus. While detrimental effects on sperm and fertility have not yet been reported in Zika-infected human males, persistence of Zika in semen and sperm and sexual transmission by males has been documented. This new preclinical data suggests that our Zika vaccine may represent an opportunity to limit the potential for sexual transmission of the virus. In addition to our ongoing ZIKA-001 and 002 clinical studies, we are planning for a larger phase 2 study in our efforts to bring our Zika vaccine to patients.
Npj Vaccines published a paper entitled "DNA Inoculation of Synthetic Cross-Reactive Antibodies Protects Against Lethal Influenza A and B Infections," co-authored by Inovio scientists and collaborators from the Wistar Institute and MedImmune. The paper reported the results of a preclinical study in which Inovio’s DNA-based monoclonal antibody product candidate for the treatment of influenza produced broadly cross-reactive antibodies that provided complete protection from a lethal challenge with multiple viruses of both influenza A and B types. Following previously reported similar data from Inovio’s dMAb candidates for HIV, dengue, and Chikungunya, this study further validates the potential for Inovio’s dMAb technology platform to be able to use encoded DNA plasmids for in vivo production of monoclonal antibodies and to induce protective immune responses. The goal for this platform is to rapidly generate therapeutic monoclonal antibodies directly in the recipients. Such benefits are complementary to Inovio’s antigen-generating platform in terms of immune mechanism and short response times, and advantages that overcome conventional monoclonal antibodies’ long development lead times and complex manufacturing processes and costs.