On November 7, 2016 ARIAD Pharmaceuticals, Inc. (NASDAQ: ARIA) reported financial results for the third quarter and first nine months of 2016 (Press release, Ariad, NOV 7, 2016, View Source [SID1234516345]).

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The Company also provided an update on corporate developments and reaffirmed 2016 financial guidance.

"During the third quarter, ARIAD achieved several important milestones that further our commitment as a small, research-based biotechnology company to patients with rare cancers, including those with no other targeted treatment options available," said Paris Panayiotopoulos, president and chief executive officer of ARIAD. "Iclusig was approved in Japan and we received priority review from the FDA for brigatinib in crizotinib-treated ALK+ non-small cell lung cancer. We are continuing to invest heavily in R&D and to progress in enrolling in the OPTIC, OPTIC-2L and ALTA-1L trials for Iclusig and brigatinib, as well as our clinical trial for AP32788, a novel kinase inhibitor for a rare form of lung cancer involving mutations in the EGFR and HER2 genes, and for which there are currently no approved targeted treatments."

Financial Results for the Quarter and Nine Months Ended September 30, 2016

Revenue

Worldwide net product revenue from sales of Iclusig were $34.3 million for the third quarter of 2016, compared to $27.5 million in the third quarter of 2015, an increase of 25%; and $133.3 million for the first nine months of 2016, compared to $79.3 million for the first nine months of 2015, an increase of 68%. Net product revenue for the nine months ended September 30, 2016 includes one-time revenue of approximately $25.5 million related to cumulative shipments of Iclusig in France that were recorded upon obtaining pricing and reimbursement approval in May 2016.
U.S. net product revenue from sales of Iclusig were $33.6 million for the third quarter of 2016, compared to $20.3 million in the third quarter of 2015, an increase of 66 percent; and $91.2 million for the first nine months of 2016, compared to $60.6 million for the first nine months of 2015, an increase of 50 percent.
European royalties on sales of Iclusig were $4.0 million of which $3.5 million was recorded as other revenue during the third quarter of 2016. European royalties on sales of Iclusig were $5.3 million of which $4.6 million was recorded as other revenue during the first nine months of 2016. On June 1, 2016, ARIAD out-licensed the rights to Iclusig in Europe to Incyte Corporation (Incyte). From June 1, 2016, ARIAD records royalty revenue based on tiered royalty rates from Iclusig sales in Europe recognized by Incyte. European sales of Iclusig were $7.2 million for the third quarter of 2015 and $18.7 million for the first nine months of 2015.
For the three and nine months ended September 30, 2016, license and other revenue includes $3.5 million from research and development cost sharing amounts from Incyte and achievement of a $2.0 million milestone from Medinol Ltd. earned during the third quarter of 2016.
GAAP and Non-GAAP Net Income (Loss)

GAAP net loss for the quarter ended September 30, 2016 was $27.8 million, or $0.14 per basic and diluted share, respectively, compared to GAAP net loss of $55.5 million, or $0.29 loss per basic and diluted share, for the quarter ended September 30, 2015. GAAP net income for the nine months ended September 30, 2016 was $28.2 million, or $0.15 per basic share and $0.14 per diluted share, compared to GAAP net loss of $171.3 million, or $0.91 loss per basic and diluted share, for the nine months ended September 30, 2015. During the nine months ended September 30, 2016, the Company recorded a $129.0 million gain related to the Incyte transaction under other income (expense), net related to closing the sale of the Company’s European operations and out-license of Iclusig rights in Europe.

Non-GAAP net loss for the quarter ended September 30, 2016 was $22.5 million, or $0.12 per diluted share, compared to non-GAAP net loss of $45.5 million, or $0.24 per diluted share for the quarter ended September 30, 2015. Non-GAAP net income for the nine months ended September 30, 2016 was $47.4 million, or $0.24 per diluted share, compared to non-GAAP net loss of $142.3 million, or $0.75 per diluted share, for the nine months ended September 30, 2015.

Non-GAAP net loss excludes stock-based compensation, restructuring charges for a reduction in force in March 2016 and transaction costs for the Incyte transaction. See "Use of Non-GAAP Financial Measures" below for a description of non-GAAP financial measures and the reconciliation between GAAP and non-GAAP measures at the end of this press release.

Operating Expenses

R&D expenses were $43.6 million for the third quarter of 2016, a decrease of $4.6 million or 10 percent, compared to $48.2 million for the third quarter of 2015. R&D expenses were $130.6 million for the first nine months of 2016, an increase of $4.2 million or 3 percent, compared to $126.4 million for the first nine months of 2015.
Selling, general and administrative expenses were $26.2 million for the third quarter of 2016, a decrease of $10.5 million or 29 percent, compared to $36.7 million for the third quarter of 2015. Selling, general and administrative expenses were $96.5 million for the first nine months of 2016, a decrease of $22.4 million or 19 percent, compared to $118.9 million for the first nine months of 2015.
Other income (expense), net

For the nine months ended September 30, 2016, other income (expense), net includes a recorded gain on the Incyte transaction of $129.0 million.
Cash Position

As of September 30, 2016, cash, cash equivalents and marketable securities totaled $314.7 million, compared to $278.5 million at June 30, 2016 and $242.3 million at December 31, 2015.
PDL Royalty Financing and Convertible Notes 2019

In July 2016, the Company received $50.0 million from PDL BioPharma, Inc. (PDL), representing the second tranche of funding under the terms of the original royalty financing agreement. As of September 30, 2016, the amount due under the PDL royalty financing totaled $96.8 million.
In addition, as of September 30, 2016, the Company has $200 million of aggregate principal amount of convertible notes which are due to mature on June 15, 2019.
2016 Financial Guidance

We are reaffirming our prior guidance for global Iclusig net product and royalty revenue of $170 million to $180 million.
We are reaffirming our prior guidance for research and development expense of $175 million to $180 million, and sales, general and administration expense of $120 million to $125 million.
We are reaffirming our prior guidance for cash, cash equivalents and marketable securities at December 31, 2016, of $280 million to $290 million.
Recent Progress and Key Objectives

Iclusig

Our partner for Iclusig in Asia, Otsuka Pharmaceutical Co., Ltd. (Otsuka), received approval from the Japanese Pharmaceuticals and Medical Devices Agency (PMDA) for Iclusig for the treatment of chronic myeloid leukemia (CML) resistant or intolerant to preceding drug treatment and relapsed or treatment resistant Philadelphia chromosome-positive acute lymphoblastic leukemia (Ph+ ALL). Additional regulatory applications are pending for Taiwan and South Korea.
ARIAD has submitted the four-year efficacy and safety data from the pivotal Phase 2 PACE clinical trial to the FDA and other health authorities as a label supplement, with an FDA action date of December 12, 2016.
Patient enrollment is ongoing in the OPTIC and OPTIC-2L clinical trials in patients with resistant or intolerant chronic phase (CP) CML. Initial results from OPTIC are expected to be presented at the American Society of Hematology (ASH) (Free ASH Whitepaper) conference in December 2017.
Investigator-sponsored trials are ongoing in a focused set of additional clinical settings where Iclusig has potential activity, including frontline Philadelphia-positive acute lymphoblastic leukemia (Ph+ALL), acute myeloid leukemia (AML), and molecularly subtypes of solid tumors, including FGFR+ and RET+ non-small cell lung cancer.
At ASH (Free ASH Whitepaper) in December 2016, clinical trial data will be presented for both CP-CML and Ph+ ALL, in addition to new translational and real world data on Iclusig.
Brigatinib

ARIAD completed the New Drug Application (NDA) submission for brigatinib to the FDA for patients with ALK+ non-small cell lung cancer (NSCLC) who are resistant or intolerant to crizotinib in August 2016, and the application was accepted by the FDA in October 2016. The FDA granted ARIAD’s request for Priority Review and has set an action date of April 29, 2017 under the Prescription Drug User Fee Act (PDUFA). ARIAD is also working on the European Marketing Authorization Application, which should be ready for submission early next year.
On October 9th, updated safety and efficacy data were presented at the 41st Annual Congress of the European Society for Medical Oncology (ESMO) (Free ESMO Whitepaper) held in Copenhagen, Denmark, from the Phase 1/2 study of brigatinib in ALK+ NSCLC, showing greater than 12 months progression free survival in both the post-crizotinib and crizotinib naive settings, as well as continued ongoing responses in patients with CNS metastases.
For the World Conference on Lung Cancer, to be held December 4-7 in Vienna, ARIAD and its academic collaborators will be presenting four abstracts on brigatinib. Updated results will be presented from the ALTA trial, based on a data cut later than the one underlying the ASCO (Free ASCO Whitepaper) presentation earlier this year. There will also be an update on CNS metastases data from the Phase 1/2 and ALTA studies.
Patient enrollment continues for the ALTA 1L randomized, front-line clinical trial of brigatinib, a global, Phase 3 study designed to compare brigatinib and crizotinib in patients with ALK+ NSCLC who have not received prior ALK inhibitors. Full enrollment is expected in 2018.
Investigators are moving forward with several investigator-sponsored studies, including a trial in ROS1+ NSCLC, a trial in patients who experience failure of a second-generation TKI, and a basket study to evaluate brigatinib in patients with ALK/ROS1-mutant metastatic solid tumors.
In the United States, an Expanded Access Program is now open to provide brigatinib access to eligible patients with ALK+ NSCLC who are resistant or intolerant to at least one prior ALK TKI. In Europe, an Early Access Program has been established.
Advancing the Pipeline

We continued to advance the Phase 1/2 clinical trial of AP32788, our investigational precision therapy for patients with NSCLC having exon 20 mutations in EGFR or HER2. There are currently no approved targeted treatment options available for the approximately 6,000 U.S. patients with this disease. We continue to expect first trial data to be released in 2017.
Finally, during the third quarter, we also continued to advance our emerging small molecule program focused on kinase targets within the space of immuno-oncology. The program remains on track with earlier guidance to enter lead optimization by the end of this year.
Upcoming Meetings

Jefferies London Healthcare Conference, London, United Kingdom, November 16-17, 2016
IASLC World Conference on Lung Cancer (WCLC), Vienna, Austria, December 4-7, 2016
American Society of Hematology (ASH) (Free ASH Whitepaper), San Diego, CA, December 4-8, 2016
Recent Event

On October 20, 2016, ARIAD received a Congressional letter requesting information from the Company related to Iclusig. The Company provided a response on November 4, 2016.

On November 7, 2016 Celyad (Euronext Brussels and Paris, and NASDAQ: CYAD), a leader in the discovery and development of engineered cell therapies, reported that first data analysis of the NKR-2 Phase I trial shows encouraging results which will be presented during a poster session at the 58th American Society of Hematology (ASH) (Free ASH Whitepaper) Annual Meeting, taking place on December 3-6, 2016, in San Diego, CA (Press release, Celyad, NOV 7, 2016, View Source [SID1234516387]).

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The NKR-2 Phase I trial is a single infusion, dose escalation study evaluating the safety and feasibility of NKR-2 T-cells in Acute Myeloid Leukemia and Multiple Myeloma patients. This study was completed in September 2016 with a successful safety follow-up for all dose level cohorts. There were no cases of cytokine release syndrome, cell-related neurotoxicity, auto-immunity, or CAR-T related death.

Based on recent analysis, encouraging clinical update and correlative analysis, including post-infusion immunophenotyping, will be presented at the poster session of the ASH (Free ASH Whitepaper) Annual Meeting:

Title: Safety Data from a First-in-Human Phase 1 Trial of NKG2D Chimeric Antigen Receptor-T Cells in AML/MDS and Multiple Myeloma (Poster Presentation)
Abstract: 4052
Session: 616. Acute Myeloid Leukemia: Novel Therapy, excluding Transplantation: Poster III
Presentation: Monday, December 5, 2016, 6:00pm – 8:00pm PST
Location: San Diego Convention Center, Hall GH
Dr. Christian Homsy, CEO of Celyad commented: "NKR-2 Phase I trial was a safety study with the primary objective of ensuring that there was no on-target, off-tumor toxicity. We are positively surprised at reports of unexpected clinical benefit, while testing just one single infusion dosed between 50 and 1,000 times lower than our expected efficacious dose extrapolated from animal experiments. Our exceptionally strong animal data was obtained with three injections of human equivalent doses of 1 to 2 billion cells per injection, while the highest dose tested in the NKR-2 study was 30 million cells in a single infusion. These results are therefore encouraging and we look forward to triggering the next phase of our NKR-T program once European agencies and the FDA have approved our THINK trial protocol".

Dr. Frédéric Lehmann, VP Immuno-Oncology at Celyad: "We are excited to present these data at ASH (Free ASH Whitepaper) and to explore the full potential of our NKR-2 autologous therapy in our next development phase. The THINK trial will evaluate the clinical activity and safety in seven indications, in both hematologic malignancies and solid tumors. It is our hope that this study will be the foundation of a robust approach to treating patients with advanced tumors."

Dr. David Gilham, VP Research and Development at Celyad: "NKR-2 CAR T cell therapy was designed to act like a drug with short term persistence and multiple injections in order to provide a better controlled and more predictable safety profile than that of other traditional CAR-T products. The primary objective is to avoid uncontrolled in-vivo cell expansion and long term persistence thereby replacing this paradigm with well controlled pharmacokinetics. We are re-assured to note that the safety outcome of this Phase I study confirms the pre-clinical animal data generated to date."

On November 7, 2016 Biothera Pharmaceuticals, Inc. reported the publication of preclinical research identifying an essential mechanism in the activation of anti-cancer immune responses by Imprime PGG, the Company’s Phase 2 cancer immunotherapy drug (Press release, Biothera, NOV 7, 2016, View Source [SID1234516380]). The formation of an immune complex between Imprime PGG and endogenous anti-beta glucan antibodies (ABA) offers the potential to use a biomarker for selecting patients most likely to respond to Imprime-based therapy. The results were published recently in PLOS ONE, a peer-reviewed open access scientific journal, in an article titled, "Imprime PGG-mediated Anti-cancer Immune Activation Requires Immune Complex Formation."

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Imprime PGG acts as a Pathogen Associated Molecular Pattern (PAMP) that activates the innate immune system to enhance the efficacy of immune checkpoint inhibitors, as well as tumor targeting and anti-angiogenic antibodies. Imprime PGG combination therapy can trigger a robust, integrated and fully functional innate and adaptive immune response to cancer.

Utilizing whole blood from healthy human donors, Biothera researchers demonstrated that the Imprime PGG-ABA immune complexes activate and become decorated with complement (iC3b). Once formed, these three-part complexes (Imprime-ABA-complement) can then bind to and activate innate effector immune cells. However, these complexes form only in blood from donors who have sufficient levels of ABA (>20 μg/ml), and evidence of innate immune activation in response to Imprime PGG treatment is apparent only in such donors. Importantly, supplementing the whole blood from donors with insufficient ABA levels with purified ABA restores innate immune activation, which highlights the critical nature of sufficient ABA for Imprime PGG responsiveness.

"These data clearly show the necessity of ABA for responsiveness to Imprime-based therapy," said Jeremy Graff, Ph.D., Biothera’s Chief Scientific Officer and Senior Vice President, Research. "We look forward to using ABA levels to identify these biomarker-positive patients in our upcoming Phase 2 clinical trials combining Imprime PGG and immune checkpoint inhibitors."

Biothera plans to conduct a Phase 2 clinical trial to evaluate Imprime PGG and Merck’s anti-PD-1 inhibitor KEYTRUDA (pembrolizumab) in patients with either advanced melanoma or metastatic triple negative breast cancer. The Big Ten Cancer Research Consortium plans to test this therapeutic combination in Phase 1b/2 study in patients with non-small cell lung cancer. Both studies are planned to open enrollment in 2016.

On November 7, 2016 Aduro Biotech, Inc. (Nasdaq:ADRO) reported an oral presentation given by the company’s chief scientific officer, Thomas Dubensky Jr., Ph.D., at the 4th European Society of Medical Oncology (ESMO) (Free ESMO Whitepaper) Symposium on Immuno-Oncology held last week in Lausanne, Switzerland (Press release, Aduro BioTech, NOV 7, 2016, View Source [SID1234516350]). The data, generated from multiple preclinical models, demonstrated important changes in the tumor microenvironment and the activation of acute and systemic tumor-specific immune cell responses following intratumoral administration of ADU-S100 (also known as MIW815), an investigational STING (Stimulator of Interferon Genes) Pathway Activator immunotherapy. Importantly, these preclinical data underscore the ability for ADU-S100 to induce tumor-specific memory mediated by immune cells (e.g. T-cells and NK-cells) whereby the immune system is able to eliminate specific cancerous cells upon their reintroduction without further therapy. Additionally, the anti-tumor efficacy achieved with ADU-S100 was enhanced by combination with an anti-PD-1 immune checkpoint inhibitor, and resulted in the complete eradication of local and distal tumors.

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Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

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"We are pleased to have further validated, through multiple preclinical models, our previous discoveries regarding the potential mechanism of action of the STING Pathway and the role it serves in stimulating a robust and systemic T-cell immune response," stated Dr. Dubensky. "We look forward to working in partnership with Novartis on translating our preclinical findings to a clinical experience as we continue to make progress with our ongoing Phase 1 study of ADU-S100."

Presentation Title: Activation of the STING pathway to induce tumor immunity
In the oral presentation which was given on Saturday, November 5, Dr. Dubensky presented data from preclinical studies using multiple models that demonstrate intratumoral injection of ADU-S100 activates the STING Pathway and induces a durable local and systemic anti-tumor immune response as evidenced by induction of type I interferons (IFNs) and a CD8+ T-cell response. Additionally, preclinical data show the combination of STING activation in the tumor microenvironment and PD-1 blockade enhances antitumor efficacy. There is an ongoing Phase 1 first-in-human dose escalation clinical study to evaluate the safety, tolerability and possible anti-tumor activity of ADU-S100 in patients with cutaneously-accessible advanced metastatic solid tumors or lymphomas. To learn more about this trial, visit www.clinicaltrials.gov.

About the Tumor Microenvironment
The tumor microenvironment is the cellular environment in which the tumor exists, and, along with cancerous cells, includes support cells, immune cells, surrounding blood vessels, and the extracellular matrix. The tumor cells and the surrounding microenvironment are closely related and interact constantly. Tumors influence the microenvironment by releasing signals that promote tumor growth, immune tolerance and immune suppression. When tumors initially form, the body’s immune system recruits and activates a host of immune cells to fight the invading tumor. However, in cases where cancer develops, tumors are eventually able to evade the immune system by changing their microenvironment to inhibit the ability of the immune system to recognize and destroy the tumor thus allowing for tumor outgrowth and formation of metastasis.

About STING Pathway Activator Platform
The Aduro-proprietary STING Pathway Activator product candidates, including ADU-S100 (MIW815), are synthetic small molecule immune modulators that are designed to target and activate human STING. STING is generally expressed at high levels in immune cells, including dendritic cells. Once activated, the STING receptor initiates a profound innate immune response through multiple pathways, inducing the expression of a broad profile of cytokines, including interferons and chemokines. This subsequently leads to the development of a systemic tumor antigen-specific T cell adaptive immune response.