On November 8, 2018 Constellation Pharmaceuticals, Inc., (Nasdaq: CNST) a clinical-stage biopharmaceutical company using its expertise in epigenetics to discover and develop novel therapeutics, reported its third-quarter and nine-month 2018 financial results (Press release, Constellation Pharmaceuticals, NOV 8, 2018, View Source [SID1234531184]).

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"We are excited about the progress we have made this year with our clinical programs and our entire epigenetics platform," said Jigar Raythatha, president and chief executive officer of Constellation Pharmaceuticals. "In 2019, we look forward to further progress in our pipeline, as we expect to evaluate proof of concept for both our ProSTAR and MANIFEST clinical trials in mid-2019 as well as initiate clinical development of our second-generation EZH2 inhibitor CPI-0209."

Recent News

Continued enrollment in ProSTAR Phase 1b/2 study of CPI-1205 in metastatic castration-resistant prostate cancer (mCRPC). As planned, 34 sites are activated and enrolling patients in each of the two cohorts of the Phase 1b portion of the study. The Company expects to determine a recommended Phase 2 dose and begin the randomized portion of the trial in the fourth quarter of 2018.

Enhanced and expanded the Phase 2 portion of the ongoing MANIFEST study of CPI-0610 in myelofibrosis (MF). Constellation modified the MANIFEST trial design to stratify for transfusion-dependent status in second-line treatment and to initiate a first-line treatment arm in combination with ruxolitinib in JAK 1/2-inhibitor-naïve patients with MF. These changes are intended to provide additional measures of potential clinical activity and to expand the potential addressable population of MF patients for CPI-0610, thereby enabling multiple potential paths to registration. More than a dozen sites are now open for MANIFEST in the US, Canada, and Europe, with more sites expected to open in the next few months. Preliminary data in this trial as of May 25 included evidence of reductions in spleen volume, improvements in symptom scores, and increased hemoglobin levels, as well as one case of a transfusion-dependent patient achieving transfusion independence.

Announced Fast Track designation for CPI-0610 for the treatment of MF. The FDA awarded CPI-0610 Fast Track status based on preliminary results from the Phase 2 MANIFEST study. Fast Track is a process designed to facilitate the development and expedite the review of drugs to treat serious conditions and fill unmet medical needs.

Expanded Board of Directors with experts in mCRPC and MF. Constellation announced the appointments of Dr. Elizabeth G. Tréhu and Steven L. Hoerter to its Board of Directors, bringing considerable experience working in the disease areas of mCRPC and MF.

Presenting preclinical data from EZH2 franchise in prostate cancer. Constellation will be presenting data at the upcoming EORTC-NCI-AACR (Free EORTC-NCI-AACR Whitepaper) Molecular Targets and Cancer Therapeutics Symposium on November 13-16 in Dublin, Ireland, and at the AACR (Free AACR Whitepaper)-KCA Joint Conference on Precision Medicine in Solid Tumors on November 15-17 in Seoul, South Korea.
Third Quarter 2018 Financial Results

Cash and cash equivalents as of September 30, 2018 grew 45% to $128.5 million compared to June 30, 2018, primarily due to capital raised in the initial public offering in July, partially offset by operating expenses.

Research and development (R&D) expenses increased 66% year over year to $12.7 million in the third quarter of 2018 mainly due to increased clinical trial expenses.

General and administrative (G&A) expenses grew 86% year over year to $3.7 million in the third quarter of 2018, primarily due to costs related to building out the organization as the Company evolved from a preclinical-stage company to a multi-candidate clinical-stage company, as well as costs associated with operating as a public company.

The net loss attributable to common stockholders increased 9% year over year to $15.9 million mainly due to increases in G&A and R&D expenses, partly offset by the inclusion of unpaid cumulative dividends in 2017 that were waived in 2018. The net loss per share attributable to common stockholders decreased 95% to $0.81 per share for the third quarter of 2018 due to an increase in shares outstanding as a result of the initial public offering and conversion of the preferred stock to common stock.
Financial Guidance

We expect that cash as of September 30, 2018, will fund planned operations into the first quarter of 2020.

Anticipated Milestones

The Company continues to anticipate achieving the following milestones during the upcoming twelve months:

Fourth Quarter 2018

Initiate the Phase 2 portion of the ProSTAR study with CPI-1205
Early 2019

Determine safety and the recommended Phase 2 dose in the ORIOn-E trial for CPI-1205 in combination with checkpoint inhibitors in solid tumors
Mid 2019

Initiate the Phase 1 trial with CPI-0209, a second-generation EZH2 inhibitor
Evaluate proof of concept for CPI-1205 in the ProSTAR trial
Evaluate proof of concept for CPI-0610 in the MANIFEST trial
Financial Results (Unaudited)

Constellation Pharmaceuticals, Inc.
Statements of operations and comprehensive loss (unaudited)

On November 8, 2018 Regulus Therapeutics Inc. (Nasdaq: RGLS), a biopharmaceutical company focused on the discovery and development of innovative medicines targeting microRNAs, reported financial results for the third quarter ended September 30, 2018 and provided a summary of recent events (Press release, Regulus, NOV 8, 2018, View Source [SID1234531200]).

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Third Quarter 2018 Corporate Highlights and Recent Updates

Amended and restructured its Collaboration and License Agreement with Sanofi: In November, Regulus and Sanofi agreed to restructure their Collaboration and License Agreement and immediately transfer development responsibilities of RG-012 for the treatment of Alport syndrome to Sanofi. Sanofi will assume all future costs and development activities associated with the advancement of RG-012, currently in Phase 2 for the treatment of Alport syndrome. Under the terms of the Amendment, Regulus is eligible to receive approximately $7 million in upfront and material transfer payments. Regulus is also eligible to receive up to $40 million in development milestone payments, including a $10 million payment for an interim enrollment milestone. In addition, Sanofi will reimburse Regulus for certain out-of-pocket expenses associated with transition activities and assume Regulus’ upstream license royalty obligations.

Initiated new chronic mouse toxicity study for RGLS4326; data anticipated in Q1 2019: In September 2018, and in consultation with the FDA, the Company initiated a new 27-week chronic mouse toxicity study for RGLS4326 for the treatment of autosomal dominant polycystic kidney disease (ADPKD), incorporating several changes believed to address the unexpected findings in the earlier terminated chronic mouse toxicity study. This study is ongoing, and data are anticipated in Q1 2019. The Company anticipates the advancement of the RGLS4326 clinical program upon successful resolution of the unexpected findings.

Completed reverse stock split and regained compliance with NASDAQ listing requirements: In a special meeting of stockholders, held September 28, 2018, stockholders voted to approve a proposal authorizing the Board of Directors of the Company to amend the Company’s certificate of incorporation to affect a reverse stock split of Regulus’ outstanding common shares. Following the special meeting of stockholders, the Board of Directors approved a 1-for-12 reverse stock split. The Company’s shares began trading on a split-adjusted basis on October 4, 2018. On October 18, 2018, The Nasdaq Stock Market notified Regulus that it had regained compliance with the minimum bid price requirement for continued listing on The Nasdaq Global Market.

"The recently announced Sanofi restructuring represents a significant achievement for Regulus, bringing non-dilutive capital and eliminating future spend for this partnered program. Importantly, we are eligible to receive approximately $17 million in upfront and milestone payments anticipated over the next twelve months," said Jay Hagan, President and Chief Executive Officer of Regulus. "In July, we established several near-term key objectives, including reducing our cash burn, restructuring the Sanofi collaboration, advancing our prioritized pipeline, including ADPKD, and positioning other programs for business development opportunities. Regulus has made significant progress towards completing all of these objectives, and we look forward to the continued advancement of our ADPKD and HBV programs."

Program Updates

Presented preclinical data supporting RGLS4326 as a novel therapeutic for the treatment of ADPKD at the American Society of Nephrology’s Kidney Week 2018: In October 2018, Regulus presented three posters during the American Society of Nephrology’s Kidney Week describing the discovery and preclinical evaluation of RGLS4326, a novel single-stranded, chemically-modified oligonucleotide designed to preferentially target the kidney and inhibit miR-17 functions to treat ADPKD. In preclinical studies, RGLS4326 inhibited miR-17 activity and reduced cyst formation and proliferation of primary cyst cultures derived from human donors with ADPKD. The data presented also demonstrated that RGLS4326 has favorable pharmacokinetic and pharmacodynamic profiles in normal and polycystic kidney disease (PKD) mouse models, where preferential distribution to kidney and localization to collecting duct cysts were evident. Furthermore, data demonstrated that RGLS4326 directly modulates expression of genes implicated in ADPKD pathogenesis including Pkd1 and Pkd2, and conferred efficacy in multiple PKD mouse models following subcutaneous administration.

Advancement of Hepatitis B virus (HBV) Programs: The Company has identified multiple human microRNA targets that serve as host factors for the virus. Compounds directed at modulating these targets are under active in vitro and in vivo preclinical investigation. The Company believes that targeting a host factor in the liver represents a unique mechanism of action for treatment of the virus compared to other programs in development and holds the potential for achieving a functional cure. The Company currently expects to file an IND for the HBV program in the second half of 2019, with the potential of achieving human proof-of-concept in a Phase 1 study.

Additional Program Updates: In September 2018, the Company announced progress of its glioblastoma multiforme (GBM) and non-alcoholic steatohepatitis (NASH) preclinical programs. The Company’s GBM program, targeting microRNA-10b, demonstrated statistically significant improvements in survival as both a monotherapy as well as in combination with temozolomide (TMZ) in an orthotopic GBM animal model. The Company’s lead NASH candidate demonstrated improvement in key endpoints, including NAFLD Activity Score (NAS), liver transaminases, hyperglycemia, and disease-related gene expression. In the diet-induced NASH mouse model (Amylin model) after 2-4 weekly doses, early onset of improvement across multiple disease parameters including liver triglycerides and blood levels of transaminases was observed. The Company plans to seek partners to further advance these programs’ development.

Third Quarter 2018 Financial Results

Cash Position: As of September 30, 2018, Regulus had $20.5 million in cash, cash equivalents and short-term investments. Under the terms of the Sanofi Amendment, Regulus is eligible to receive approximately $7 million in upfront and material transfer payments. Including these additional proceeds, the Company expects its cash runway to extend through Q2 2019.

Research and Development (R&D) Expenses: R&D expenses were $6.9 million and $28.7 million for the three and nine months ended September 30, 2018, respectively, compared to $12.7 million and $42.7 million for the same periods in 2017. The decreases were primarily attributable to the pausing of the RG-012 and RGLS4326 programs early in the third quarter of 2018, the discontinuation of the RG-101 and RGLS5040 programs in 2017 and reductions in personnel-related expenses primarily attributable to our corporate restructurings.

General and Administrative (G&A) Expenses: G&A expenses were $3.0 million and $10.1 million for the three and nine months ended September 30, 2018, respectively, compared to $2.7 million and $13.8 million for the same periods in 2017. The increase for the three months ended September 30, 2018 as compared to the three months ended September 30, 2017 was driven by non-recurring severance charges recorded in the third quarter of 2018 in connection with our July 2018 corporate restructuring. The decrease for the nine months ended September 30, 2018 as compared to the nine months ended September 30, 2017 was driven by non-recurring severance charges and non-recurring, non-cash stock-based compensation charges recorded in connection with our May 2017 corporate restructuring.

Revenue: Revenue was less than $0.1 million for each of the three and nine months ended September 30, 2018 and 2017.

Net Loss: Net loss was $10.3 million, or $1.18 per share (basic and diluted), and $40.1 million, or $4.62 per share (basic and diluted), for the three and nine months ended September 30, 2018, respectively, compared to $15.8 million, or $2.11 per share (basic and diluted), and $57.5 million, or $10.52 per share (basic and diluted), for the same periods in 2017. Historical and current period net loss per share values have been retroactively adjusted to reflect our October 2018 reverse stock split.

Upcoming Events

On November 14, 2018, Regulus will present survival data on its lead anti-miR candidate targeting microRNA-10b for glioblastoma multiforme at the Society for Neuro-Oncology Meeting in New Orleans, Louisiana.

On November 14, 2018, Regulus will present a corporate overview at the Stifel 2018 Healthcare Conference in New York.

On November 8, 2018 Affimed N.V. (Nasdaq: AFMD), a clinical stage biopharmaceutical company focused on discovering and developing highly targeted cancer immunotherapies that harness the power of innate and adaptive immunity (NK cells, macrophages and T cells), reported that Dr. Adi Hoess, CEO, will present at the Jefferies 2018 London Healthcare Conference on Wednesday, November 14, 2018 at 8:40 am GMT in London (Press release, Affimed, NOV 8, 2018, View Source [SID1234530921]).

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A live webcast of the conference presentation can be accessed through the "Events" section on the "Investors & Media" page of the Affimed website at www.affimed.com/events.php. A replay of the presentation will be available from Affimed’s website for 30 days following the conference.

On November 8, 2018 FLX Bio, Inc., a clinical-stage, biopharmaceutical company focused on the development of oral small-molecule drugs that target immune drivers of cancer and other immune-related disorders, reported that data from a Phase 1 study of FLX475 in healthy volunteers which demonstrated excellent pharmacokinetics, pharmacodynamics, and safety and tolerability will be presented on November 10, 2018 at the Society for Immunotherapy of Cancer (SITC) (Free SITC Whitepaper) Meeting in Washington D.C (Press release, FLX Bio, NOV 8, 2018, View Source [SID1234530959]). Preclinical data showing the benefits of using a GCN2 inhibitor to treat cancer will also be featured at the meeting.

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"These Phase 1 data confirm that FLX475 fully engages its intended target, CCR4, on regulatory T cells at well-tolerated doses which is predicted to specifically block their recruitment into tumors without reducing regulatory T cells in healthy tissues or beneficial cells that mediate the anti-tumor immune response," said Brian Wong, M.D., Ph.D., CEO of FLX Bio. "We believe that inhibiting regulatory T cells in the tumor microenvironment with such high precision and selectivity could remove a major barrier to attaining deep and durable remissions in patients with cancer."

Pharmacokinetics, pharmacodynamics, and safety of FLX475, an orally-available, potent, and selective small-molecule antagonist of CCR4, in healthy volunteers (Poster #P484; Presenter: William Ho, M.D., Ph.D.)

A Phase 1, first-in-human, randomized, double-blind, placebo-controlled study of FLX475 in 104 healthy volunteers
FLX475 was well tolerated with no serious adverse events reported at any dose level, including those projected to achieve or exceed maximal inhibition of human Treg
Long half-life and oral absorption of FLX475 support once-daily oral dosing
These results have enabled an accelerated Phase 1/2 trial, which is now enrolling, to evaluate FLX475 in the treatment of multiple types of cancers, both as a monotherapy and in combination with the anti-PD1 antibody pembrolizumab
"Based on these highly informative and encouraging clinical data, we are now enrolling our Phase 1/2 study of FLX475, which is designed to accelerate the development of this novel agent in patients with tumor types predicted to be more likely to respond to FLX475 treatment, including those that contain relatively high numbers of regulatory T cells and higher CCR4 ligand expression," commented Bill Ho, M.D., Ph.D., CMO of FLX Bio.

Targeting the stress response kinase GCN2 to restore immunity in the tumor microenvironment (Poster #P202; Presenter: Lisa Marshall)

The tumor microenvironment is characterized by deficiencies in oxygen and key nutrients such as glucose and amino acids
Myeloid-derived suppressor cells (MDSCs), tumor and other cells can create a nutrient-poor environment that inhibits immune function and supports tumor growth
GCN2 plays a key role in sensing and modulating the response to nutrient deprivation resulting in immune suppression in the tumor microenvironment
Results of preclinical studies show that FLX Bio’s selective GCN2 inhibitor relieves immune suppression (takes the brakes off) and promotes T effector cell activation to recover the function of effector T cells
"Our GCN2 inhibitors have shown a direct ability to relieve immune suppression, allowing the immune response to once again attack tumors effectively," continued Dr. Ho. "We look forward to selecting a preclinical candidate for this program in early 2019."

About FLX475

FLX475 is a best-in-class oral, small molecule antagonist of CCR4. FLX Bio is conducting an open-label, dose-escalation and cohort expansion Phase 1/2 study in patients with multiple types of cancer to evaluate the safety and tolerability of FLX475 as a monotherapy and in combination with pembrolizumab. In preclinical studies, FLX475 inhibited tumor growth and increased tumor regression as a single agent. In addition, FLX475 enhanced the antitumor effects of various checkpoint inhibitors including anti-PD-L1 and anti-CTLA4 antibodies as well as immune agonists such as anti-4-1BB antibodies. FLX475 also has the potential to enhance cell-based immunotherapies such as CAR-T and cancer vaccines. Unlike antibodies to CCR4, FLX475 selectively blocks the recruitment of regulatory T cells to the tumor site and does not deplete cells beneficial to an antitumor response or regulatory T cells in healthy tissue such as blood, spleen and skin cells.

About GCN2 Inhibitors

FLX Bio is developing orally-bioavailable, highly-selective GCN2 inhibitors that stimulate an immune response by limiting Treg and MDSC functions as well as promoting effector T cell proliferation and function. A GCN2 inhibitor has the potential to be highly efficacious since this key protein acts downstream of multiple tumor-promoting enzymes such as indoleamine deoxygenase (IDO) and arginase (ARG), which breakdown the amino acids tryptophan and arginine, respectively. In cell-based assays, FLX Bio’s GCN2 inhibitors increase CD8 T cell proliferation and function in tryptophan-, arginine- and glucose-limited conditions. Additional preclinical activities are ongoing for this series of compounds. FLX expects to select a preclinical candidate in early 2019.

On November 8, 2018 Intrexon Corporation (NASDAQ: XON), a leader in the engineering and industrialization of biology to improve the quality of life and health of the planet, reported its third quarter financial results for 2018.

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Recent Commercial Achievements:

Intrexon continues discussions with several major energy companies concerning partnering of its Methane Bioconversion Platform;
Site selection on Intrexon’s first 2,3 BDO plant is on track for year end;
Okanagan Specialty Fruits, a wholly owned subsidiary of Intrexon, completed the 2018 Arctic Apple harvest, yielding ten times last year’s production, and expects to make pre-sliced Arctic apples available through over 500 retail outlets this month;
EnviroFlight, Intrexon’s joint venture with Darling Ingredients Inc., is scheduled to open phase one of the largest black soldier fly larvae (BSFL) facility in the U.S. this month; and
Intrexon commenced deployment of its Botticelli platform, beginning with a collaboration in tomato with a large international producer.
Recent Technical/Business Achievements:

Precigen, Inc., a wholly owned subsidiary of Intrexon, recently reported data on a multigenic therapeutic candidate that in appropriate pre-clinical models suggests potential superiority to approved anti-PD-1 checkpoint inhibitors;
From Intrexon’s methane bioconversion platform, the Company now is producing 2,3, BDO from natural gas at roughly 50% of the theoretical target yield, has demonstrated performance at 500X scale-up and has conducted sustained production runs exceeding 1,000 hours;
Oxitec, Ltd., a wholly owned subsidiary of Intrexon, entered into a second cooperative agreement with the Bill & Melinda Gates Foundation to develop a new strain of Oxitec’s Friendly biological engineering platform to develop a self-limiting Anopheles stephensi mosquito to help combat this mosquito that spreads malaria in India, Middle East and the Horn of Africa;
ActoBio Therapeutics, Inc., a wholly owned subsidiary of Intrexon, and T1D Partners, LLC, announced that the first patient has been dosed in the Company’s Phase Ib/IIa clinical trial for AG019 for the treatment of early onset type 1 diabetes (T1D);
Continuing its expansion into regenerative medicine, Exemplar Genetics, a wholly owned subsidiary of Intrexon, reported the first pig has been born with the potential to produce organs for human transplant;
Trans Ova Genetics, a wholly owned subsidiary of Intrexon, created six bull calves that rank at the top of the global Holstein bull population;
Intrexon announced advances in the development of its engineered yeast platform to produce cannabinoids for medical use via fermentation. This microbe-based process has potential to provide greater supply-chain security and avoids the resource-intensive isolation that often leads to quality and quantity variability in end products;
The U.S. Food and Drug Administration (FDA) recommended amendment of the Association of American Feed Control Officials (AAFCO) ingredient definition of dried BSFL to include feeding to poultry. The approval of BSFL for use in poultry feed expands the potential for this ingredient as a more sustainable source of protein and enables EnviroFlight to support this new market opportunity with its new facility;
Collaborator Fibrocell Science, Inc. (NASDAQ: FCSC) reported the FDA granted Fast Track Designation to FCX-013, the company’s clinical stage candidate for the treatment of moderate to severe localized scleroderma, and the FDA’s Office of Orphan Products Development awarded Fibrocell a $1.4 million clinical trial research grant for continued clinical development of FCX-007, the company’s gene therapy candidate for the treatment of recessive dystrophic epidermolysis bullosa (RDEB); and
Collaborator Oragenics, Inc. (NYSE: OGEN) announced the resumption of its Phase 2 clinical trial for AG013 for the potential treatment of oral mucositis (OM).
Recent Corporate Highlights:

Intrexon completed its registered underwritten public offering of $200 million aggregate principal amount of 3.50% convertible senior notes due in 2023 (Convertible Notes);
Precigen Inc., a wholly owned subsidiary of Intrexon, and Ziopharm Oncology, Inc. (NASDAQ: ZIOP) announced a new definitive license agreement to replace all existing agreements between the companies that will provide Ziopharm exclusive and non-exclusive rights to technology controlled by Precigen, Inc., as well as securing for Precigen developmental control over the majority of its portfolio.
The Company, through its subsidiary ActoBio Therapeutics, acquired the remaining interests in certain entities previously owned by a related party. As a result, ActoBio owns the exclusive rights to use its technologies to develop therapeutics in the fields of chronic rhinosinusitis and celiac disease;
Intrexon transferred its stock exchange listing from the New York Stock Exchange (NYSE) to the Nasdaq Global Select Market (Nasdaq) and began trading under "XON" ticker on the Nasdaq exchange on September 25, 2018; and
Intrexon announced the formation of a Bioinformatics Hub in Munich, establishing Intrexon Bioinformatics Germany GmbH (IBG).
Third Quarter 2018 Financial Highlights:

Total revenues of $32.4 million, a decrease of 30% from the third quarter of 2017;
Net loss of $57.3 million attributable to Intrexon, or $(0.44) per basic share, including non-cash charges of $38.7 million;
Adjusted EBITDA of $(28.9) million, or $(0.22) per basic share;
The net change in deferred revenue related to upfront and milestone payments, which represents the cash and stock received from collaborators less the amount of revenue recognized during the period, was a decrease of $17.3 million compared to a decrease of $8.6 million in the third quarter of 2017; and
Cash, cash equivalents, and short-term investments totaled $246.6 million, the value of preferred shares totaled $158.4 million, and the value of common equity securities totaled $4.7 million at September 30, 2018.
Year-to-Date 2018 Financial Highlights:

Total revenues of $117.4 million, a decrease of 24% from the nine months ended September 30, 2017;
Net loss of $168.9 million attributable to Intrexon, or $(1.31) per basic share, including non-cash charges of $109.0 million;
Adjusted EBITDA of $(75.3) million, or $(0.58) per basic share; and
The net change in deferred revenue related to upfront and milestone payments, which represents the cash and stock received from collaborators less the amount of revenue recognized during the period, was a decrease of $34.5 million compared to a decrease of $28.2 million in the nine months ended September 30, 2017.
"Our company is transitioning from one with great science and technology to one with great products and product candidates that embody our engineered biology," commented Randal J. Kirk, Chairman and Chief Executive Officer of Intrexon. "Recognizing our requirements, we are fully occupied on the development of systems, teams and plans to successfully commercialize products that we believe will be transformative in their fields."

Mr. Kirk concluded, "While we do not underestimate the challenges that face us – or anyone – in making such a transition, we have persevered in the execution of our plans laid long ago and believe that we are seeing the fruits of our prior labors. It long has been our goal to create one of the truly great companies in the world and all of us at intrexon are excited to be where we are today and looking with great anticipation toward our future."

Third Quarter 2018 Financial Results Compared to Prior Year Period

Total revenues decreased $13.6 million, or 30%, from the quarter ended September 30, 2017. Collaboration and licensing revenues decreased $13.8 million from the quarter ended September 30, 2017 due to (i) a decrease in research and development services for certain of the Company’s exclusive channel collaborations, or ECCs, as the Company redeployed certain resources towards supporting prospective new platforms and partnering opportunities and began to focus more on the further development of relationships and structures that provide the Company with more control and ownership over the development process and commercialization path, (ii) a decrease in research and development services for certain of the Company’s ECCs as a result of program progression where the Company’s collaborators have taken responsibility of the execution of the programs, (iii) changes in revenue recognition for upfront and milestone payments under the new Accounting Standards Codification 606, or ASC 606, revenue standard whereby revenues are recognized based on the amount of services the Company performs for its collaborators, and (iv) the mutual termination of the Company’s second ECC with ZIOPHARM for the treatment of graft-versus-host disease in December 2017. Gross margin on products declined in the current period as a result of increased operating costs associated with new product offerings and cloned products. Gross margin on services improved in the current period as a result of pricing changes and an increase in the number of embryos produced per bovine in vitro fertilization cycle due to improved production results.

Research and development expenses increased $8.4 million, or 23%, and include $8.7 million expense related to in-process research and development reacquired as part of an asset acquisition in September 2018. Although selling, general and administrative (SG&A) expenses were consistent period over period, legal and professional fees decreased $2.9 million primarily due to a decline in the use of regulatory and other consultants. This decrease was offset primarily by higher compensation expenses related to performance and retention incentives for SG&A employees.

Year-to-Date 2018 Financial Results Compared to Prior Year Period

Total revenues decreased $36.6 million, or 24%, from the nine months ended September 30, 2017. Collaboration and licensing revenues decreased $37.8 million from the nine months ended September 30, 2017 primarily due to (i) a decrease in research and development services for certain of the Company’s ECCs as the Company redeployed certain resources towards supporting prospective new platforms and partnering opportunities and began to focus more on the further development of relationships and structures that provide the Company with more control and ownership over the development process and commercialization path, (ii) a decrease in research and development services for certain of the Company’s ECCs as a result of program progression where the Company’s collaborators have taken responsibility of the execution of the programs, (iii) changes in revenue recognition for upfront and milestone payments under the new ASC 606 revenue standard whereby revenues are recognized based on the amount of services the Company performs for its collaborators, and (iv) the mutual termination of the Company’s second ECC with ZIOPHARM for the treatment of graft-versus-host disease in December 2017. Product revenues decreased $2.2 million or 9% primarily due to lower customer demand for live calves, cows previously used in production, and cloned products. These decreases were partially offset by increased customer demand for pregnant recipients. Gross margin on products declined in the current period as a result of lower product sales and increased operating costs associated with new product offerings and cloned products. The increase in service revenues of $2.5 million, or 7%, as well as the gross margin thereon relates to pricing changes and an increase in the number of embryos produced per bovine in vitro fertilization cycle due to improved production results.

Research and development expenses increased $19.4 million, or 19%, and include (i) $8.7 million expense related to in-process research and development reacquired as part of an asset acquisition in September 2018 and (ii) $5.3 million of one-time costs associated with closing one of Oxitec’s Brazilian subsidiary’s leased research and development facilities as the Company decentralized operations previously conducted in this facility. Research and development consultants and lab supplies increased $3.1 million primarily due to increased expenses from contract research organizations and consultants providing services for both programs being developed internally and pursuant to some of the Company’s collaborations. Depreciation and amortization increased $2.1 million primarily as a result of the depreciation expense on research and development assets and amortization of developed technology acquired from GenVec, Inc. in June 2017. Although SG&A expenses were consistent period over period, legal and professional fees decreased $7.5 million primarily due to decreased legal fees associated with ongoing litigation and decreased fees incurred for regulatory and other consultants. This decrease was offset by an increase of $6.9 million in compensation expenses related to performance and retention incentives for SG&A employees.

Conference Call and Webcast

The Company will host a conference call today Thursday, November 8th, at 5:30 PM ET to discuss the third quarter 2018 financial results and provide a general business update. The conference call may be accessed by dialing 1‑888-317-6003 (Domestic US), 1-866-284-3684 (Canada), and 1-412-317-6061 (International) and providing the number 8225818 to join the Intrexon Corporation Call. Participants may also access the live webcast through Intrexon’s website in the Investors section at View Source