On May 10, 2018 Valeant Pharmaceuticals International, Inc. (NYSE/TSX: VRX) ("Valeant") reported that Joseph C. Papa, chairman and chief executive officer, and Arthur J. Shannon, senior vice president and head of Investor Relations and Communications, are scheduled to participate at the Bank of America Merrill Lynch Healthcare Conference in Las Vegas on May 16, 2018 at 10:40 a.m. PDT (1:40 p.m. EDT) (Press release, Valeant, MAY 10, 2018, http://ir.valeant.com/news-releases/2018/05-10-2018-133108200 [SID1234526498]).

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A live webcast and audio archive of the event will be available on the Investor Relations page of the Valeant web site at: http://ir.valeant.com/events-and-presentations/2018.

On May 10,2018 Aptose Biosciences Inc. ("Aptose" or the "Company") (NASDAQ:APTO) (TSX:APS), a clinical-stage company developing highly differentiated therapeutics that target the underlying mechanisms of cancer, reported financial results for the three months ended March 31, 2018 and reported on corporate developments (Press release, Aptose Biosciences, MAY 10, 2018, View Source;p=RssLanding&cat=news&id=2348536 [SID1234526465]). Unless specified otherwise, all amounts are in US dollars.

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The net loss for the quarter ended March 31, 2018 was $6.8 million ($0.23 per share) compared with $3.3 million ($0.19 per share) in the quarter ended March 31, 2017 and total cash used in operating activities was $4.1 million compared with $2.7 million in the quarter ended March 31, 2018. Total cash and cash equivalents and investments as of March 31, 2018 were $16.2 million (which, based on current operations, provide the Company with sufficient resources to fund research and development and operations into Q2 2019). In the quarter ended March 31, 2018, Aptose raised $8.9 million from the Common Shares Purchase Agreement with Aspire Capital and subsequent to March 31, we raised a further $6.1 million with Aspire Capital under this same agreement.

"CG-806, our highly potent non-covalent pan-FLT3/pan-BTK inhibitor, continues on track with IND-enabling studies," said William G. Rice, Ph.D., Chairman, President and Chief Executive Officer. "In parallel, new preclinical data on CG-806 presented at AACR (Free AACR Whitepaper) demonstrate its breadth and potency of activity against patient-derived AML and CLL cells and superiority to other kinase inhibitors. For our clinical-stage compound APTO-253, we made notable progress in manufacturing and qualification studies required to return the new drug product to the clinic. We also presented new mechanistic data for APTO-253 at AACR (Free AACR Whitepaper), demonstrating heightened sensitivity of BRCA1 or BRCA2 mutated cancer cells to APTO-253 and opening the door to genetically-defined solid tumor indications for the molecule."

Corporate Highlights

CG-806 preclinical data presented at AACR (Free AACR Whitepaper) – At the 2018 American Association for Cancer Research (AACR) (Free AACR Whitepaper) Conference held in April, researchers from Oregon Health & Science University (OHSU) Knight Cancer Institute and Aptose presented preclinical data demonstrating that CG-806, a highly potent pan-FLT3/pan-BTK inhibitor, kills malignant cells in samples freshly collected from patients with various hematologic malignancies and demonstrates superiority to other kinase inhibitors. CG-806 was shown to have greater potency against a broader set of AML samples relative to other FLT3 inhibitors, including midostaurin, gilteritinib, quizartinib, sorafenib, crenolanib, and dovitinib. Separately, CG-806 was also shown to have greater potency and range of activity than ibrutinib on patient-derived CLL samples.

An additional study presented by Aptose explored the potency of CG-806 in hematologic malignancies relative to other FLT3 or BTK inhibitors commercialized or in development. CG-806 induced apoptosis through inhibition of key multiple signaling pathways that were specific to each sample of AML or B-cell cancer cells. CG-806 was also superior to other FLT3 inhibitors against FLT3-wild type (WT) AML cells, as well as AML cells housing various mutant forms of FLT3. Collectively, the data demonstrated the ability of CG-806 to target all WT and mutant forms of FLT3 and BTK and to inhibit multiple signaling pathways, producing killing of diverse subtypes of hematologic malignancies driven by different genomic aberrations.
New mechanistic data on APTO-253 presented at AACR (Free AACR Whitepaper) – Also at AACR (Free AACR Whitepaper), the Aptose research team presented data showing that APTO-253 stabilizes a G-quadruplex DNA structure in the MYC gene promoter, leading to suppression of MYC expression and induction of programmed cell death in AML cells. The action of APTO-253 on separate G-quadruplexes induces the DNA damage response in cancer cells and exhibits synthetic lethality comparable to olaparib – an FDA-approved targeted therapy that acts against cancers in people with hereditary BRCA1 or BRCA1 mutations, including some ovarian, breast and prostate cancers – albeit through a different mechanism. Unlike other drugs for which loss of this DNA repair function results in hypersensitivity, APTO-253 does not produce myelosuppression, even at the maximum tolerated dose. These findings open the window to how APTO-253 might be used clinically to treat certain solid tumor patients with tumors harboring deficiencies in DNA repair.

Completed manufacture of APTO-253 cGMP clinical supply – The Company completed the manufacture of the cGMP clinical supply that will be required for the potential return of APTO-253 to the clinic, and the new clinical supply has completed and passed stability, sterility, mock infusion, animal bridging and blood compatibility studies. Aptose plans to submit these findings to the FDA during the 2nd Quarter of 2018 to seek release of the CMC-related clinical hold and allow return of APTO-253 to dosing in the open Phase 1b trial in patients with acute myeloid leukemia (AML) or myelodysplastic syndrome (MDS).

CG-806 pre-IND progress – Aptose successfully manufactured CG-806 drug substance and formulated drug product, and then performed animal dose range finding preclinical studies in rodents and dogs, and successfully dosed up to 1000 mg/kg/day, the maximum feasible dose. The Company is currently manufacturing a drug batch that will be used for IND-enabling GLP animal toxicology studies that are planned to begin during the 2nd quarter of 2018.

Appointment of New Board Member – In April, Aptose announced the appointment of Caroline M. Loewy to its Board of Directors. Ms. Loewy is an accomplished and respected executive leader with more than 25 years of experience in accelerating biotechnology product development and growth. She currently provides strategic advisory services to life science companies on a variety of high-impact matters including funding strategies, product pipeline evaluation, and assessing business development opportunities. Prior, she held numerous executive roles, including that of Chief Financial Officer at several public and private biopharmaceutical companies, and senior biotechnology research analyst at Morgan Stanley and Prudential Securities. Aptose’s Board of Directors now includes seven members with extensive biotechnology and pharmaceutical experience.

Early Exercise of Option for CG-806 License – In May, Aptose exercised its option under the 2016 Option Agreement to exclusively license CG-806 from CrystalGenomics, Inc. With the early exercise of the option, Aptose owns global rights to develop and commercialize CG-806 for all indications outside of Korea and China – the Licensed Territory. The exercise triggered a payment of $2.0 million to CrystalGenomics, and CrystalGenomics is eligible for regulatory and sales milestone payments, as well as royalties on product sales in the Licensed Territory.
New Base Shelf Prospectus Filing and New At-The-Market Facility – As previously announced in February, Aptose filed a new Base Shelf Prospectus in Canada, and a registration statement with the SEC, which allows the Company to offer up to $100,000,000 of common shares, warrants to purchase common shares or units comprised of one or more of these securities, for a period of 25 months. This provides Aptose with flexibility to raise capital to fund operations, R&D and potential upcoming clinical trials. Subsequently in March, Aptose entered into a new At-The-Market (ATM) Facility to replace the ATM Facility that expired in December 2017.

On May 10, 2018 Heron Therapeutics, Inc. (Nasdaq: HRTX), a commercial-stage biotechnology company focused on improving the lives of patients by developing best-in-class treatments to address some of the most important unmet patient needs, reported financial results for the three months ended March 31, 2018 and highlighted recent corporate progress (Press release, Heron Therapeutics, MAY 10, 2018, View Source [SID1234526483]).

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Recent Corporate Progress

Pain Management Franchise

Positive Topline Results from Pivotal Phase 3 Clinical Trials of HTX-011 in Bunionectomy and Hernia Repair. HTX-011 achieved all primary and key secondary endpoints in two completed pivotal Phase 3 trials, EPOCH1 for bunionectomy and EPOCH2 for hernia repair. In both of these studies:

HTX-011 demonstrated statistically significant reductions in both pain intensity and the use of opioid rescue medications through 72 hours following surgery;
HTX-011 significantly increased the proportion of patients who required no opioids for postoperative pain, thereby eliminating the risk of opioid-related side effects and addiction in these patients; and
HTX-011 was well tolerated in both studies.
HTX-011 is the only long-acting local anesthetic to demonstrate in Phase 3 studies significantly reduced pain and opioid use compared to bupivacaine solution, the current standard-of-care local anesthetic for postoperative pain control, through 72 hours. In the second quarter of 2018, Heron expects to report topline Phase 2 data for HTX-011 in breast augmentation and total knee arthroplasty. In the second half of 2018, Heron expects to file a New Drug Application for HTX-011 with the U.S. Food and Drug Administration (FDA).

CINV Franchise

CINV Sales. Chemotherapy-induced nausea and vomiting (CINV) franchise net product sales for the three months ended March 31, 2018 were $11.6 million. Heron reaffirms full-year 2018 CINV franchise net product sales guidance of $60 million to $70 million.

SUSTOL Sales. Net product sales of SUSTOL (granisetron) extended-release injection for the three months ended March 31, 2018 were $6.4 million. On January 1, 2018, Heron adopted Topic 606, the new revenue recognition standard now in effect. Under the prior revenue recognition standard, Heron would have recognized net product sales of $7.7 million for the same period. The entry of generic palonosetron in the first quarter of 2018 is expected to have a several-quarter negative impact on provider demand for SUSTOL.
CINVANTI Sales. Net product sales of CINVANTI (aprepitant) injectable emulsion for the three months ended March 31, 2018 were $5.2 million. CINVANTI is the only polysorbate 80-free intravenous (IV) formulation of a neurokinin-1 (NK1) receptor antagonist indicated for the prevention of acute and delayed nausea and vomiting associated with highly emetogenic chemotherapy (HEC) and nausea and vomiting associated with moderately emetogenic chemotherapy (MEC). CINVANTI was approved by the FDA on November 9, 2017 and became commercially available in the U.S. on January 4, 2018.
"With more than 100 oncology clinics ordering CINVANTI in the first quarter of launch and significant progress made toward formulary review in the hospital segment, we are very pleased that providers are seeing the value of CINVANTI, which is not formulated with a synthetic surfactant," said Robert H. Rosen, President of Heron.

"2018 is off to a great start for Heron. Our EPOCH1 and EPOCH2 Phase 3 results demonstrated HTX-011’s superiority over the standard-of-care in reducing both pain intensity and opioid use," said Barry D. Quart, Pharm.D., Chief Executive Officer of Heron. "Based on these results, we believe that HTX-011 can become the cornerstone of opioid-free pain management for many patients undergoing a wide range of surgical procedures."

Financial Results

As of March 31, 2018, Heron had cash, cash equivalents and short-term investments of $113.9 million. In April 2018, Heron received net cash proceeds of $168.7 million from a public offering of common stock. Heron’s March 31, 2018 pro-forma cash, cash equivalents and short-term investments, adjusting for the April 2018 public offering, were $282.6 million. This compares to $172.4 million in cash, cash equivalents and short-term investments as of December 31, 2017.

Net product sales for the three months ended March 31, 2018 were $11.6 million, compared to $3.6 million for the same period in 2017.

Heron’s net loss for the three months ended March 31, 2018 was $52.3 million, or $0.81 per share, compared to a net loss of $50.3 million, or $1.00 per share for the same period in 2017. Net loss for the three months ended March 31, 2018 included non-cash, stock-based compensation expense of $7.7 million compared to $8.0 million for the same period in 2017.

Net cash used for operating activities for the three months ended March 31, 2018 was $61.7 million, compared to $50.6 million for the same period in 2017.

About HTX-011 for Postoperative Pain

HTX-011, which utilizes Heron’s proprietary Biochronomer drug delivery technology, is an investigational, long-acting, extended-release formulation of the local anesthetic bupivacaine in a fixed-dose combination with the anti-inflammatory meloxicam for the prevention of postoperative pain. By delivering sustained levels of both a potent anesthetic and a local anti-inflammatory agent directly to the site of tissue injury, HTX-011 was designed to deliver superior pain relief while reducing the need for systemically administered pain medications such as opioids, which carry the risk of harmful side effects, abuse and addiction.

In March 2018, Heron reported positive topline results from EPOCH1 and EPOCH2, its pivotal Phase 3 studies of HTX-011 in bunionectomy and hernia repair, respectively. All primary and key secondary endpoints were achieved in these studies. Furthermore, HTX-011 is the only long-acting local anesthetic to demonstrate in Phase 3 studies significantly reduced pain and opioid use compared to bupivacaine solution, the current standard-of-care local anesthetic for postoperative pain control, through 72 hours. HTX-011 was well tolerated in both studies. HTX-011 continues to be investigated in ongoing Phase 2 studies in breast augmentation and total knee arthroplasty. HTX-011 was granted Fast Track Designation from the FDA in the fourth quarter of 2017. In the second half of 2018, Heron expects to file an NDA to the FDA for HTX-011.

About CINVANTI (aprepitant) injectable emulsion

CINVANTI, in combination with other antiemetic agents, is indicated in adults for the prevention of acute and delayed nausea and vomiting associated with initial and repeat courses of highly emetogenic cancer chemotherapy (HEC) including high-dose cisplatin and nausea and vomiting associated with initial and repeat courses of moderately emetogenic cancer chemotherapy (MEC). CINVANTI is an intravenous formulation of aprepitant, a substance P/neurokinin-1 (NK1) receptor antagonist. CINVANTI is the first intravenous (IV) formulation to directly deliver aprepitant, the active ingredient in EMEND capsules. Aprepitant (including its prodrug, fosaprepitant) is the only single-agent NK1 receptor antagonist to significantly reduce nausea and vomiting in both the acute phase (0 – 24 hours after chemotherapy) and the delayed phase (24 – 120 hours after chemotherapy). CINVANTI is the only IV formulation of an NK1 receptor antagonist indicated for the prevention of acute and delayed nausea and vomiting associated with HEC and nausea and vomiting associated with MEC that is free of polysorbate 80 or any other synthetic surfactant. Pharmaceutical formulations containing polysorbate 80 have been linked to hypersensitivity reactions, including anaphylaxis and irritation of blood vessels resulting in infusion-site pain. FDA-approved dosing administration included in the United States prescribing information for CINVANTI is a 30-minute infusion.

Please see full prescribing information at www.CINVANTI.com.

About SUSTOL (granisetron) extended-release injection

SUSTOL is indicated in combination with other antiemetics in adults for the prevention of acute and delayed nausea and vomiting associated with initial and repeat courses of moderately emetogenic chemotherapy (MEC) or anthracycline and cyclophosphamide (AC) combination chemotherapy regimens. SUSTOL is an extended-release, injectable 5-HT3 receptor antagonist that utilizes Heron’s Biochronomer polymer-based drug delivery technology to maintain therapeutic levels of granisetron for ≥5 days. The SUSTOL global Phase 3 development program was comprised of two, large, guideline-based clinical studies that evaluated SUSTOL’s efficacy and safety in more than 2,000 patients with cancer. SUSTOL’s efficacy in preventing nausea and vomiting was evaluated in both the acute phase (0 – 24 hours after chemotherapy) and delayed phase (24 – 120 hours after chemotherapy).

Please see full prescribing information at www.SUSTOL.com.

On May 10, 2018 Ziopharm Oncology, Inc. (Nasdaq:ZIOP), reported financial results for the first quarter ended March 31, 2018, and provided an update on the Company’s recent activities (Press release, Ziopharm, MAY 10, 2018, View Source [SID1234526499]).

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"The landscapes of CAR-T therapies and the use of cytokines are playing out as anticipated," said Laurence Cooper, M.D., Ph.D., Chief Executive Officer of Ziopharm. "Regarding CAR-T, we find the dominating concern among patients, physicians and payers is the high costs and lengthy manufacturing time. We are addressing these issues head on with Sleeping Beauty CAR-T cells manufactured in two days with our technology called ‘point-of-care,’ which we expect to enter the clinic this year."

Dr. Cooper continued, "Immune-stimulatory cytokines have gained significant momentum as potential combination therapies with immune checkpoint inhibitors. We are excited to build on our Controlled IL-12 platform and its ability to turn cold tumors hot as we explore more tumor types that can benefit from our ability to regulate IL-12."

Program Updates

Controlled IL-12

Ziopharm is advancing Ad-RTS-hIL-12 plus veledimex as a gene therapy to treat patients with recurrent glioblastoma (rGBM) as a monotherapy and in combination with an immune checkpoint inhibitor. Ad-RTS-hIL-12 plus veledimex is an adenoviral vector (Ad) administered via a single injection into the tumor and engineered to express human IL-12 (hIL-12), a powerful cytokine that has demonstrated a targeted, anti-tumor immune response with the ability to activate and recruit killer T cells to the tumor site. The expression of hIL-12 is controlled and modulated with the RheoSwitch Therapeutic System (RTS) by the small molecule veledimex, an activator ligand which is taken by mouth and crosses the blood-brain barrier.

The Company reported that it is focusing its resources on studies of Controlled IL-12 in additional tumor types to demonstrate the value of this platform technology and, as a result, the Company is pausing plans for the pivotal trial in rGBM.

Combination Trial with OPDIVO (nivolumab) in rGBM Initiated. Ziopharm has initiated a trial of adult patients with rGBM to evaluate a single dose of Ad-RTS-hIL-12 plus daily veledimex for 15 days in combination with OPDIVO (nivolumab), an immune checkpoint inhibitor targeting programmed death-1 (PD-1). In January, the protocol for this first-ever dosing combination was finalized with the U.S. Food and Drug Administration (FDA), and since then the Company has been working with clinical trial sites. Ziopharm expects the first patient to be dosed in this trial in the second quarter.

Additional Oncology Indications to be Explored Including in Combination with Immune Checkpoint Inhibitors. The Company previously has presented compelling data demonstrating that Ad-RTS-hIL-12 plus veledimex can turn cold tumors hot by recruiting and activating a sustained immune response that favorably changes the tumor microenvironment in different tumor types. Therefore, Ziopharm plans to explore the potential of the Controlled IL-12 platform by combining it with immune checkpoint inhibitors in multiple tumor types in addition to rGBM later this year.

Pivotal Trial in rGBM Paused. Ziopharm is pausing plans for its pivotal randomized control trial for Ad-RTS-hIL-12 plus 20mg dose of veledimex for the treatment of rGBM. The Company is progressing in resolving previously disclosed technical requirements related to Chemistry and Manufacturing Control (CMC), making this asset phase-3 ready for rGBM.

Expansion Substudy Added to Phase 1 Trial in rGBM. Ziopharm is initiating an expansion substudy in its Phase 1 trial to evaluate Ad-RTS-hIL-12 plus veledimex as a monotherapy to treat patients with rGBM. The Company is adding patients who have not received steroids for four weeks prior and have not been treated with bevacizumab for their disease to the cohort receiving a 20mg dose of veledimex. Previously, the Company has shown improvement in survival benefit in patients who received Ad-RTS-hIL-12 plus 20mg of veledimex with no steroids or low-dose steroids. The data from these patients will help further understand the benefits of IL-12 as a single-agent.

Phase 1 for Pediatric Tumors Ongoing. Ziopharm is enrolling pediatric patients in its Phase 1 trial of Ad-RTS-hIL-12 with veledimex for the treatment of brain tumors at multiple U.S. sites.

ASCO 2018 Poster Title Announced. The company reported that a research poster entitled, "Demonstration of Anti-Tumor Immunity via Intratumoral Regulated Platform Ad-RTS-hIL-12 in Advanced Breast Cancer and Recurrent Glioblastoma Patients," has been accepted for presentation during the 2018 American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) annual meeting. The presentation is scheduled for the Developmental Therapeutics-Immunotherapy poster session on Monday, June 4, 8 to 11:30 a.m. CT in Hall A. Abstract details will be made public on May 16, per ASCO (Free ASCO Whitepaper) embargo rules.

Sleeping Beauty and Adoptive Cell Therapies

Using Ziopharm’s non-viral approach leveraging Sleeping Beauty platform to genetically modify cells, the Company is developing chimeric antigen receptor (CAR) T-cell (CAR-T) and T-cell receptor (TCR) T-cell (TCR-T) therapies. These programs are being advanced in collaboration with Precigen Inc., a wholly-owned subsidiary of Intrexon Corporation, and with MD Anderson Cancer Center, the National Cancer Institute and Merck KGaA, Darmstadt, Germany. This non-viral approach to genetically modifying T cells has the potential to reduce the costs of and expand access to this immunotherapy based on very rapid production and thus avoiding the need for centralized manufacturing.

Initiation of First Point-of-Care Clinical Trial Expected in Second Half of 2018. Ziopharm is advancing the Sleeping Beauty platform towards point-of-care manufacturing for the very rapid manufacturing of genetically modified CAR+ T cells, with Ziopharm’s first clinical trial utilizing this approach expected to begin in the second half of 2018. Ziopharm’s third-generation point-of-care trial intends to use the Sleeping Beauty platform to manufacture CAR+ T cells co-expressing membrane-bound interleukin-15, or mbIL15, within two days after genetically modifying T cells from the patient. The Company reported that the investigational new drug (IND) application has been submitted to the FDA by MD Anderson to initiate a Phase 1 trial to evaluate the point-of-care technology for the investigational treatment of CD19+ leukemia and lymphoma.

Phase 1 Trial of Sleeping Beauty-Modified TCRs to Treat Solid Tumors Expected to Initiate in Second Half of 2018. The NCI expects to initiate a Phase 1 trial in the second half of 2018 to evaluate adoptive cell transfer-based immunotherapies genetically modified using the Sleeping Beauty platform to express TCRs for the treatment of solid tumors. Ziopharm, Intrexon, and the NCI last year entered into a Cooperative Research and Development Agreement to develop and evaluate adoptive cell therapy for patients with advanced cancers using autologous peripheral blood lymphocytes genetically modified using the Sleeping Beauty system to express TCRs that recognize specific immunogenic mutations, or neoantigens, expressed within a patient’s solid tumor.

Phase 1 Trial of CD33-specific CAR+ T Therapy for Acute Myeloid Leukemia (AML). Enrollment is underway at MD Anderson in the Phase 1 adoptive cellular therapy clinical trial of CAR+ T-cell therapy in patients with refractory/recurrent AML that express CD33. This trial infuses autologous T cells genetically modified with lentivirus to express a CD33-specific CAR and a kill switch for elimination of genetically modified cells. Data from this trial are expected to serve as the basis for evaluating CD33 as a potential target for further development using non-viral manufacturing of T cells with Ziopharm’s point-of-care technology.

Corporate Update

Ziopharm appointed Robert Hadfield, who has financial, biotech and legal experience, to serve as general counsel. He joined the company from the Longwood Fund, a health care venture capital firm in Boston, and Flex Pharma before that, serving as general counsel in both. Mr. Hadfield received his J.D. from Georgetown University.

First-Quarter 2018 Financial Results

Net loss applicable to the common shareholders for the first quarter of 2018 was $21.1 million, or $(0.15) per share, compared to a net loss of $19.7 million, or $(0.15) per share, for the first quarter of 2017. The increased net loss is primarily due to a decrease in revenue recognized related to the implementation of ASU 2014-09 and an increase in operating expenses.
Research and development expenses were $10.2 million for the first quarter of 2018, compared to $12.0 million for the first quarter of 2017. The decrease in research and development expenses for the three months ended March 31, 2018 is primarily due to decreased manufacturing and preclinical activity related to our cell and gene therapy programs, as our trials prepare to be moved forward in the clinic.
General and administrative expenses were $6.2 million for the first quarter of 2018, compared to $3.6 million for the first quarter of 2017. The increase in general and administrative expenses for the three months ended March 31, 2018 is primarily due to severance and non-cash stock compensation expense.
The Company ended the quarter with unrestricted cash resources of approximately $51.1 million.
In addition, a prepayment of approximately $32.4 million remains for programs to be conducted by the Company at MD Anderson Cancer Center under the current Research and Development Agreement.
The Company believes its current resources will be sufficient to fund its currently planned operations into the second quarter of 2019.
Conference Call and Slide Webcast

Ziopharm will host a webcast and conference call today, May 10, at 4:30 p.m. ET. The call can be accessed by dialing 1-844-309-0618 (U.S. and Canada) or 1-661-378-9465 (international). The passcode for the conference call is 4857096. To access the slides and live webcast or the subsequent archived recording, visit the "Investors & Media" section of the Ziopharm website at www.ziopharm.com. The webcast will be recorded and available for replay on the Company’s website for two weeks.

On May 10, 2018 Athersys, Inc. (NASDAQ:ATHX) reported its financial results for the three months ended March 31, 2018 (Press release, Athersys, MAY 10, 2018, View Source [SID1234526466]).

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Highlights of the first quarter of 2018 and recent events include:

Completed a $21.1 million equity investment and announced plans to expand the HEALIOS K.K. ("Healios") collaboration by June 1, 2018. This proposed expansion includes a $10 million license fee funded in an escrow account and a potential additional $25 million of committed payments over time, as well as additional possible payments including milestones and royalties, if the collaboration is fully expanded in accordance with the letter of intent disclosed in March 2018;
Advanced our preparations for the MASTERS-2 Phase 3 registration study for ischemic stroke to enable initiation of this important study and supported the continued enrollment of Healios’ TREASURE study;
Progressed Phase 1/2 study evaluating MultiStem therapy in acute respiratory distress syndrome (ARDS) patients;
Announced plans with The University of Texas Health Science Center at Houston to conduct a Phase 2 clinical trial evaluating MultiStem cell therapy for early treatment and prevention of complications after severe traumatic injury;
Established a new equity facility with Aspire Capital Fund LLC, as a follow-on to a prior facility, providing the Company with access to additional capital as needed to support its ongoing operations;
Recognized revenues of $1.1 million for the quarter ended March 31, 2018 and a net loss of $10.2 million, or $(0.08) per share; and
Ended the 2018 first quarter with $49.7 million of cash and cash equivalents, excluding the $10 million in escrow from Healios related to the proposed collaboration expansion.
"We finished the first quarter in a strong financial position, with approximately $50 million on the balance sheet and look forward to building on that as we work to complete the expansion of our partnership with Healios," commented Dr. Gil Van Bokkelen, Chairman & CEO at Athersys. "As we and Healios recently disclosed, we have extended the timeline to complete the agreements to expand our collaboration until the end of May, and we are working together to achieve that goal.

"We are also focused on preparing for the upcoming initiation of our MASTERS-2 trial, while we continue to support the ongoing TREASURE trial in Japan," added Dr. Van Bokkelen. "In addition, we have been advancing our other clinical programs and broadening our portfolio of new opportunities, as evidenced by the recent announcement related to a clinical study in trauma. This represents another significant area of unmet clinical need that we are now well-positioned to pursue with funding support from the Medical Technology Enterprise Consortium and our collaborator, UTHealth," concluded Dr. Van Bokkelen.

First Quarter Results

Revenues decreased to $1.1 million for the three months ended March 31, 2018 compared to $1.5 million for the three months ended March 31, 2017 . Our revenues are comprised of revenue from manufacturing-related activities for Healios, royalty and related contract revenue from our collaboration with RTI Surgical, Inc. and grant revenue. Our revenue from Healios increased during the first quarter of 2018 compared to the prior year first quarter by approximately $0.3 million as we continue to supply clinical product to Healios and provide other manufacturing-related services, and we expect these revenues will be higher for the 2018 annual period as compared to the 2017 year. Regarding our royalty revenue, excluding a $1.0 million milestone payment from RTI in the 2017 first quarter, royalty revenues increased by approximately $0.2 million in the first quarter of 2018 as a result of an increase in the royalty rate that became effective late 2017 associated with our technology license to RTI. Grant revenue varies from period-to-period with new and completed grants, and the timing of grant-funded activities. Absent new grant awards, we expect our annual grant revenue to decline in 2018 from 2017 with the expiration of certain grant-funded programs.

Research and development expenses increased to $8.9 million for the three months ended March 31, 2018 from $5.6 million in the comparable period in 2017. The $3.3 million increase is primarily comprised of an increase in preclinical and clinical development costs of $2.7 million, an increase in personnel costs of $0.3 million, and an increase in internal research supplies and other research costs of $0.3 million. The increase in our clinical and preclinical costs is primarily a result of increased process development activities to support large-scale manufacturing and clinical product manufacturing costs during the period.

General and administrative expenses increased to $2.7 million for the three months ended March 31, 2018 from $2.1 million in the comparable period in 2017. The $0.6 million increase was due primarily to an increase of $0.3 million in professional fees and increases in personnel costs, stock-based compensation costs and other administrative costs compared to the same period last year.

Net loss was $10.2 million in 2018 compared to $5.6 million in 2017. The difference of $4.6 million reflects the above variances, as well as $0.4 million in insurance proceeds that we received this quarter, which were offset by a $0.7 million non-cash gain related to the fair value of our warrant liabilities recorded in the first quarter of 2017 for warrants that expired in 2017. The warrant issued in March 2018 to Healios in connection with its equity investment was treated as equity with its value recorded as additional paid-in capital with an offset in other current assets.

Net cash used in operating activities was $5.7 million for the three months ended March 31, 2018 and $5.4 million for the three months ended March 31, 2017, reflecting the increased net loss in the first quarter of 2018 (i.e., cash used to fund preclinical and clinical development activities) compared to the prior year period, as offset in part by proceeds received from Healios for our cost-share arrangement for clinical product supply and an increase in accounts payable due to service providers, such as contract manufacturers, under longer-term contracts. As of March 31, 2018, we had $49.7 million in cash and cash equivalents, compared to $29.3 million at December 31, 2017, which includes, among other things, the investment made by Healios in March 2018 and excludes the $10 million that Healios has funded into an escrow account to be released to us upon execution of the expansion agreements.

Conference Call

Gil Van Bokkelen, Chairman and Chief Executive Officer, and William (BJ) Lehmann, President and Chief Operating Officer, will host a conference call today to review the results as follows:

Date Thursday, May 10, 2018
Time 4:30 p.m. (Eastern Time)
Telephone access: U.S. and Canada 800-273-1254
Telephone access: International 973-638-3440
Access code 1189915
Live webcast www.athersys.com, under the Investors section
A replay will be available for on-demand listening shortly after the completion of the call until 11:59 PM Eastern Time on May 24, 2018 at the aforementioned URL, or by dialing (800) 585-8367 or (855) 859-2056 in the U.S. and Canada, or from abroad (404) 537-3406, and entering access code 1189915.

About MultiStem

MultiStem cell therapy is a patented regenerative medicine product in clinical development that has shown the ability to promote tissue repair and healing in a variety of ways, such as through the production of therapeutic factors produced in response to signals of inflammation and tissue damage. MultiStem therapy’s potential for multidimensional therapeutic impact distinguishes it from traditional biopharmaceutical therapies focused on a single mechanism of benefit. The therapy represents a unique "off-the-shelf" stem cell product that can be manufactured in a scalable manner, may be stored for years in frozen form, and is administered without tissue matching or the need for immune suppression. Based upon its efficacy profile, its novel mechanisms of action, and a favorable and consistent safety profile demonstrated in clinical studies, MultiStem therapy could provide a meaningful benefit to patients, including those suffering from serious diseases and conditions with unmet medical need.