On August 15, 2018 Neuralstem, Inc. (Nasdaq:CUR), a biopharmaceutical company focused on the development of nervous system therapies based on its neural stem cell and small molecule compound technologies, reported its financial results for the second quarter ended June 30, 2018 (Press release, Neuralstem, AUG 15, 2018, View Source [SID1234528876]).

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"We are pleased to report a productive second quarter of 2018 as we continue to advance our pipeline of innovative neural stem cell and small molecule therapies," said Jim Scully, interim Chief Executive Officer of Neuralstem. "We are especially excited about the advancement of our lead stem cell therapy candidate, NSI-566, into a Phase 2 trial in ischemic stroke, as well as its potential application to other areas of unmet medical need. Additionally, based on encouraging preclinical data, we look forward to exploring our small molecule NSI-189’s potential treatment applications, including Angelman Syndrome and Alzheimer’s Disease."

Clinical Highlights

NSI-566, is a spinal cord-derived neural stem cell line that is being evaluated to treat paralysis associated with stroke, Amyotrophic Lateral Sclerosis (ALS) and chronic spinal cord injury (cSCI). NSI-566 is Neuralstem’s lead stem cell therapy candidate.

In July, Neuralstem announced initiation of a Phase 2 clinical trial evaluating NSI-566 as a potential treatment for ischemic stroke. This trial, which will be a randomized, double-blind, controlled study, is based on the positive results from the open-label Phase 1 safety study and is intended to further test the safety and efficacy of NSI-566 to reverse paralysis in stroke patients where half of their body has been partially paralyzed. James Li, Ph.D., Executive Vice President of Asia Operations of Suzhou Neuralstem Ltd, will be managing this trial which will be taking place at Bayi Brain Hospital in Beijing, China, and commenced on August 1, 2018. In Phase 1, NSI-566 treatment of 9 chronically hemiparetic stroke patients resulted in statistically significant improvement from baseline of motor functioning and clinical status.

In June, the Company announced the results from a study published in Cell Stem Cell that support the potential therapeutic application of transplanted NSI-566 in patients with chronic spinal cord injury (cSCI). The manuscript, entitled "A First-in-Human, Phase I Study of Neural Stem Cell Transplantation for Chronic Spinal Cord Injury," presented a detailed analysis of motor and sensory function and electrophysiology results which showed improvement in three of the four patients after NSI-566 transplantation. The study’s primary objective was to evaluate the safety of NSI-566 transplantation in subjects with stable thoracic spinal cord injury, and additional endpoints measured included changes in neurologic deficits, neurophysiology, and neuropathic pain.

In May, the Company announced the results from a study published in the Annals of Clinical and Translational Neurology in a manuscript entitled "Long-term Phase 1/2 Intraspinal Stem Cell Transplantation Outcomes in Amyotrophic Lateral Sclerosis" that support the potential of transplanted human spinal cord-derived neural stem cells (HSSC) to stabilize functioning of ALS patients. The study evaluated the impact of HSSC transplantation on functional outcomes, as measured using the ALSFRS-R scale, and on a composite statistic that combined functional and survival outcomes. Results were evaluated against matched controls derived from two historical datasets and showed significantly better ALSFRS-R scores at 24 months, as well as the composite functional/survival score in subjects receiving HSSC. The ALS Functional Rating Scale-Revised (ALSFRS-R) is a validated questionnaire that measures physical function in performing activities of daily living (ADLs).
NSI-189, is a small molecule benzylpiperazine-aminopyridine, in clinical development for MDD and in preclinical development for Angelman syndrome, irradiation-induced cognitive impairment, Type 1 and Type 2 diabetes, and stroke.

In August, the Company announced it had been granted orphan drug designation by the FDA for the treatment of Angelman Syndrome. In pre-clinical models, NSI-189 has demonstrated the ability to restore long term potentiation (LTP), a measure of synaptic plasticity and an in vitro biomarker of memory. Angelman Syndrome (AS) is a rare congenital genetic disorder caused by a lack of function in the UBE3A gene on the maternal 15th chromosome. It affects approximately one in 15,000 people – about 500,000 individuals globally. Symptoms of AS include developmental delay, lack of speech, seizures, and walking and balance disorders. Patients with AS may never walk or speak and require life-long care. Life expectancy is normal which places a significant burden on patients and caregivers. There are currently no FDA-approved therapies for the treatment of Angelman syndrome. The FDA’s orphan-drug designation program provides special status and incentives to encourage the development of drugs for diseases affecting fewer than 200,000 people in the U.S. Orphan drug designation confers seven years of market exclusivity upon FDA approval, as well as other development incentives, such as tax credits related to clinical trial expenses, an exemption from the FDA-user fee and FDA assistance in clinical trial design.

In July, the Company presented preclinical data at the Alzheimer’s Association International Conference in Chicago, Illinois, demonstrating that oral administration of NSI-189 in a mouse model of Alzheimer’s Disease leads to a significant amelioration and/or improvement in cognition measures and anxiety. Results were presented in a poster titled ‘Effect of Neurogenic Compound NSI-189 on Indices of Cognition and Anxiety in a Mouse Model (5XFAD) of Alzheimer’s Disease.’ The study was carried out by Dr. Corinne Jolivalt’s laboratory at the University of California, San Diego, and found that treatment with NSI-189 significantly improved learning ability as well as retention, short-term memory and anxiety levels of mice.
Corporate Highlights

Effective August 1, Jim Scully was appointed as interim chief executive officer by the Board of Directors. Mr. Scully succeeds Mr. Rich Daly, former Neuralstem president and chief executive officer. Mr. Scully brings to Neuralstem a wealth of experience from a range of senior executive roles in the pharmaceutical and broader healthcare industry, including leadership roles in financial and strategic planning, global business development and general management at Takeda Pharmaceuticals, Astellas Pharmaceuticals, Abbott Laboratories and Walgreens.

Also, effective August 1, the Board of Directors appointed William Oldaker as Chairman of the Board. Mr. Oldaker has served as a director of Neuralstem since April 2007. Additionally, he is a founder and partner in the Washington, D.C. law firm, Oldaker & Willison PLLP, and is a member of the Colorado, D.C. and Iowa Bar Associations, the Bar Association for the Court of Appeals, D.C., and the Bar of the United States Supreme Court.
Financial Results for the Quarter Ended June 30, 2018

Cash Position and Liquidity: At June 30, 2018, cash and investments was $7.1 million as compared to $9.7 million at March 31, 2018. The $2.6 million decrease reflects a $0.6 million loss for the period adjusted for certain non-cash items including a $1.4 million gain related to the change in fair value of our liability classified warrants, $760,000 net cash outflows related to changes in operating assets and liabilities, and $200,000 of share-based compensation. The Company expects its existing cash, cash equivalents and short-term investments to fund its operations based on its current operating plans, into the first quarter of 2019.

Operating Loss: Operating loss for the second quarter ended June 30, 2018 was $2.0 million compared to a loss of $4.2 million for the comparable period of 2017. Operating loss for the six months ended June 30, 2018 was $4.4 million compared to a loss of $8.5 million for comparable period of 2017.

The decrease in operating loss for both the three- and six-month periods was primarily related to decreases in clinical trial and related costs due to the completion of the NSI-189 Phase 2 clinical trial, decreases in personnel, facility and related expenses due to ongoing corporate restructuring and cost reduction efforts offset by revenues from a milestone-based royalty and reimbursements under a National Institute of Health (NIH) grant.

Net Loss: Net loss for the second quarter ended June 30, 2018 was $0.6 million, or $0.04 per share (basic), compared to a loss of $4.6 million, or $0.39 per share (basic), for the comparable period of 2017. The decrease in net loss was primarily due to a decrease in operating loss and the non-cash charges related to the change in the fair value of liability classified warrants.

Net loss for the six months ended June 30, 2018 was $2.8 million, or $0.18 per share (basic), compared to a loss of $12.2 million, or $1.06 per share (basic), for the comparable period of 2017. The decrease in net loss was primarily due to a decrease in operating loss and the non-cash charges related to the change in the fair value of liability classified warrants and warrant inducement expenses in the 2017 period and a decrease in interest expense related to our long-term debt which matured in April 2017.

Research and Development Expenses: The $1.0 million of research and development expenses for the quarter ended June 30, 2018 represents a $1.6 million, or 61% decrease over the comparable period of 2017. This decrease was primarily attributable to a $710,000 decrease in personnel and facility expenses due to ongoing corporate restructuring and cost reduction efforts, a $310,000 decrease in clinical trial and related costs due to the completion of our NSI-189 Phase 2 clinical trial and a $410,000 decrease in non-cash share-based compensation expense along with $90,000 of reimbursements under a NIH grant.

The $2.2 million of research and development expenses for the six months ended June 30, 2018 represents a $3.3 million, or 60% decrease over the comparable period of 2017. This decrease was primarily attributable to a $1.8 million decrease in personnel and facility expenses due to ongoing corporate restructuring and cost reduction efforts, a $540,000 decrease in clinical trial and related costs due to the completion of the NSI-189 Phase 2 clinical trial, a $720, 000 decrease in our non-cash share-based compensation expense along with $180,000 of reimbursements under a NIH grant.

General and Administrative Expenses: The $1.3 million of general and administrative expenses for the second quarter ended June 30, 2018 represents a $380,000, or 23% decrease over the comparable period of 2017. This decrease was primarily attributable to a $400,000 decrease in payroll and related expenses due to corporate restructuring and cost reduction efforts coupled with a $40,000 decrease in non-cash share-based compensation expense partially offset by a $70,000 increase in tax and insurance expenses.

The $2.4 million of general and administrative expenses for the six months ended June 30, 2018 represents a $530,000, or 18% decrease over the comparable period of 2017. This decrease was primarily attributable to a $560,000 decrease in payroll and related expenses coupled with a $40,000 decrease in consulting and professional service expenses due to corporate restructuring and cost reduction efforts partially offset by a $90,000 increase in our tax and insurance expenses.

On August 15, 2018 Genprex, Inc. (NASDAQ:GNPX), a clinical stage gene therapy company developing a new approach to treating cancer based upon a novel proprietary technology platform, reported a clinical and corporate update, and the filing of quarterly results for the second quarter ended June 30, 2018 on Form 10-Q with the Securities and Exchange Commission (Press release, Genprex, AUG 15, 2018, View Source [SID1234528893]).

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Rodney Varner, Chairman and CEO, remarked, "We have made significant progress in recent months to advance the development of Oncoprex for treatment of non-small cell lung cancer (NSCLC), including engaging collaborators with expertise and other resources necessary for important pre-clinical and clinical services. We also obtained an additional $10 million in capital, which provides additional financial resources to position the Company to achieve its critical milestones in its path toward developing and commercializing Oncoprex. "

Julien L. Pham, MD, MPH, President and Chief Operating Officer, stated, "We are moving toward resuming enrollment in the Phase I/II clinical evaluating the combination of Oncoprex and erlotinib (Tarceva) for the treatment of Stage IV non-small cell lung cancer (NSCLC), adding an additional preclinical trial to study Oncoprex in combination with immunotherapies, and progressing with manufacturing scale-up."

Clinical Development Highlights (May 2018 to present)

Selected Accenture to provide clinical data management services to help accelerate the clinical development of Genprex’s lead drug candidate, Oncoprex.
Entered an agreement to use WIRB-Copernicus Group (WCG) to provide site selection and feasibility services, including Institutional Review Board (IRB) and Institutional Biosafety Committee (IBC) oversight for new clinical trial sites that Genprex anticipates adding to participate in its Phase I/II clinical trial evaluating the combination of OncoprexTM and erlotinib (Tarceva) in NSCLC.
Selected 4Clinics as a CRO to provide clinical and regulatory support for the clinical development program in the form of biostatistics, statistical programming and analysis, as well as medical and scientific writing for the Phase I/II clinical trial.

Entered an agreement with The University of Texas MD Anderson Center under which Genprex is sponsoring a pre-clinical study intended to develop a novel therapeutic approach for the treatment of cancer using a combination of the multifactorial tumor suppressor gene TUSC2 and immunotherapy, including the immune checkpoint inhibitors anti-PD1 and/or anti CTLA-4. This study will include the identification of biomarkers to predict the response to TUSC2-immunotherapy combinations.
Amended its agreement with The University of Texas MD Anderson Cancer Center to resume patient enrollment in its Phase I/II trial evaluating the combination of Oncoprex and erlotinib (Tarceva) for the treatment of Stage IV non-small cell lung cancer (NSCLC).
Corporate Update

Entered an agreement with the University of Texas at Austin Dell Medical School to establish executive offices at the school’s Health Discovery Building, joining the WorkSpaces @ Texas Health CoLab. WorkSpaces @ Texas Health CoLab is designed to identify and support people and companies that share Dell Medical School’s commitment to improving health outcomes to patients and reducing healthcare costs.
Established offices in Cambridge, MA, where Dr. Julien Pham, President and COO will oversee the clinical development of Genprex’s lead drug candidate, Oncoprex.
Completed a $10 million private placement.
Forward Looking Statements

Statements contained in this press release that are not statements of historical facts are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Because these statements are subject to risks and uncertainties, the actual results may differ materially from those expressed or implied by such forward-looking statements. Such statements include, but are not limited to, statements about Genprex’s business plans, statements about the timing and success of the Company’s existing and planned clinical trials, statements about the development of the Company’s current and potential future product candidates, statements about the Company’s plans to seek regulatory approval of its product candidates, and statements about the services the Company expects to receive from its development partners and the effect of those services on the development of Oncoprex. Risks that contribute to the uncertain nature of the forward-looking statements include: the success, cost and timing of the Company’s product candidate development activities and current and planned clinical trials; the Company’s ability to execute on its strategy; regulatory developments in the United States and foreign countries; the Company’s estimates regarding expenses, future revenue and capital requirements; and the ability of the Company’s development partners to provide services to the Company and the Company’s ability to utilize those services, and the ability of those services to influence the development of Oncoprex. These and other risks and uncertainties are described more fully under the caption "Risk Factors" and elsewhere in Genprex’s filings and reports with the United States Securities and Exchange Commission. All forward-looking statements contained in this press release speak only as of the date on which they were made. Genprex does not undertake any obligation to update these statements to reflect any events that occur or facts that exist after the date on which the statements were made.

On August 14, 2018 Ohr Pharmaceutical, Inc. (Nasdaq: OHRP), a pharmaceutical company developing therapies for ophthalmic diseases, reported financial results for its fiscal third quarter ended June 30, 2018 (Press release, Ohr Pharmaceutical, AUG 14, 2018, View Source [SID1234528877]).

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"We continue to work with our advisor to pursue strategic alternatives with the goal of maximizing shareholder value," said Dr. Jason Slakter, chief executive officer of Ohr Pharmaceutical. "We look forward to updating the market on our progress."

Financial Results for the Third Quarter ended June 30, 2018

For the quarter ended June 30, 2018, the Company reported a net loss of approximately $0.5 million, or ($0.01) per share, compared to a net loss of approximately $3.9 million, or ($0.07) per share in the same period of 2017.
For the quarter ended June 30, 2018, total operating expenses were approximately $1.2 million, consisting of $0.8 million in general and administrative expenses, $0.1 million of research and development expenses, and $0.3 million in depreciation and amortization. This compares to total operating expenses of $3.9 million in the same period of 2017, consisting of $1.4 million in general and administrative expenses, $2.2 million of research and development expenses, and $0.3 million in depreciation and amortization.
At June 30, 2018, the Company had cash and cash equivalents of approximately $4.4 million, compared to cash and equivalents of approximately $12.8 million at September 30, 2017.
Financial Results for the Nine Months Ended June 30, 2018

For the nine months ended June 30, 2018, the Company reported a net loss of approximately $6.9 million, or ($0.12) per share, compared to a net loss of approximately $18.6 million, or ($0.45) per share in the same period of 2017.
For the nine months ended June 30, 2018, total operating expenses were approximately $7.5 million, consisting of $2.9 million in general and administrative expenses, $4.2 million of research and development expenses, $0.8 million in depreciation and amortization, $0.7 million in impairment of goodwill, and $1.2 million in gain on settlement of accounts payable and long term liabilities. This compares to total operating expenses of $18.5 million in the same period of 2017, comprised of approximately $4.6 million in general and administrative expenses, $13.2 million in research and development expenses, $0.9 million in depreciation and amortization, and $0.1 million in gain on settlement of accounts payable.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:
This news release contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are made only as the date thereof, and we undertake no obligation to update or revise the forward-looking statement whether as a result of new information, future events or otherwise. Our actual results may differ materially and adversely from those expressed in any forward-looking statements as a result of various factors and uncertainties, including our ability to identify, execute and conclude any strategic alternatives to maximize shareholder value, the financial resources available to us and risk that we may not be able to obtain sufficient funding as needed and as a result be forced to cease operations and liquidate, the ability to negotiate and conclude a strategic partnership, the future success of any scientific studies, our ability to successfully develop products, rapid technological change in our markets, changes in demand for any future products, legislative, regulatory and competitive developments, uncertainty related to our ability to continue as a going concern, the impact of significant reductions in our operations, our ability to maintain compliance with the Nasdaq Capital Market continued listing standards and policies and to maintain the listing and trading of our common stock on a national securities exchange, and general economic conditions. Our most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q discuss some of the important risk factors that may affect our business, results of operations and financial condition.

On August 14, 2018 Sophiris Bio Inc. (NASDAQ: SPHS) (the "Company" or "Sophiris"), a biopharmaceutical company studying topsalysin (PRX302), a first-in-class, pore-forming protein, in late stage clinical trials for the treatment of patients with urological diseases, reported financial results for the second quarter 2018 and recent corporate highlights (Press release, Sophiris Bio, AUG 14, 2018, View Source [SID1234528933]).

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"In the second quarter, we announced top-line interim safety and biopsy data following a single administration of topsalysin from our ongoing Phase 2b clinical trial in low to intermediate risk localized prostate cancer," said Randall E. Woods, president and CEO of Sophiris. "The 29% (10/35 patients) clinical response rate we observed was extremely encouraging and provides the foundation for the next stage of development. We and our scientific advisors believe the initial data support advancing topsalysin for the treatment of localized prostate cancer into potential registration trials, and we will continue to evaluate the merits of administering a second dose. Looking ahead for the rest of the year, we are continuing our manufacturing activities to ensure drug supply for potential Phase 3 trials, we plan to advance dialogue with the regulatory agencies around a potential Phase 3 trial design in patients with localized prostate cancer and, once available, we will evaluate safety and biopsy data from the patients who received a second administration of topsalysin."

Second Quarter Corporate Highlights:

Positive top-line interim results from Phase 2b trial in localized prostate cancer. On June 25, the Company announced top-line safety and six month follow-up biopsy data from 35 patients with pre-identified, clinically-significant localized prostate cancer that were treated with a single administration of topsalysin.

Safety analysis, following a single administration of topsalysin in this study indicates that, to date, topsalysin has been well-tolerated; no hypersensitivity reactions or other serious systemic reactions to study medication have been observed after a single administration.

Based on the six-month follow-up biopsy results, 29% of patients (10/35) demonstrated a clinical response. Of the 10 clinical responders in the Phase 2b trial, six patients experienced a complete ablation with no histological evidence of the targeted tumor remaining. In addition, 37% of patients (13/35) experienced a partial response, but the targeted lesion was still deemed clinically-significant based on the targeted biopsy.

Two additional patients have received six-month follow-up biopsies following their first administration of topsalysin. The Company expects to report updated data following receipt of the results of these biopsies.

Independent Data Monitoring Committee recommendation to continue clinical trial as planned. In May 2018, an Independent Data Monitoring Committee (IDMC) met to review the safety data from all 38 patients administered a single dose of topsalysin as well the safety data available from the first seven patients who received a second administration of topsalysin. At that time, the IDMC unanimously recommended the clinical trial continue without changes to the protocol.

Second administration completed in Phase 2b trial. The Phase 2b study was designed to include an option to re-treat patients who did not have any clinically-significant adverse events and who responded to the first administration of topsalysin but still had a targeted lesion remaining.

Eleven patients received a second administration of topsalysin in the Phase 2b clinical trial. The eleventh patient died on the same day he received a second administration of topsalysin. The death did not occur during the procedure. As a precaution, Sophiris elected to halt further re-administration and no additional patients have received a second administration of topsalysin in the Phase 2b clinical trial. The event is under active review.

The Company expects to have six month follow-up biopsy results and additional safety data from all patients who received a second administration of topsalysin in its ongoing Phase 2b trial in localized prostate cancer patients late in the fourth quarter of 2018.

Financial Results:

At June 30, 2018, the Company had cash, cash equivalents and securities available-for-sale of $18.5 million and working capital of $14.1 million. The Company expects that its cash and cash equivalents will be sufficient to fund its operations through June 2019, assuming no new clinical trials are initiated. The Company will require significant additional funding to advance topsalysin in clinical development. As of June 30, 2018, the outstanding principal balance of our term loan was $7 million on which the Company is currently making monthly interest only payments.

For the three months ended June 30, 2018

The Company reported a net loss of $6.1 million or ($0.20) per share for the three months ended June 30, 2018, compared to net income of $0.6 million or $0.02 per share for the three months ended June 30, 2017. The net income for the three months ended June 30, 2017 was driven by a non-cash gain related to the revaluation of the Company’s warrant liability. See an additional discussion below related to this item.

Research and development expenses

Research and development expenses were $3.6 million for the three months ended June 30, 2018, compared to $1.4 million for the three months ended June 30, 2017. The increase in research and development costs is primarily attributable to increases in the costs associated with manufacturing activities for topsalysin, and to a lesser extent, an increase in clinical costs associated with our Phase 2b clinical trial of topsalysin for the treatment of localized prostate cancer.

General and administrative expenses

General and administrative expenses were $1.1 million for the three months ended June 30, 2018, compared to $1.4 million for the three months ended June 30, 2017. The decrease in general and administrative expense is primarily due to decreases in non-cash stock-based compensation expense and consulting services.

Gain (loss) on revaluation of the warrant liability

Loss on revaluation of the warrant liability was $1.4 million for the three months ended June 30, 2018, compared to a gain of $3.3 million for the three months ended June 30, 2017. As these warrants may require the Company to pay the warrant holder cash under certain provisions of the warrant, the Company accounts for these warrants as a liability, and the Company is required to calculate the fair value of these warrants each reporting date. The non-cash loss reported for the three months ended June 30, 2018, is associated with a increase in the fair value of the Company’s warrant liability from March 31, 2018, to June 30, 2018, which is calculated using a Black-Scholes pricing model. Certain inputs utilized in the Company’s Black-Scholes fair value calculation may fluctuate in future periods based upon factors which are outside of the Company’s control. A significant change in one or more of these inputs used in the calculation of the fair value may cause a significant change to the fair value of the Company’s warrant liability, which could also result in a material non-cash gain or loss being reported in the Company’s consolidated statement of operations and comprehensive loss.

For the six months ended June 30, 2018

The Company reported a net loss of $9.4 million or ($0.31) per share for the six months ended June 30, 2018 compared to a net loss of $2.0 million or ($0.07) per share for the six months ended June 30, 2017.

Research and development expenses

Research and development expenses were $6.9 million for the six months ended June 30, 2018 compared to $2.6 million for the six months ended June 30, 2017. The increase in research and development costs is primarily attributable to increases in the costs associated with manufacturing activities for topsalysin, and to a lesser extent, an increase in clinical costs associated with our Phase 2b clinical trial of topsalysin for the treatment of localized prostate cancer.

General and administrative expenses

General and administrative expenses were $2.3 million for the six months ended June 30, 2018 compared to $2.7 million for the six months ended June 30, 2017. The decrease in general and administrative expense is primarily due to decreases in non-cash stock-based compensation expense and consulting services.

Gain (loss) on revaluation of the warrant liability

Loss on revaluation of the warrant liability was $10 thousand for the six months ended June 30, 2018 as compared to a gain of $3.2 million for the six months ended June 30, 2017. The non-cash loss reported for the six months ended June 30, 2018, is associated with an increase in the fair value of our warrant liability from December 31, 2017 to June 30, 2018.

On August 14, 2018 Agilent Technologies, Inc. (NYSE: A) reported revenue of $1.20 billion for the third quarter ended July 31, 2018, up 8 percent year over year (up 6 percent on a core basis(1)) (Press release, Agilent, AUG 14, 2018, http://www.agilent.com/about/newsroom/presrel/2018/14aug-gp18051.html [SID1234529003]).

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Third-quarter GAAP net income was $236 million, or $0.73 per share. Last year’s third-quarter GAAP net income was $175 million, or $0.54 per share.

During the third quarter, Agilent had intangible amortization of $26 million, acquisition and integration costs of $7 million, transformational initiatives of $4 million, business exit and divestitures of $1 million, $20 million of step-up gain on our initial Lasergen investment, and $5 million in other costs. Excluding these items and a tax benefit of $42 million, Agilent reported third-quarter non-GAAP net income of $217 million, or $0.67 per share(2), up 14 percent year over year.

"The Agilent team continues to capitalize on healthy end markets and delivered another strong quarter," said Mike McMullen, Agilent CEO and president. "Both earnings and revenue growth, led by China and the global pharma and chemical & energy end markets, exceeded expectations. In addition, we achieved our 14th consecutive quarter of improving our year-over-year core operating margins."

"We put our strong balance sheet to work creating value for shareholders and customers," McMullen continued. "We repurchased $243 million in shares, paid $48 million in dividends, and invested $430 million in M&A."

Financial Highlights

Third-quarter revenue of $540 million from Agilent’s Life Sciences and Applied Markets Group (LSAG) grew 6 percent year over year (up 5 percent on a core basis(1)) with strength in the chemical & energy and pharma end markets. LSAG’s operating margin for the quarter was 22.9 percent.

Third-quarter revenue of $426 million from the Agilent CrossLab Group (ACG) grew 10 percent year over year (up 8 percent on a core basis(1)). Both services and consumables saw strong growth across all end markets and geographies. ACG’s operating margin for the quarter was 23.8 percent.

Third-quarter revenue of $237 million from Agilent’s Diagnostics and Genomics Group (DGG) grew 9 percent year over year (up 5 percent on a core basis(1)). Strength in genomics and China led the results. DGG’s operating margin for the quarter was 18.5 percent.

Agilent expects fourth-quarter 2018 revenue in the range of $1.24 billion to $1.26 billion. Fourth-quarter 2018 non-GAAP earnings are expected to be in the range of $0.72 to $0.74 per share(3).

For fiscal year 2018, Agilent expects revenue of $4.86 billion to $4.88 billion and non-GAAP earnings of $2.69 to $2.71 per share(3). The guidance is based on July 31, 2018 currency exchange rates.

Conference Call

Agilent’s management will present more details about its third-quarter fiscal 2018 financial results on a conference call with investors today at 1:30 p.m. (Pacific Time). This event will be webcast live in listen-only mode. Listeners may log on at www.investor.agilent.com and select "Q3 2018 Agilent Technologies Inc. Earnings Conference Call" in the "News & Events — Calendar of Events" section. The webcast will remain available on the company’s website for 90 days.

Additional information regarding financial results can be found at www.investor.agilent.com by selecting "Financial Results" in the "Financial Information" section.

A telephone replay of the conference call will be available at approximately August 14, 2018 at 4:30 PM (Pacific Time) after the call and through August 22 by dialing +1 855-859-2056 (or +1 404-537-3406 from outside the United States) and entering pass code 3179138.

The adjustment for taxes excludes tax benefits that management believes are not directly related to on-going operations and which are either isolated or cannot be expected to occur again with any regularity or predictability. For the three and nine months ended July 31, 2018, management uses a non-GAAP effective tax rate of 18.0%. In the same periods last year, management used a non-GAAP effective tax rate of 16.2% and 18.0%, respectively.
We provide non-GAAP net income and non-GAAP net income per share amounts in order to provide meaningful supplemental information regarding our operational performance and our prospects for the future. These supplemental measures exclude, among other things, charges related to amortization of intangibles, business exit and divestiture costs, transformational initiatives, acquisition and integration costs, pension settlement gain, gain on step acquisition of Lasergen, NASD site costs, special compliance costs, and adjustment for Tax Reform.
Business exit and divestiture costs include costs associated with business divestitures.
Transformational initiatives include expenses associated with targeted cost reduction activities such as manufacturing transfers including costs to move manufacturing due to new tariffs and tariff remediation actions, small site consolidations, legal entity and other business reorganizations, insourcing or outsourcing of activities. Such costs may include move and relocation costs, one-time termination benefits and other one-time reorganization costs. Included in this category are also expenses associated with company programs to transform our product lifecycle management (PLM) system, human resources and financial systems.
Acquisition and Integration costs include all incremental expenses incurred to effect a business combination. Such acquisition costs may include advisory, legal, accounting, valuation, and other professional or consulting fees. Such integration costs may include expenses directly related to integration of business and facility operations, the transfer of assets and intellectual property, information technology systems and infrastructure and other employee-related costs.
Pension settlement gain resulted from transfer of the substitutional portion of our Japanese pension plan to the government.
Gain on step acquisition of Lasergen resulted from the measurement at fair value of our equity interest held at the date of business combination.
NASD site costs include all the costs related to the expansion of our manufacturing of nucleic acid active pharmaceutical ingredients incurred prior to the commencement of commercial manufacturing.
Special compliance costs include costs associated with transforming our processes to implement new regulations such as the EU’s General Data Protection Regulation (GDPR), revenue recognition and certain tax reporting requirements.
Other includes certain legal costs and settlements in addition to other miscellaneous adjustments.
Adjustment for Tax Reform primarily consists of an estimated provision of $480 million for U.S. transition tax and correlative items on deemed repatriated earnings of non-U.S. subsidiaries and an estimated provision of $53 million associated with the decrease in the U.S. corporate tax rate from 35% to 21% and its impact on our U.S. deferred tax assets and liabilities. The taxes payable associated with the transition tax, net of tax attributes, on deemed repatriation of foreign earnings is approximately $440 million, payable over 8 years. The final impact of Tax Reform may differ materially from these estimates, due to, among other things, changes in interpretations, analysis and assumptions made, additional guidance that may be issued, and actions that we may undertake.
Our management uses non-GAAP measures to evaluate the performance of our core businesses, to estimate future core performance and to compensate employees. Since management finds this measure to be useful, we believe that our investors benefit from seeing our results "through the eyes" of management in addition to seeing our GAAP results. This information facilitates our management’s internal comparisons to our historical operating results as well as to the operating results of our competitors.
Our management recognizes that items such as amortization of intangibles can have a material impact on our cash flows and/or our net income. Our GAAP financial statements including our statement of cash flows portray those effects. Although we believe it is useful for investors to see core performance free of special items, investors should understand that the excluded items are actual expenses that may impact the cash available to us for other uses. To gain a complete picture of all effects on the company’s profit and loss from any and all events, management does (and investors should) rely upon the GAAP income statement. The non-GAAP numbers focus instead upon the core business of the company, which is only a subset, albeit a critical one, of the company’s performance.
Readers are reminded that non-GAAP numbers are merely a supplement to, and not a replacement for, GAAP financial measures. They should be read in conjunction with the GAAP financial measures. It should be noted as well that our non-GAAP information may be different from the non-GAAP information provided by other companies.
The preliminary non-GAAP net income and diluted EPS reconciliation is estimated based on our current information.

We compare the year-over-year change in revenue excluding the effect of recent acquisitions and divestitures and foreign currency rate fluctuations to assess the performance of our underlying business.
(a) The constant currency year-over-year growth percentage is calculated by recalculating all periods in the comparison period at the foreign currency exchange rates used for accounting during the last month of the current quarter, and then using those revised values to calculate the year-over-year percentage change.
(b) The dollar impact from the current quarter currency impact is equal to the total year-over-year dollar change less the constant currency year-over-year change.
The preliminary reconciliation of GAAP revenue adjusted for recent acquisitions and divestitures and impact of currency is estimated based on our current information.