On August 7, 2018 Aileron Therapeutics (Nasdaq:ALRN), the clinical-stage leader in the field of stapled peptide therapeutics for cancers and other diseases, reported business highlights and financial results for the second quarter ended June 30, 2018 (Press release, Aileron Therapeutics, AUG 7, 2018, View Source;p=RssLanding&cat=news&id=2362608 [SID1234528618]). ALRN-6924 is a first-in-class stapled peptide designed to reactivate wild-type p53 tumor suppression in solid and liquid tumors. "In our clinical and preclinical programs to-date, ALRN-6924 has been shown to act on-target and to have antitumor activity. Further, in the second quarter, we completed a number of preclinical in-vivo studies with ALRN-6924 in combination with CDK4/6 inhibitors, IO drugs, and chemotherapeutic agents in solid and liquid tumors," said Manuel Aivado, SVP, CSO and CMO of Aileron. "It was gratifying to see impressive complementary activity between ALRN-6924 and a number of cancer therapeutics in these models. These studies are the basis of four preclinical abstracts that we expect to present at scientific meetings in the fourth quarter of this year." "The results of these preclinical studies increase our confidence in the potential of ALRN-6924 as a combination therapy," said John Longenecker, Aileron CEO. "In addition to our ongoing clinical programs, and informed by these preclinical studies, we look forward to initiating clinical trials of ALRN-6924 in combination with both generic and proprietary anticancer drugs within the next six to 12 months, subject to the results of our ongoing research, partnering discussions and obtaining additional funding."

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ALRN-6924 Program Updates

Enrollment Ongoing in Phase 2a Trial with ALRN-6924 in Peripheral T-Cell Lymphoma
Aileron is conducting a Phase 2a open-label, multi-center trial of ALRN-6924 as a monotherapy in patients with relapsed or refractory peripheral T-cell lymphoma (PTCL). The Company is enrolling patients in an expansion cohort to determine if more frequent dose intensity (days 1, 3, and 5 in a 21-day cycle vs. days 1,8, and 15 in a 28-day cycle) can provide an increased benefit to patients. Interim data from our QW (1,8, and 15) dosing schedule have shown response rates that we believe are similar to those of currently prescribed drugs in this indication. Additional interim data from this trial are expected to be presented at a major medical conference in the fourth quarter of 2018.
Phase 1 and 1b Studies in AML and MDS
Aileron is conducting Phase 1 and 1b open-label, multi-center dose-escalation clinical trials of ALRN-6924 as a monotherapy and in combination with cytosine arabinoside (Ara-C) for the treatment of acute myeloid leukemia (AML) and myelodysplastic syndrome (MDS). In the Phase 1 monotherapy trial, the Company is currently testing patients with ALRN-6924 (starting at 2.7 mg/kg) three times per week for two consecutive weeks, followed by one week off, in a 21-day cycle. In this arm of the trial, after the first cohort of three patients cleared safety review committee oversight at the 2.7 mg/kg dose, three new patients were enrolled at 3.8 mg/kg, the next dose level per protocol. One of those three patients died of tumor lysis syndrome related to treatment with ALRN-6924. The Company has reported the death to the FDA, and since the death, has dosed an additional three patients at the 2.7 mg/kg dose level as per trial protocol. The Company plans to continue to enroll patients in the trial. The Company also has initiated an expansion cohort of its Phase 1b trial for MDS patients, testing ALRN-6924 in combination with Ara-C, in the third quarter of 2018. The Company plans to report interim data from its AML/MDS trials at a major medical conference in the fourth quarter, including data from the MDS expansion cohort.

Pipeline products
Aileron has initiated additional preclinical work within and outside of the therapeutic area of oncology and believes its technology to be well-suited to address heretofore undruggable targets. The company is committed to fully exploring the utility of its stapled peptide technology.
Corporate Update

Company to Present at Upcoming Scientific and Investor Conferences
The Company plans to participate at upcoming investor conferences, including the Canaccord Genuity 38th Annual Growth Conference (Aug. 8-9, Boston). Aileron also expects to present abstracts in the fourth quarter at venues that may include the 60th ASH (Free ASH Whitepaper) Annual Meeting in San Diego (12-1 thru 4), the 30th EORTC-NCI-AACR (Free EORTC-NCI-AACR Whitepaper) Symposium in Dublin (11-13 thru 16), SITC (Free SITC Whitepaper) 2018 in Washington D.C. (ll-7 thru 11), and the San Antonio Breast Cancer Symposium in San Antonio (12-4 thru 8).

CEO Search ongoing
John P. Longenecker, Ph.D. was named interim Chief Executive Officer on May 15, 2018. Aileron is actively engaged in a process to appoint a new CEO.
Moving to New Built-to-Suit Facility
Aileron plans to move to a new built-to-suit lab and office facility at 490 Arsenal Way in Watertown, MA in the third quarter of 2018.
Second Quarter 2018 Financial Results

Cash Position and Guidance: Cash, cash equivalents and investments as of June 30, 2018 were $35.8 million, compared to $50.8 million as of December 31, 2017. The Company believes that its cash, cash equivalents and investments as of June 30, 2018 will enable the Company to fund its operating expenses and capital expenditure requirements into the second half of 2019.

R&D Expenses: Research and development (R&D) expenses were $5.3 million for the three months ended June 30, 2018, compared to $3.2 million for the same period in 2017 and $10.2 million for the six months ended June 30, 2018 compared to $6.1 million for the same period in 2017. The increase in R&D expense for both the three and six months ended June 30, 2018 was primarily driven by increased activity in the Company’s non-clinical research and increases in clinical personnel expense. The Company expects R&D expenses to continue to increase as it advances its ALRN-6924 and other programs and hires additional R&D personnel.

G&A Expenses: General and administrative (G&A) expenses were $4.3 million in the three months ended June 30, 2018, compared to $1.8 million for the same period in 2017 and $7.3 million for the six months ended June 30, 2018 compared to $3.4 million for the same period in 2017. Approximately $1.1 million of the increased expense during the three and six months ended June 30, 2018 was due to charges in connection with a separation agreement with our former Chief Executive Officer. Of this $1.1 million charge, approximately $0.5 million is a salary continuation charge and $0.6 million resulted from a non-cash charge for stock option modifications. The remaining increase in G&A expenses for both the three and six-month periods ended June 30, 2018 was primarily due to increases in personnel related costs, higher legal fees in connection with our anticipated facility relocation in third quarter 2018, increased insurance costs associated with being a public company, and increased non-cash stock compensation costs. The Company expects G&A expenses to increase slightly in the future as it hires additional personnel to support the Company’s anticipated growth in its research and development activities.

Stock-based compensation: Stock-based compensation expense included in research and development expense and general and administrative was $1.3 million for the three months ended June 30, 2018 compared to $0.3 million for the same period in 2017. The increase of $1.0 million is attributable to stock option modification charges of $0.6 million and the effect of stock option grants made over the past twelve months.

Net Loss: The Company reported a net loss attributable to common stockholders of $9.5 million in the three months ended June 30, 2018 compared to $4.9 million for the same period in 2017 and a net loss of $17.1 million and $9.5 million for the six months ended June 30, 2018 and 2017, respectively. Based on the Company’s weighted average shares outstanding, the Company reported a net loss attributable to common stockholders of $0.64 per share in the three months ended June 30, 2018, compared to $10.98 per share for the same period in 2017 (prior to the conversion of preferred stock to common), and a net loss of $1.16 per share for the six months ended June 30, 2018 compared to $21.56 per share for the same period in 2017 (prior to the preferred stock conversion to common).

A reconciliation of GAAP to non-GAAP financial measures has been provided in the table included below in this press release. An explanation of these measures is also included below under the heading "Non-GAAP Financial Measures."

Shares Outstanding: As of June 30, 2018, there were 14.7 million shares of common stock outstanding.

About ALRN-6924

ALRN-6924 is a first-in-class product candidate designed to reactivate wild type p53 tumor suppression by disrupting the interactions between the two primary p53 suppressor proteins, MDMX and MDM2. Aileron believes ALRN-6924 is the first and only product candidate in clinical development that can equipotently bind to and disrupt the interaction of MDMX and MDM2 with p53. ALRN-6924 is currently being evaluated in multiple clinical trials for the treatment of acute myeloid leukemia (AML), advanced myelodysplastic syndrome (MDS) and peripheral T-cell lymphoma (PTCL). In addition, because many approved drugs and drug candidates for cancer require a functioning p53 pathway, the company has expanded and advanced its non-clinical research to test a variety of approved drugs in combination with ALRN-6924, including cyclin-dependent kinase inhibitors, immuno-oncology agents, and traditional chemotherapeutic agents for solid and liquid tumors. For information about its clinical trials, please visit www.clinicaltrials.gov.

On August 7, 2018 BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX) reported financial results for the second quarter ended June 30, 2018 (Press release, BioCryst Pharmaceuticalsa, AUG 7, 2018, http://ir.biocryst.com/news-releases/news-release-details/biocryst-reports-second-quarter-2018-financial-results [SID1234528490]).

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"Building on the clear direction from our shareholders and a strong conviction in the medical community that BCX7353 is a highly differentiated asset which can deliver enormous value to patients and shareholders, we have made substantial progress advancing our prophylactic and acute BCX7353 clinical programs, and significantly strengthened our balance sheet," said Jon P. Stonehouse, BioCryst’s President and Chief Executive Officer.

"Enrollment in the ZENITH-1 trial has completed, and we look forward to reporting Part 1 results later this quarter. Enrollment in the APeX-2 and APeX-S trials continues to go extremely well, and we are confident that we will report top-line safety and efficacy in the second quarter of next year. We believe we have the programs, the focused commitment of an experienced team and the financial resources to deliver significant value to patients and shareholders with our existing portfolio and we are excited about the clinical and regulatory milestones ahead of us in the next 12 months," Stonehouse added.

Second Quarter 2018 Financial Results

For the three months ended June 30, 2018, total revenues were $12.5 million, compared to $3.1 million in the second quarter of 2017. The increase in revenue was primarily associated with the recognition of $7.0 million of deferred revenue and a $5.0 million milestone, both associated with the European Medicines Agency’s (EMA) approval of peramivir (ALPIVABTM). These revenues were partially offset by lower collaboration revenue under U.S. Government development contracts.

Research and Development (R&D) expenses for the second quarter of 2018 increased to $21.0 million from $15.8 million in the second quarter of 2017, primarily due to increased spending on the Company’s hereditary angioedema (HAE) and preclinical programs, as well as additions in R&D personnel. These increases were partially offset by decreased activity under U.S. Government development contracts.

General and administrative (G&A) expenses for the second quarter of 2018 increased to $9.5 million, compared to $2.8 million in the second quarter of 2017. The increase was primarily due to a $4.9 million reserve recorded for concern regarding the collectability of the EMA approval milestone, as well as incurred merger-related costs. As previously disclosed, BioCryst and Seqirus are engaged in a formal dispute resolution that involves many items under the contract including, but not limited to, the EMA approval milestone.

Interest expense was $2.2 million in the second quarter of 2018, compared to $2.1 million in the second quarter of 2017. Also, a $619,000 mark-to-market gain on the Company’s foreign currency hedge was recognized in the second quarter of 2018, as compared to a $400,000 mark-to-market loss in the second quarter of 2017. These changes result from periodic changes in the U.S. dollar/Japanese yen exchange rate. During the second quarters of 2018 and 2017, the Company also realized currency gains of $889,000 and $921,000, respectively, from the exercise of a U.S. Dollar/Japanese yen currency option within its foreign currency hedge.

Net loss for the second quarter of 2018 was $18.5 million, or $0.19 per share, compared to a net loss of $16.9 million, or $0.21 per share, for the second quarter 2017.

Cash, cash equivalents and investments totaled $122.1 million at June 30, 2018, and reflect a decrease from $159.0 million at December 31, 2017. Net operating cash use for the second quarter 2018 was $18.4 million, and the first six months of 2018 was $41.3 million.

Year to Date 2018 Financial Results

For the six months ended June 30, 2018, total revenues were $16.5 million, compared to $12.5 million in the first half of 2017. The increase in revenue was primarily associated with the recognition of $7.0 million of deferred revenue and a $5.0 million milestone payment, both associated with the EMA approval of peramivir. These revenues were offset by infrequent revenue events that occurred in 2017 that did not recur in 2018. Those 2017 events were the recognition of $4.1 million of royalty revenue from Japanese government stockpiling of RAPIACTA and a $2.0 million payment for the Canadian regulatory approval of RAPIVAB. The increase in revenues was partially offset by lower collaboration revenue under U.S. Government development contracts.

R&D expenses increased to $39.5 million from $32.5 million in the first half of 2017, primarily due to increased spending on our HAE and preclinical programs. These increases were partially offset by a decrease in the Company’s peramivir and galidesivir development spending in 2018.

G&A expenses for the first half of 2018 increased to $17.1 million, compared to $5.9 million in the first half of 2017. The increase was primarily due to approximately $6.4 million of merger-related costs associated with the Company’s failed merger with Idera Pharmaceuticals, Inc. (Idera) and a $4.9 million reserve for collectability of the EMA approval milestone of peramivir.

Interest expense was $4.4 million in the first half of 2018, compared to $4.2 million in the first half of 2017. Also, a $1.2 million mark-to-market loss on the Company’s foreign currency hedge was recognized in the first half of 2018, as compared to a $1.9 million mark-to-market loss in the first half of 2017. These changes result from periodic changes in the U.S. dollar/Japanese yen exchange rate. During 2018 and 2017, the Company also realized currency gains of $889,000 and $921,000, respectively, from the exercise of a U.S. Dollar/Japanese yen currency option within its foreign currency hedge.

Net loss for the first half of 2018 was $44.2 million, or $0.45 per share, compared to a net loss of $31.1 million, or $0.40 per share, for the first half 2017.

Clinical Development Update & Outlook

On August 6, 2018, BioCryst announced it had received Fast Track Designation by the U.S. Food and Drug Administration (FDA) for BCX7353 for the prevention of angioedema attacks in patients with HAE.

On August 6, 2018, BioCryst announced the full exercise of the underwriters’ option to purchase additional shares and the completion of its public offering resulting in the sale of 10,454,546 shares of its common stock at a price of $5.50 per share. The net proceeds from this offering are approximately $53.5 million, after deducting underwriting discounts and commissions and other estimated offering expenses.

On July 11, 2018, BioCryst announced it had completed enrollment in all three cohorts of its ZENITH-1 clinical trial, a proof-of-concept Phase 2 clinical trial liquid formulation of BCX7353 for treatment of acute HAE attacks.

On July 25, 2018, BioCryst announced that results from the Phase 2, APeX-1 trial of BCX7353 for the prevention of attacks in patients with HAE were published in the July 26th issue of The New England Journal of Medicine.

On July 20, 2018, BioCryst entered into a $30 million secured loan facility with MidCap Financial Trust as administrative agent and lender (MidCap), pursuant to the terms and conditions of that certain Amended and Restated Credit and Security Agreement. The Credit Agreement replaces the Credit and Security Agreement dated as of September 23, 2016.

On July 10, 2018, BioCryst announced that it had terminated the previously announced merger agreement with Idera following the Company’s stockholders’ failure to approve the adoption of the merger agreement. Pursuant to the merger agreement, the Company reimbursed Idera$6 million in July.

On June 25, 2018, BioCryst announced that the Company had reached agreement on the design of a Phase 3 trial and regulatory requirements for marketing authorization of BCX7353 for HAE with the Pharmaceuticals and Medical Devices Agency in Japan.

On May 24, 2018, BioCryst announced that the EMA Committee for Orphan Medicinal Products issued a positive opinion on BioCryst’s application for orphan designation of BCX7353 for the treatment of HAE. In addition, the United Kingdom’s Medicines and Healthcare products Regulatory Agency has granted a Promising Innovative Medicine designation to BCX7353.
Financial Outlook for 2018

Based upon development plans, merger-related incurred costs from the recently terminated merger agreement with Idera and awarded government contracts, BioCryst expects its 2018 net operating cash use to be in the range of $85 to $105 million, and its 2018 operating expenses to be in the range of $90 to $110 million. The Company’s operating expense range excludes equity-based compensation expense due to the difficulty in reliably projecting this expense, as it is impacted by the volatility and price of the Company’s stock, as well as by the vesting of the Company’s outstanding performance-based stock options.

Conference Call and Webcast

BioCryst’s leadership team will host a conference call and webcast Tuesday, August 7, 2018 at 11:00 a.m. Eastern Time to discuss these financial results and recent corporate developments. To participate in the conference call, please dial 1-877-303-8027 (United States) or 1-760-536-5165 (International). No passcode is needed for the call. The webcast can be accessed live or in archived form in the "Investors" section of the Company’s website at www.BioCryst.com. An accompanying slide presentation may also be accessed via the BioCryst website. Please connect to the website at least 15 minutes prior to the start of the conference call to ensure adequate time for any software download that may be necessary.

About BCX7353

Discovered by BioCryst, BCX7353 is a novel, oral, once-daily, selective inhibitor of plasma kallikrein currently in development for the prevention and treatment of angioedema attacks in patients diagnosed with HAE. BCX7353 was generally safe and well tolerated in the Phase 2 APeX-1 clinical trial. BioCryst is currently conducting the Phase 3 APeX-2 clinical trial and the long-term safety APeX-S clinical trial, both evaluating two dosage strengths of BCX7353 administered orally once-daily as a preventive treatment to reduce the frequency of attacks in patients with HAE. BioCryst is also conducting the ZENITH-1 clinical trial. ZENITH-1 is a proof-of-concept Phase 2 clinical trial testing an oral liquid formulation of BCX7353 for the treatment of acute angioedema attacks.

On August 7, 2018 Johnson & Johnson (NYSE: JNJ) reported that it will participate in the 2018 Wells Fargo 13th Annual Healthcare Conference on Thursday, Sept. 6th, at The Westin Boston Waterfront in Boston, MA (Press release, Johnson & Johnson, AUG 7, 2018, View Source [SID1234528660]). Alex Gorsky, Chairman and Chief Executive Officer will represent the Company in a session scheduled at 9:45 a.m. (Eastern Time).

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This webcast will be available to investors and other interested parties by accessing the Johnson & Johnson website at www.investor.jnj.com.

A webcast replay will be available approximately two hours after the live webcast.

On August 7, 2018 Infinity Pharmaceuticals, Inc. (NASDAQ: INFI) reported its second quarter 2018 financial results and provided an update on the company, including its progress with IPI-549, a first-in-class oral immuno-oncology product candidate that selectively inhibits phosphoinositide-3-kinase-gamma (PI3K-gamma) and targets immune-suppressive tumor macrophages/myeloid-derived suppressor cells (MDSCs) (Press release, Infinity Pharmaceuticals, AUG 7, 2018, View Source [SID1234528757]).

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"We are particularly pleased to welcome Sam Agresta to the Infinity team as Chief Medical Officer. Sam brings extensive experience in novel oncology drug development, having led the recent approvals of Agios’s two targeted therapies based on compelling Phase 1 data," said Adelene Perkins, Chief Executive Officer and Chair of Infinity Pharmaceuticals. "We continue to be encouraged by our progress in all aspects of our business. Building on the datasets we presented at the recent American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) Annual Meeting, including showing that IPI-549 was well-tolerated, clinically active and on-mechanism as a monotherapy and in combination with nivolumab, we look forward to presenting more mature data from the combination expansion cohorts in the second half of this year. We are also enthusiastic about partnering with Arcus and testing IPI-549 in combination with its very promising novel agents, in a new collaboration we established in June."

Infinity is evaluating IPI-549 as a monotherapy and in combination with Opdivo (nivolumab), a PD-1 immune checkpoint inhibitor, in collaboration with Bristol-Myers Squibb, in the MARIO-1 Phase 1/1b study in approximately 200 patients with advanced solid tumors. In addition, Arcus Biosciences will initiate two triple combinations investigating IPI-549 with their dual adenosine receptor antagonist, AB928, anti-PD-1 antibody, AB122, and chemotherapy in triple negative breast cancer and ovarian cancer. One triple combination therapy will evaluate IPI-549 in combination with AB928 and AB122 and the second will evaluate IPI-549 in combination with AB928 and chemotherapy, with topline data expected in 2019.

Recent developments include the following:

IPI-549

Continued Progress with the MARIO-1 Phase 1/1b Study of IPI-549: The monotherapy and combination dose-escalation portions of this study have been completed. Enrollment is complete in the mesothelioma combination expansion cohort and is ongoing for the other five disease-specific combination expansion cohorts currently underway, as well as for the seventh combination expansion cohort of patients pre-selected for having high baseline blood levels of myeloid derived suppressor cells (MDSCs), which began enrolling patients in May 2018.
Second Quarter 2018 Financial Results

At June 30, 2018, Infinity had total cash, cash equivalents and available-for-sale securities of $49.2 million, compared to $47.8 million at March 31, 2018.
R&D expense for the second quarter of 2018 was $3.7 million, compared to $3.9 million for the same period in 2017. The decrease in R&D expense was primarily due to a reduction in bonus and stock compensation offset by an increase in clinical development expense for IPI-549.
General and administrative expense was $3.4 million for the second quarter of 2018, compared to $6.2 million for the same period in 2017. The decrease in G&A expense was primarily due to a reduction in bonus and stock compensation.
Net loss for the second quarter of 2018 was $7.0 million, or a basic and diluted loss per common share of $0.12, compared to a net loss of $17.0 million, or a basic and diluted loss per common share of $0.34 for the same period in 2017.
Financial Outlook
Infinity’s 2018 financial guidance is:

Net Loss: Infinity expects net loss for 2018 to range from $35 million to $45 million.
Cash and Investments: Infinity expects to end 2018 with a year-end cash, cash equivalents and available-for-sale securities balance ranging from $15 million to $25 million.
Cash Runway: Based on its current operational plans, Infinity expects that its existing cash, cash equivalents and available-for-sale securities will be adequate to satisfy the company’s capital needs through the third quarter of 2019. Infinity’s financial guidance excludes additional funding or business development activities and does not include the potential $22 million payment from Verastem upon the first regulatory approval of duvelisib, or a potential $2 million payment from PellePharm, a private company, upon initiation of a Phase 3 study for the hedgehog inhibitor program, which Infinity licensed to PellePharm in 2013. Verastem announced that its New Drug Application for duvelisib was accepted by the U.S. Food and Drug Administration (FDA) and that it was given priority review with an FDA action date of October 5, 2018. With the potential Verastem payment, Infinity expects that its cash runway would extend into 2020.
Conference Call Information
Infinity will host a conference call today, August 7, 2018, at 4:30 p.m. ET to discuss these financial results and company updates. A live webcast of the conference call can be accessed in the "Investors/Media" section of Infinity’s website at www.infi.com. To participate in the conference call, please dial 1-877-316-5293 (domestic) or 1-631-291-4526 (international) five minutes prior to start time. The conference ID number is 8037589. An archived version of the webcast will be available on Infinity’s website for 30 days.

About IPI-549 and the Ongoing Phase 1/1b Study
IPI-549 is an investigational first-in-class, oral, immuno-oncology product candidate targeting tumor-associated myeloid cells through selective phosphoinositide-3-kinase-gamma (PI3K-gamma) inhibition, thereby reducing pro-tumor macrophage function and increasing anti-tumor macrophage function. In preclinical studies, IPI-549 demonstrated the ability to reprogram macrophages from a pro-tumor (M2), immune suppressive function, to an anti-tumor (M1) immune activating function and enhance the activity of, and overcome resistance to, checkpoint inhibitors.1,2 As such, IPI-549 may have the potential to treat a broad range of solid tumors and represents a potentially additive or synergistic approach to restoring anti-tumor immunity in combination with other immunotherapies such as checkpoint inhibitors.

The ongoing Phase 1/1b study being conducted by Infinity is designed to evaluate the safety, tolerability, activity, pharmacokinetics and pharmacodynamics of IPI-549 as a monotherapy and in combination with Opdivo in approximately 200 patients with advanced solid tumors.3 The study includes monotherapy and combination dose-escalation components, in addition to monotherapy expansion and combination expansion components. The monotherapy dose-escalation and expansion components are complete. The combination dose-escalation component is also complete, and combination expansion cohorts are enrolling.

The combination expansion component of the study includes multiple cohorts designed to evaluate IPI-549 in patients with specific types of cancer, including patients with non-small cell lung cancer (NSCLC), melanoma and head and neck cancer whose tumors show initial resistance or initially respond to but subsequently develop resistance to immune checkpoint blockade therapy. The combination expansion component also includes a cohort of patients with triple negative breast cancer (TNBC) who have not been previously treated with immune checkpoint blockade therapy, a cohort of patients with mesothelioma, a cohort of patients with adrenocortical carcinoma and a cohort of patients with high baseline blood levels of MDSCs.

IPI-549 is an investigational compound and its safety and efficacy has not been evaluated by the U.S. Food and Drug Administration or any other health authority.

On August 7, 2018 Novelion Therapeutics Inc. (NASDAQ: NVLN), a biopharmaceutical company dedicated to developing and commercializing therapies for individuals living with rare diseases ("Novelion" or the "Company"), reported financial results for the second quarter and six months ended June 30, 2018 and provided an overview of business activities (Press release, QLT, AUG 7, 2018, View Source [SID1234528932]).

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Interim Chief Executive Officer Jeff Hackman commented, "Under our new leadership team, we are laser focused on maximizing the potential of our two commercial assets, enhancing our operational efficiencies by reducing costs, and fixing our capital structure issues so we can invest in the long-term opportunity of our valuable rare disease therapies.

"On the commercial front, we expect sequential revenue growth in the second half of this year, bolstered by stabilizing JUXTAPID sales in the U.S., and continued penetration of the Japan market, where there are more than 200 registered HoFH patients. We also expect initial contribution from the European launch of MYALEPTA (metreleptin) for both generalized lipodystrophy (GL) and partial lipodystrophy (PL), which represents the largest market for metreleptin in terms of treatable patients, a number of whom have already been identified through our pre-approval compassionate use program and are expected to be converted onto therapy, subject to pricing and reimbursement approvals, where required. Further, we believe that we can leverage the EU approval data package to support our plans to expand the U.S. label to include the PL indication and to file in additional markets, including Brazil. We want to thank Murray Stewart, M.D., our head of R&D, and his team, along with all the employees that supported the filing and approval, for achieving this important approval. We look forward to their work on expanding the metreleptin opportunity."

Business Highlights

•
On July 31, Novelion announced that the European Commission (EC) granted marketing authorization for MYALEPTA, as an adjunct to diet, as a replacement therapy to treat the complications of leptin deficiency in lipodystrophy (LD) patients with confirmed congenital GL or acquired GL in adults and children 2 years of age and above; or with confirmed familial PL or acquired PL, in adults and children 12 years of age and above for whom standard treatments have failed to achieve adequate metabolic control. MYALEPTA is the first and only licensed treatment in Europe in these indications. Pricing and reimbursement negotiations with healthcare authorities have commenced and will be pursued on a country-by-country basis.

•
In August, the Company submitted a marketing application for JUXTAPID in Brazil. While the Company currently recognizes sales for JUXTAPID in Brazil via the pre-approval named patient sales program, the Company is seeking formal marketing approval which, if successful, will open the door for product promotion and should also result in more predictable sales trends.

•
JUXTAPID: Novelion reported net revenues of JUXTAPID of $16.3 million in the second quarter of 2018, $10.5 million, or 64%, of which were from prescriptions written in the U.S. and $0.8 million of which was royalty revenue from Amryt’s sales of JUXTAPID in the EMEA region.

•
MYALEPT: Novelion reported net revenues of MYALEPT of $15.6 million in the second quarter of 2018, $12.5 million, or 80%, of which were from prescriptions written in the U.S.

•
In June, clinical data from a metreleptin study assessing weight loss in overweight and obese adults with low leptin levels were featured in a poster presentation at the American Diabetes Association’s (ADA) 78th Scientific Sessions. These data support potential metreleptin pipeline opportunities.

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In July, Novelion’s Board of Directors appointed Mark Corrigan, M.D. as Executive Chair. Dr. Corrigan serves in a supervisory role to the Company’s management team and will continue to perform the traditional duties of Board Chair. In addition, Jeff Hackman was appointed interim chief executive officer.

Dr. Corrigan commented, "The first half of 2018 has been filled with important milestones. Having finalized Aegerion’s legal settlements earlier this year, our organization was pleased with the strong market receptivity of our continued launch of JUXTAPID in Japan, as well as the stabilization of our U.S. JUXTAPID franchise. More importantly, the MYALEPTA European approval creates a larger revenue opportunity for us than in the U.S. In addition to top-line growth, we intend to further our operational improvements with the goal of creating a pathway to sustainable positive cash flow and robust EBITDA growth. Given our progress on these initiatives, we intend to re-engage with the investor and analyst community, and we also plan to resume revenue guidance for 2019."

Second Quarter 2018 Financial Results

GAAP total net revenues for the second quarter of 2018 were $31.9 million compared to $40.9 million for the same period of 2017, primarily as a result of the timing of orders for both products in Brazil. The second quarter of 2017 benefitted from $8.1 million of Brazil revenues derived from the named patient sales program, whereas the second quarter of 2018 does not reflect any named patient sales in Brazil. The Company expects that marketing approval of its products, if achieved, in Brazil will support more predictable sales. Revenue growth of $2.0 million in other foreign markets more than offset the $0.7 million decrease in U.S. revenues. The second quarter of 2017 also benefitted from a one-time recognition of previously deferred revenue totaling $2.3 million, related to a change in method of revenue recognition for MYALEPT.

GAAP net revenues for JUXTAPID in the second quarter of 2018 were $16.3 million compared to $20.7 million for the same period in 2017. JUXTAPID revenues representing named patient sales in Brazil totaled $4.3 million in the second quarter of 2017, while there were no named patient sales

of JUXTAPID in Brazil in the second quarter of 2018. Growth of 8% in other foreign markets nearly offset the 5% decrease in U.S. revenues, where we continue to see stabilization of sales.

GAAP net revenues for MYALEPT in the second quarter of 2018 were $15.6 million compared to $20.2 million for the same period in 2017. MYALEPT revenues representing named patient sales in Brazil totaled $3.8 million in the second quarter of 2017, while there were no named patient sales of MYALEPT in Brazil in the second quarter of 2018. As mentioned previously, MYALEPT revenues of $20.2 million in the second quarter of 2017 included a one-time recognition of previously deferred revenue of $2.3 million. Excluding this effect, U.S. revenues were virtually unchanged compared to the comparable period of the prior year, while MYALEPT revenues in foreign markets other than Brazil more than doubled from $1.5 million to $3.2 million in the same timeframe.

GAAP total operating expenses for the second quarter of 2018 were $34.1 million compared to total operating expenses of $38.4 million for the same period in 2017. GAAP SG&A expenses were $23.7 million in the second quarter of 2018 compared to $26.5 million for the same period in 2017. GAAP R&D expenses were $10.4 million in the second quarter of 2018 compared to $10.8 million for the same period in 2017.

On a pro forma basis, during the second quarter of 2018, SG&A expenses were $21.7 million compared to $25.1 million for the same period in 2017. The 14% decrease in pro forma SG&A expenses in the second quarter of 2018 compared with the same period in 2017 was primarily related to cost reduction programs initiated in early 2018. Additionally, there were no restructuring charges incurred during the second quarter of 2018, compared to $1.0 million in restructuring charges incurred during the second quarter of 2017, related to the consolidation of similar positions during the integration of the business subsequent to the acquisition of Aegerion.

On a pro forma basis, during the second quarter of 2018, R&D expenses decreased 5% to $10.2 million compared to $10.7 million for the same period in 2017, reflecting cost savings initiatives.

GAAP net loss in the second quarter of 2018 was $31.3 million compared to GAAP net loss of $21.4 million during the same period in 2017.

On a pro forma basis, net loss in the second quarter of 2018 was $11.1 million, compared to a net loss of $1.4 million for the same period in 2017.

First Six Months of 2018 Financial Results

GAAP total net revenues for the first six months of 2018 were $59.4 million compared to $70.9 million for the same period of 2017, primarily as a result of timing of orders for both products in Brazil. The first six months of 2017 benefitted from $10.9 million of Brazil sales derived from the named patient sales program, whereas named patient sales in Brazil totaled $1.2 million in the first six months of 2018. Growth of $5.2 million, or 45%, in other foreign markets offset the $4.7 million, or 10% decrease in U.S. revenues, excluding the impact of the one-time deferred revenue recognition in 2017.

GAAP net revenues for JUXTAPID for the first six months of 2018 were $29.6 million compared to $36.7 million in same period in 2017. JUXTAPID revenues totaled $5.9 million in Brazil in the first half of 2017, whereas there were no named patient sales of JUXTAPID in the first half of 2018. Revenue growth of $1.7 million, or 19%, in other foreign markets helped offset the $2.8 million, or

13%, decrease in U.S. revenues in the most recent six month period compared to the comparable period of 2017.

GAAP net revenues for MYALEPT for the first six months of 2018 were $29.8 million compared to $34.1 million for the same period in 2017. MYALEPT revenues in Brazil totaled $5.0 million in the first half of the prior year compared to $1.2 million in the first half of 2018. Excluding the impact of the $2.3 million deferred revenue recognition in 2017, U.S. sales of MYALEPT declined $1.8 million, or 7%, which was more than offset by the growth in foreign markets other than Brazil where MYALEPT revenues more than doubled from $2.8 million in the first half of 2017 to $6.3 million in the same period of 2018.

GAAP total operating expenses for the first six months of 2018 were $69.6 million compared to total operating expenses of $73.6 million for the same period in 2017. GAAP SG&A expenses were $47.4 million in the first six months of 2018 compared to $51.0 million for the same period in 2017. GAAP R&D expenses were $22.1 million for the first six months of 2018 compared to $20.1 million for the same period in 2017.

On a pro forma basis, for the first six months of 2018, SG&A expenses decreased 10% to $43.3 million compared to $48.0 million for the same period in 2017 primarily as a result of cost reduction programs initiated in early 2018. There were no restructuring charges in the first six months of 2018, compared with restructuring charges of $2.5 million for the same period in 2017 which were related to the consolidation of similar positions during the integration of the business subsequent to the acquisition of Aegerion.

On a pro forma basis, for the first six months of 2018, R&D expenses increased 11% to $21.8 million compared to $19.7 million for the same period in 2017 due to increased clinical activity, partially offset by cost savings initiatives.

GAAP net loss for the first six months of 2018 was $64.1 million compared to GAAP net loss of $52.4 million during the same period in 2017.

Net loss on a pro forma basis for the first six months of 2018 was $24.7 million, compared to $10.1 million for the same period in 2017.

As of June 30, 2018, the Company’s consolidated unrestricted cash balance was $40.0 million, compared to $55.4 million at December 31, 2017. As of June 30, 2018, there were 18.9 million shares outstanding. Consolidated debt principal is $345.0 million, reflecting the amount of aggregate convertible and term loan debt issued by subsidiary Aegerion.