On November 3, 2016 BioTime, Inc. (NYSE MKT and TASE: BTX), a clinical stage biotechnology company with a focus on pluripotent cell-based technologies, reported financial results for the third quarter ended September 30, 2016, and recent therapeutic program progress (Filing, Q3, BioTime, 2016, NOV 3, 2016, View Source [SID1234516259]).

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"Through the quarter, we continued to execute on our plan with great progress across all our programs within the BioTime family of companies. We are particularly encouraged by the early data reported on Renevia and OpRegen. Both Asterias and OncoCyte also reported promising data from their clinical trials," said Adi Mohanty, Co-Chief Executive Officer. "For the remainder of the year and into 2017, we expect to achieve a substantial number of value-enhancing milestones, including additional efficacy and safety data from the second and third patient cohorts in the OpRegen clinical trial, and pivotal data and potential CE mark approval for Renevia in Europe."

Third Quarter and Recent Accomplishments

Clinical Progress

OpRegen (retinal pigment epithelial cells)

The ongoing Phase I/IIa clinical trial is evaluating the safety of three different dosage regimens of OpRegen in the advanced form of dry age-related macular degeneration (Dry-AMD). Dry-AMD is a condition for which there is currently no FDA-approved therapy. Preliminary data from the first cohort of patients treated in this trial of OpRegen resulted in no serious adverse events. Imaging data from the first patient who completed one-year of post-treatment clinical assessment may indicate that the graft can survive for at least 12 months. These and other data will be presented at the International Symposium on Ocular Pharmacology and Therapeutics (ISOPT), on December 2, in Rome, Italy.
Enrollment in the second cohort, in which patients are receiving a higher and more clinically meaningful 200,000 cell dose, is expected to be complete by year end 2016, and data are expected early in 2017.
Additional data, from the third cohort, which is expected to commence before year end, is anticipated by the end of 2017.
US clinical trial sites are expected to be announced in early 2017.
Renevia (adipose cells + cell delivery matrix)

The Renevia pivotal clinical trial for HIV-related facial lipoatrophy continues to enroll new patients and is on track to complete patient enrollment by the end of 2016. The objective of the trial is to assess the safety and efficacy of Renevia in restoring normal skin contours in patients whose subcutaneous fat has been lost due to antiviral drug treatment for HIV. BioTime expects top-line efficacy data in the first half of 2017. If the data are positive, the company plans to submit an application for CE mark approval in Europe shortly thereafter.
Positive data from the pivotal trial could provide support for future studies of Renevia in certain broader applications of fat tissue deficits. These include various medical aesthetics applications, such as age-related and trauma-related facial fat loss.
AST-OPC1 (oligodendrocyte progenitor cells)

In September, BioTime’s affiliate Asterias Biotherapeutics, Inc. (NYSE MKT: AST), announced positive data from the AST-OPC1 SCiSTAR Phase 1/2a clinical study in patients with complete cervical spinal cord injuries. All patients in the initial cohort who received 10 million AST-OPC1 cells showed at least one motor level of improvement (regaining some function in their arms), while two of five patients achieved two motor levels of improvement (regaining some function in their arms, hands and fingers) on at least one side of their body. The data were presented at the Annual Scientific Meeting of the International Spinal Cord Society (ISCoS) in Vienna, Austria.
Six-month efficacy data on this first cohort are expected to be announced in January 2017. Enrollment is also ongoing in a new cohort in which patients are receiving a higher dose of 20 million cells.
OncoCyte (non-invasive cancer diagnostics)

In August, BioTime’s subsidiary OncoCyte Corporation (NYSE MKT: OCX) closed a financing with both new and existing investors, providing OncoCyte with gross proceeds of $10.55 million, before deducting placement agent fees and offering expenses.
Data was presented related to OncoCyte’s lead product, a confirmatory diagnostic for lung cancer screening. OncoCyte expects to complete the study by year end and, if successful, could launch the product by mid-year 2017.
Research and Development

In August, BioTime strengthened its regenerative medicine intellectual property portfolio with the issuance of 31 new patents. This included nine in the U.S. and 22 in Australia, Canada, China, India, Israel, and Japan. The new patents supplement the existing portfolio of more than 700 patents and patent applications owned or licensed by the BioTime family of companies worldwide.
Management Team

In October, BioTime strengthened its senior management team with the appointment of Jim Knight as Senior Vice President, Head of Corporate Development. Mr. Knight is a highly accomplished professional with an extensive skill set and knowledge that is applicable immediately, as the company has started reporting encouraging early clinical data on its key programs.
Third Quarter Financial Results

Cash Position and Equity Values: Cash and cash equivalents totaled $30.5 million as of September 30, 2016, compared to $42.2 million as of December 31, 2015, which included Asterias’ cash and cash equivalents of $11.2 million. Based on the September 30, 2016, closing prices of Asterias and OncoCyte common stock on the NYSE MKT, the shares of Asterias and OncoCyte owned by BioTime had an estimated market value of $92.2 million and $74.0 million, respectively, or an aggregate market value of approximately $166.0 million on that date.

Revenues: Total revenues were $1.5 million for the third quarter, compared to $2.3 million in the third quarter of 2015. Asterias’ total revenues included in the third quarter of 2015 were $1.4 million as shown in the table below (in thousands). BioTime’s operating revenues are currently generated primarily from research grants, licensing fees and advertising from the marketing of online database products.

Three months ended September 30, 2016 Three months ended September 30, 2015
Consolidated
Results of
Operations
Asterias Consolidated
Results less
Asterias
Consolidated
Results of
Operations

Asterias
Consolidated
Results less
Asterias
REVENUES:
Total revenues 1,499 - 1,499 2,306 1,423 883

R&D Expenses: Research and development expenses were $6.4 million for the third quarter, compared to $11.4 million for the comparable period in 2015. The 2015 expenses included $4.6 million attributable to Asterias’ research and development. The decrease year over year was primarily due to the deconsolidation of Asterias for financial reporting purposes commencing May 13, 2016.

G&A Expenses: General and administrative expenses were $4.6 million for the third quarter, compared to $7.5 million for the third quarter of 2015. The decrease was primarily due to the deconsolidation of Asterias financial results and reduced expenses incurred by OncoCyte.

Operating Loss: Loss from operations was $9.6 million in the third quarter compared with a loss of $17.1 million in the third quarter of 2015. The decrease was primarily due to the lower operating expenses as a result of the deconsolidation of Asterias operating results and reduced expenses incurred by OncoCyte.

Net Income (loss) attributable to BioTime: Net income attributable to BioTime was $31.2 million, or $0.30 per basic and diluted share for the three months ended September 30, 2016, due primarily to the gain on our interest in Asterias at fair value using the equity method of accounting. There was no deferred income tax provision or benefit recorded in the three months ended September 30, 2016. For the third quarter of 2015, net loss attributable to BioTime was $14.0 million, or ($0.18) per share. Net income (loss) attributable to BioTime includes losses from BioTime’s majority owned and consolidated subsidiaries based upon BioTime’s percentage ownership of those subsidiaries.

On November 3, 2016 Arbutus Biopharma Corporation (Nasdaq:ABUS), an industry-leading Hepatitis B Virus (HBV) therapeutic solutions company, reported its third quarter 2016 unaudited financial results and provided a corporate update (Press release, Arbutus Biopharma, NOV 3, 2016, View Source [SID1234516256]).

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"This was an important quarter as we reported interim results from our ARB-1467 Phase II trial demonstrating significant HBsAg reduction in chronically infected HBV patients. These promising multi-dose data are the first of their kind for an RNAi HBV product candidate, and we plan to release additional data from this trial by year-end," said Dr. Mark J. Murray, Arbutus’ President and CEO. "We are focused on our strategy of developing a combination therapy, which is supported by our cash runway and potential opportunities to monetize our proprietary lipid nanoparticle (LNP) platform delivery technology."

Recent Highlights and Developments

In September, Arbutus presented interim clinical results from the first two cohorts of the ongoing ARB-1467 Phase II multi-dose trial in chronically infected HBV patients. Cohorts 1 and 2 enrolled patients with hepatitis B e-antigen (HBeAg) negative chronic HBV infection and single dose results demonstrate signification reductions in serum hepatitis B surface antigen (HBsAg). Multiple dose results from Cohort 1 show a step-wise, additive reduction in serum HBsAg.

Abstracts and oral presentations announced for the 2016 American Association for the Study of Liver Diseases (AASLD). Presentations will include preclinical combination data from studies with Arbutus’ proprietary HBV pipeline candidates AB-423 (capsid inhibitor) with ARB-1740 (RNAi).

Partnership with the Hepatitis B Foundation to support the patient storytelling campaign, designed with the goal of raising awareness about chronic HBV, a significant global unmet medical need and the leading cause of hepatocellular carcinoma.

In August 2016, we entered into a lease agreement for approximately 35,000 square feet of space in Warminster, Pennsylvania. This facility includes a research and development laboratory and will represent Arbutus’ primary U.S. site.
Upcoming Milestones

Nov 2016: AASLD presentations on preclinical data, including results from preclinical combination studies of proprietary pipeline candidates
4Q16: ARB-1467 multi-dose HBsAg reduction data from Phase II trial Cohort 2
4Q16: File IND (or equivalent) for core protein/capsid assembly inhibitor
4Q16: File IND (or equivalent) for ARB-1740 (RNAi)
1H17: Additional ARB-1467 Phase II data
Financial Results

As at September 30, 2016, Arbutus had cash, cash equivalents and short-term investments of $149.7 million, as compared to cash, cash equivalents and short and long-term investments of $191.4 million at December 31, 2015.

Net loss

The net loss for Q3 2016 was $19.6 million ($0.37 per common share) as compared to a net loss of $29.0 million ($0.58 per common share) for Q3 2015. The net loss for the nine months ended September 30, 2016 was $165.5 million ($3.15 per common share) as compared to a net loss of $55.9 million ($1.28 per common share) for the nine-months ended September 30, 2015.

Non-GAAP Net Loss

The non-GAAP net loss for Q3 2016 was $16.6 million ($0.31 loss per common share) as compared to a non-GAAP net loss of $0.5 million ($0.01 per common share) for Q3 2015. The non-GAAP net loss for the nine-months ended September 30, 2016 was $45.0 million ($0.86 loss per common share) as compared to a non-GAAP net loss of $22.1 million ($0.51 loss per common share) for the nine-months ended September 30, 2015. The non-GAAP net loss has been adjusted to exclude:

non-cash compensation expense of $3.0 million for the three-month period and $29.0 million for the nine-month period included in research, development, collaborations and contracts expenses, and general and administrative expenses in connection with certain share repurchase provisions arising from the merger with Arbutus Inc., described below.
non-cash impairment charge of $91.4 million ($156.3 million net of deferred income taxes of $64.9 million) for the nine-month period on intangible assets related to the discontinuance of the ARB-1598 program in the Immune Modulator drug class, as well as a delay for additional exploration of the biology of the cccDNA Sterilizer drug class.
Revenue

Revenue was $0.8 million for Q3 2016 as compared to $4.1 million for Q3 2015.

Q3 2015 revenue includes revenue from Monsanto and DoD contracts for which collaboration revenue ceased in Q4 2015.

In November 2014, Arbutus entered into a collaboration with Dicerna for the use of its technology to develop, manufacture, and commercialize products related to the treatment of PH1. In September 2016, Dicerna announced the discontinuance of its DCR-PH1 program. As such, the Company has recognized the remaining $0.6 million of the upfront payment of $2.5 million into licensing fee revenue as well as $0.09 million in research services provided to Dicerna in the three months ended September 30, 2016.

Research, Development, Collaborations and Contracts Expenses

Research, development, collaborations and contracts expenses were $15.7 million in Q3 2016 as compared to $16.4 million in Q3 2015.

R&D expenses decreased during Q3 2016 as compared to Q3 2015 as the Company’s collaboration programs with the DoD, Monsanto, and Dicerna have wound down or ended since September 30, 2015. Arbutus also continues to incur incremental costs related to an increase in activities for the research and preclinical HBV programs, focusing on advancing the development of candidates to support future clinical combination studies.

R&D compensation expense increased in Q3 2016 as compared to Q3 2015 due to an increase in the number of employees in support of the Company’s expanded portfolio of product candidates and from its merger with Arbutus Inc.

General and Administrative

General and administrative expenses were $3.7 million in Q3 2016 as compared to $7.7 million in Q3 2015.

The decrease in general and administrative expenses is primarily due a decrease in non-cash compensation expense recorded related to the expiry of repurchase rights effective Q2 2016, due to the departure of two of the four former Arbutus Inc. founders in June 2016. Non-cash compensation expense related to expiry of repurchase rights recorded in general and administrative expense was $1.5 million in Q3 2016 compared to $4.2 million in Q3 2015.

Impairment of Intangible Assets

In Q3 2015, Arbutus recorded an estimated impairment charge of $38.0 million based on the Company’s decision to discontinue its cyclophilin program, OCB-030.

Other Income (Losses)

On January 1, 2016, the Company’s functional currency changed from the Canadian dollar to the U.S. dollar based on an analysis of changes in the primary economic environment in which Arbutus operates. The Company expects to incur substantial expenses and hold cash and investment balances in Canadian dollars, and as such, will remain subject to risks associated with foreign currency fluctuations. During Q3 2016, Arbutus recorded a foreign exchange loss of $0.8 million, which is primarily an unrealized loss related to a depreciation in the value of our Canadian dollar funds from the previous period, relative to our U.S. dollar functional currency. This compares to a foreign exchange gain of $11.8 million in Q3 2015.

The aggregate decrease in fair value of the Company’s common share purchase warrants was $0.01 million in Q3 2016 as compared to a decrease in the fair value of common share purchase warrants outstanding of $2.0 million in Q3 2015. The decrease is a result of a decrease in the Company’s share price from the previous reporting date.

The company recorded an income tax benefit in Q3 2015 of $15.2 million due to the decrease in deferred tax liability resulting from the impairment charge recorded in the quarter, as discussed above.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions)

September 30, 2016 December 31, 2015

Cash and cash equivalents $ 26.6 $ 166.8
Short-term investments 123.1 14.5
Accounts receivable 0.4 1.0
Other current assets 1.7 1.6
Long-term investments - 10.1
Property and equipment, net 4.1 3.2
Intangible assets 196.3 352.6
Goodwill 162.5 162.5
Total assets $ 514.7 $ 712.3
Accounts payable and accrued liabilities 7.1 8.8
Total deferred revenue 0.0 1.1
Warrant liability 0.3 0.9
Liability-classified options 0.9 -
Contingent consideration 8.3 7.5
Deferred tax liability 81.5 146.3
Total stockholders’ equity 416.6 547.7
Total liabilities and stockholders’ equity $ 514.7 $ 712.3

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in millions)
Three Months
Ended
September 30, Nine Months Ended
September 30,
2016 2015 2016 2015

Total revenue $ 0.7 $ 4.1 $ 1.7 $ 12.2
Operating expenses
Research, development, collaborations and contracts 15.7 16.4 44.1 36.6
General and administrative 3.7 7.7 34.7 18.1
Depreciation of property and equipment 0.3 0.2 0.8 0.4
Acquisition costs - - - 9.7
Impairment of intangible assets - 38.0 156.3 38.0
Loss from operations (19.0 ) (58.2 ) (234.2 ) (90.6 )
Other income (losses) (0.6 ) 14.0 3.9 19.5
Income tax benefit - 15.2 64.9 15.2
Net loss $ (19.6 ) $ (29.0 ) $ (165.4 ) $ (55.9 )
Cumulative translation adjustment - (10.1 ) - (19.2 )
Comprehensive loss $ (19.6 ) $ (39.1 ) $ (165.4 ) $ (75.1 )

UNAUDITED GAAP TO NON-GAAP RECONCILIATION: NET LOSS AND NET LOSS PER SHARE
(in millions, except per share amounts)

Three Months Ended
September 30 Nine Months Ended
September 30
2016
2015 2016 2015
GAAP net loss $ (19.6 ) $ (29.0 ) $ (165.4 ) $ (55.9 )
Adjustment:
Compensation expense of expiring repurchase
provision rights 3.0 5.7 29.0 11.0
Impairment of intangible assets - 38.0 156.3 38.0
Income tax benefit - (15.2 ) (64.9 ) (15.2 )
Non-GAAP net loss $ (16.6 ) $ (0.5 ) $ (45.0 ) $ (22.1 )
GAAP net loss per common share $ (0.37 ) $ (0.57 ) $ (3.15 ) $ (0.64 )
Non-GAAP net loss per common share $ (0.31 ) $ (0.01 ) $ (0.86 ) $ (0.51 )

Use of Non-GAAP Financial Measures

The Company’s consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP) on a basis consistent for all periods presented. In addition to the results reported in accordance with U.S. GAAP, the Company provides additional measures that are considered "non-GAAP" financial measures under applicable SEC rules. These non-GAAP financial measures should not be viewed in isolation or as a substitute for GAAP net loss and basic and diluted net loss per common share.

The company evaluates items on an individual basis, and considers both the quantitative and qualitative aspects of the item, including (i) its size and nature, (ii) whether or not it relates to the Company’s ongoing business operations, and (iii) whether or not the Company expects it to occur as part of its normal business on a regular basis. In the three and nine months ended September 30, 2016, the Company’s non-GAAP net loss and non-GAAP net loss per common share excludes the compensation expense related to the expiration of repurchase provision rights connected with certain common shares issued as part of total consideration for the acquisition of Arbutus Inc., as well as impairment on certain intangible assets. The Company believes that the exclusion of these items provides management and investors with supplemental measures of performance that better reflect the underlying economics of the Company’s business. In addition, the Company believes the exclusion of these items is important in comparing current results with prior period results and understanding projected operating performance.

On November 3, 2016 Exelixis, Inc. (Nasdaq: EXEL) reported financial results for the third quarter of 2016 and provided an update on progress toward delivering upon its key 2016 corporate objectives, as well as commercial and clinical development milestones (Press release, Exelixis, NOV 3, 2016, View Source;p=RssLanding&cat=news&id=2219503 [SID1234516248]).

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Exelixis is focused on the U.S. launch of CABOMETYX (cabozantinib) tablets as a treatment for patients with advanced renal cell carcinoma (RCC) who have received prior anti-angiogenic therapy. CABOMETYX generated $31.2 million in net product revenue during the third quarter of 2016, which reflects the first full quarter of product sales. Net product revenues for the third quarter of 2016, including sales of COMETRIQ (cabozantinib) capsules for the treatment of certain forms of thyroid cancer, were $42.7 million. While Exelixis focuses on commercialization in the United States, its partner Ipsen is in the process of launching CABOMETYX in the European Union, following the European Commission’s (EC) September 2016 approval of CABOMETYX for the treatment of adult patients with advanced RCC who have received prior vascular endothelial growth factor (VEGF)-targeted therapy. Exelixis is eligible to receive royalties on CABOMETYX sales by Ipsen outside of the United States, Canada and Japan.

"The third quarter of 2016 was an important inflection point for Exelixis. We recorded our first full quarter of CABOMETYX sales and also made significant progress on our path towards becoming a profitable, fully integrated, commercial biopharmaceutical company," said Michael M. Morrissey, Ph.D., President and Chief Executive Officer of Exelixis. "Feedback from prescribers, as well as performance to date, suggest that clinicians treating advanced renal cell carcinoma see CABOMETYX as a differentiated therapy and are increasingly incorporating it into their practice. While we continued to execute on the U.S. CABOMETYX launch and pursue important clinical trials like CABOSUN that have the potential to further advance our business, we also demonstrated sound fiscal discipline, resulting in a significantly decreased net loss and cash burn. As we close out the year, we remain committed to maximizing our opportunity to improve the treatment of cancer while building a strong and nimble company."

Cabozantinib Highlights

Presented Positive Results from Phase 2 CABOSUN Trial in Advanced RCC. At the European Society for Medical Oncology (ESMO) (Free ESMO Whitepaper) 2016 Congress, detailed results were presented from CABOSUN, the randomized phase 2 trial of cabozantinib compared with sunitinib in patients with previously untreated advanced RCC with intermediate- or poor-risk disease per the International Metastatic Renal Carcinoma Database Consortium risk criteria. In this trial, cabozantinib demonstrated a statistically significant and clinically meaningful reduction in the rate of disease progression or death as compared to sunitinib. The CABOSUN results were the subject of a late-breaking abstract at ESMO (Free ESMO Whitepaper), and were highlighted at one of the Congress’ Presidential Symposia and in its official media program. CABOSUN was conducted by The Alliance for Clinical Trials in Oncology with support from the National Cancer Institute’s Cancer Therapy Evaluation Program (NCI-CTEP).

Plans for Supplemental New Drug Application in First-Line Advanced RCC. Based on the CABOSUN results, Exelixis plans to submit a Supplemental New Drug Application (sNDA) for cabozantinib as a treatment for previously untreated advanced RCC. The company is working with The Alliance to transfer the complete CABOSUN clinical database to Exelixis and will facilitate an independent radiological review of the CABOSUN imaging data in preparation for filing.

Phase 1 Trial Results for Cabozantinib in Combination with Nivolumab in Advanced Genitourinary Tumors. Also at the ESMO (Free ESMO Whitepaper) 2016 Congress, positive results were presented from the NCI-CTEP-sponsored phase 1 trial of cabozantinib in combination with nivolumab in patients with previously treated genitourinary tumors. Part II of the study is evaluating the triplet combination of cabozantinib, nivolumab, and ipilimumab and thus far has enrolled 15 patients. Expansion cohorts assessing cabozantinib and nivolumab, including patients with bladder, renal, and rare genitourinary cancers, are also currently being accrued.

European Commission Approval of CABOMETYX for the Treatment of Advanced RCC. On September 9, 2016, the EC approved CABOMETYX for the treatment of advanced RCC in adults following prior VEGF-targeted therapy. The approval allows for the marketing of CABOMETYX in all 28 member states of the European Union, Norway and Iceland. Under the license agreement with Ipsen, the EC approval triggered a $60.0 million milestone payment from Ipsen to Exelixis, which is expected to be received in the fourth quarter of 2016.

Outcome from First Planned Interim Analysis of Phase 3 CELESTIAL Trial. On September 6, 2016, Exelixis announced the outcome from the first planned interim analysis of CELESTIAL, the randomized global phase 3 trial of cabozantinib compared with placebo in patients with advanced hepatocellular carcinoma who have been previously treated with sorafenib. Following the analysis, the trial’s Independent Data Monitoring Committee determined that the study should continue without modifications per the study protocol. The trial protocol calls for a second interim analysis to take place once 75 percent of planned events have been observed.

Cobimetinib Highlights

Results from Cobimetinib Combination Trials Support Further Advancement. Cobimetinib, the Exelixis-discovered MEK inhibitor now the subject of a worldwide collaboration with Genentech, a member of the Roche Group, was the subject of seven presentations at the ESMO (Free ESMO Whitepaper) 2016 Congress. For the first time, investigators presented preliminary results from the phase 1b clinical trial of the triple combination of cobimetinib, vemurafenib, and atezolizumab in patients with previously untreated BRAF V600 mutation-positive advanced melanoma. The regimen was associated with promising antitumor activity and a manageable safety profile; details of a subsequent Roche-sponsored phase 3 pivotal trial, TRILOGY, have been posted to www.ClinicalTrials.gov. Investigators also presented updated results from the phase 1 trial of cobimetinib plus atezolizumab in advanced colorectal cancer that provide a rationale for COTEZO, the ongoing phase 3 pivotal trial in the same disease setting. New data from the phase 1 part of COLET, the phase 1/2 trial of cobimetinib and paclitaxel in triple-negative breast cancer, were also the subject of a poster presentation at the meeting.

Corporate Highlights

Exelixis Presence at the ESMO (Free ESMO Whitepaper) 2016 Congress. Exelixis-discovered compounds were the subject of 15 presentations at the ESMO (Free ESMO Whitepaper) 2016 Congress, which was held October 7-11 in Copenhagen, Denmark. The company also hosted an investor/analyst briefing in which management and invited guests discussed the cabozantinib data at the meeting, including CABOSUN and the combination trial of cabozantinib and nivolumab in advanced genitourinary tumors. For full details, see the August 31st abstract acceptance press release, the subsequent data press releases, and the replay of the briefing on www.exelixis.com.

Addition to the Exelixis Board of Directors. On September 22, 2016, Exelixis named Julie Anne Smith to the company’s Board of Directors. Ms. Smith joins the Exelixis board with nearly two decades of operational leadership experience in high growth public, private, startup, and established biopharmaceutical businesses. She served as President and Chief Executive Officer of Raptor Pharmaceuticals, a commercial-stage, global innovator in the development and commercialization of orphan disease therapies, from January 2015 through the company’s acquisition by Horizon Pharma plc, or Horizon. Ms. Smith is continuing to provide transition services to Horizon through December 31, 2016.

Phase 3 Clinical Development for CS-3150. On September 26, 2016, Exelixis announced its partner Daiichi Sankyo initiated a phase 3 pivotal trial to evaluate CS-3150 (esaxerenone (r-INN)), an oral, non-steroidal, selective mineralocorticoid receptor antagonist, as a treatment for essential hypertension in Japanese patients. Enrollment of the trial’s first patient made Exelixis eligible to receive a $15.0 million milestone payment, which it received in the fourth quarter of 2016. CS-3150 is one of the compounds identified during Exelixis’ prior research collaboration with Daiichi Sankyo.

Conversion and Redemption of 4.25% Convertible Senior Subordinated Notes. On August 9, 2016 and August 19, 2016, respectively, Exelixis entered into separate, privately negotiated exchange transactions with certain holders of the 4.25% Convertible Senior Subordinated Notes due 2019, or the 2019 Notes. Under the terms of the associated exchange agreements, the holders agreed to convert an aggregate principal amount of $239.4 million of 2019 Notes held by them in exchange for an aggregate of 45,064,456 shares of Exelixis common stock and an aggregate cash payment of approximately $2.4 million. Following completion of the exchange transactions, on August 24, 2016, Exelixis provided public notice of the redemption of the final $48.1 million of the 2019 Notes, representing all remaining notes outstanding. Following a required redemption period, holders of the remaining 2019 Notes had the option to convert their notes into shares of Exelixis common stock, plus cash in lieu of any fractional share, at a conversion rate of 188.2353 shares of common stock per $1,000 principal amount of their notes at any time before close of business on October 31, 2016. During the required redemption period, $47.5 million of the 2019 Notes were converted into shares of Exelixis common stock and the remaining $0.6 million of the 2019 Notes outstanding on November 2, 2016 were redeemed in cash for 100% of the principal amount thereof, plus accrued and unpaid interest to, but excluding such date.

2016 Financial Guidance

The company is refining its guidance that operating expenses for the full year 2016 will be approximately $245 million, including approximately $25 million of non-cash items primarily related to stock-based compensation expense.

Third Quarter 2016 Financial Results

Total revenues for the quarter ended September 30, 2016 were $62.2 million, compared to $9.9 million for the comparable period in 2015. Total revenues for the third quarter of 2016 include $42.7 million of net product revenue compared to $6.9 million for the comparable period in 2015. The increase in net product revenues for the three months ended September 30, 2016, as compared to the same period in 2015, reflects the impact of the commercial launch of CABOMETYX in late April 2016, as well as an increase in COMETRIQ revenues. Net product revenues for CABOMETYX and COMETRIQ were $31.2 million and $11.5 million, respectively. Total revenues for the quarter ended September 30, 2016 include the recognition of $15.0 million of contract revenue from the Daiichi Sankyo CS-3150 milestone, $3.8 million of license revenues recognized under Exelixis’ collaboration and license agreement with Ipsen and $0.7 million of royalties on ex-U.S. net sales of COTELLIC (cobimetinib). There was $3.0 million of contract revenues for a milestone payment received from Merck related to their worldwide license of Exelixis’ PI3K-delta program during the comparable period in 2015.

Research and development expenses for the quarter ended September 30, 2016 were $20.3 million, compared to $26.1 million for the comparable period in 2015. The decrease was primarily related to decreases in share-based compensation, clinical trial costs and the allocation of general corporate costs; those decreases were partially offset by increases in personnel related expenses resulting from an increase in headcount predominantly associated with the build-out of the Exelixis Medical Affairs organization.

Selling, general and administrative expenses for the quarter ended September 30, 2016 were $32.5 million, compared to $17.8 million for the comparable period in 2015. The increase was primarily related to an increase in personnel related expenses resulting from an increase in headcount connected with the build-out of the Exelixis U.S. commercial organization, marketing and outside services to support the launch and commercialization of CABOMETYX.

Other income (expense), net for the quarter ended September 30, 2016 was a net expense of ($18.5) million compared to ($9.8) million for the comparable period in 2015. The increase in net expense was primarily due to the $13.8 million of loss associated with the conversion through September 30, 2016 of $285.3 million in aggregate principal amount of the company’s 2019 Notes for 53,704,911 shares of our common stock. The net expense also includes interest expense which includes $3.9 million of non-cash expense related to the accretion of the discounts on both the 2019 Notes and the company’s indebtedness under its Secured Convertible Notes due 2018 held by entities associated with Deerfield for the quarter ended September 30, 2016, as compared to $4.9 million for the comparable period in 2015.

Net loss for the quarter ended September 30, 2016 was ($11.3) million, or ($0.04) per share, basic, compared to ($45.5) million, or ($0.21) per share, basic, for the comparable period in 2015. The decreased net loss for the quarter was primarily due to increases in net revenues and a decrease in research and development expenses, which were partially offset by increases in selling, general and administrative expenses and other income (expense), net.

Cash and cash equivalents, short- and long-term investments and long-term restricted cash and investments totaled $379.6 million at September 30, 2016, which increased from $253.3 million at December 31, 2015.

Basis of Presentation

Exelixis adopted a 52- or 53-week fiscal year that generally ends on the Friday closest to December 31st. For convenience, references in this press release as of and for the fiscal periods ended September 30, 2016, January 1, 2016 and October 2, 2015 are indicated as being as of and for the periods ended September 30, 2016, December 31, 2015 and September 30, 2015, respectively.

Correction of an Immaterial Error

Certain historical amounts in other income (expense), net, net loss and stockholders’ equity (deficit) presented herein have been revised to reflect the correction of the accounting for non-cash interest expense associated with the 2019 Notes. See "Note 1 – Organization and Summary of Significant Accounting Policies" to Exelixis’ Condensed Consolidated Financial Statements included in Exelixis’ quarterly report on Form 10-Q for the quarterly period ended September 30, 2016 for a further description of this error and the historical amounts which have been corrected.

On November 3, 2016 Bellicum Pharmaceuticals, Inc. (Nasdaq:BLCM), a clinical stage biopharmaceutical company focused on discovering and developing novel cellular immunotherapies for cancers and orphan inherited blood disorders, reported that three abstracts on the Company’s lead product candidate, BPX-501, including an oral presentation by Dr. Neena Kapoor, to review results from a study of pediatric patients with immune deficiencies, were accepted for presentation at the 58th American Society of Hematology (ASH) (Free ASH Whitepaper) Annual Meeting (Press release, Bellicum Pharmaceuticals, NOV 3, 2016, View Source;p=RssLanding&cat=news&id=2219233 [SID1234516245]). The Company will also present data highlighting preclinical results from the application of its GoCAR-T and GoTCR technologies in two poster presentations. ASH (Free ASH Whitepaper) 2016 is being held in San Diego, California on December 3-6.

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Investor/Analyst Luncheon

Bellicum will host an investor and analyst luncheon on Monday, December 5, 2016 at 12:15 PM -1:15 PM PST at the San Diego Marriott Gaslamp Quarter Hotel. Management and investigators Dr. Franco Locatelli (Ospedale Pediatrico Bambino Gesù), Dr. Neena Kapoor (Children’s Hospital of Los Angeles), and Dr. Kris Mahadeo (Montefiore Medical Center) will discuss BPX-501 Phase 2 clinical data in the malignant and non-malignant setting. The luncheon will be webcast live and may be accessed from the News & Events section of the Bellicum website. An archived version of the webcast will be available for replay for at least two weeks following the event.

ASH Presentations on Bellicum Programs

BPX-501:

Oral Presentation: "Outcome of Children with Primary Immune-Deficiencies (PIDs) Enrolled in a Phase I-II Trial Based on the Infusion of BPX-501 Donor T Cells Genetically Modified with a Novel Suicide Gene (Inducible Caspase 9, iC9) After T-Cell Depleted HLA-Haploidentical Allogeneic Stem Cell Transplantation (Haplo-HSCT)"

Abstract Number: 72
Session Name: 732.Clinical Allogeneic Transplantation: Results: Predicting Outcome
Date: Saturday, December 3, 2016
Session Time: 7:30 AM – 9:00 AM PST
Presentation Time: 8:45 AM PST

Poster Presentation: "T-Cell Depleted HLA-Haploidentical Allogeneic Hematopoietic Stem Cell Transplantation (Haplo-HSCT) Followed by Donor Lymphocyte Infusion with T Cells Transduced with the Inducible Caspase 9 (iC9) Suicide Gene in Children with Hematological Malignancies"

Abstract Number: 4683
Session Name: 732.Clinical Allogeneic Transplantation: Results: Poster III
Date: Monday, December 5, 2016
Presentation Time: 6:00 PM – 8:00 PM PST

Poster Presentation: "Clinical Outcome and Immune Recovery after Adoptive Infusion of BPX-501 Cells (Donor T Cells Transduced with iC9 Suicide Gene) in Children with Hemoglobinopathies and Diamond-Blackfan Anemia Given a/b T-Cell Depleted HLA-Haploidentical Stem Cell Transplantation (HSCT)"

Abstract Number: 2286
Session Name: 732.Clinical Allogeneic Transplantation: Results: Poster I
Date: Saturday, December 3, 2016
Presentation Time: 5:30 PM – 7:30 PM PST

CAR-T Program: (CD123 CARs)

Poster Presentation: "Inducible MyD88/CD40 (iMC) Costimulation Provides Ligand-Dependent Tumor Eradication by CD123-Specific Chimeric Antigen Receptor T Cells"

Abstract Number: 4551
Session Name: 703.Adoptive Immunotherapy: Poster III
Date: Monday, December 5, 2016
Presentation Time: 6:00 PM – 8:00 PM PST

TCR Program: (PRAME and Bob-1 TCRs)

Poster Presentation: "Inducible MyD88/CD40 (iMC) Enhances Proliferation and Survival of Tumor-Specific TCR-Modified T Cells and Improves Anti-Tumor Efficacy in Myeloma"

Abstract Number: 4550
Session Name: 703.Adoptive Immunotherapy: Poster III
Date: Monday, December 5, 2016
Presentation Time: 6:00 PM – 8:00 PM PST

On November 3, 2016 Spectrum Pharmaceuticals, Inc. (NasdaqGS: SPPI), a biotechnology company with fully integrated commercial and drug development operations with a primary focus in Hematology and Oncology reported that the earnings conference call for the third quarter 2016 will not take place to allow for more time to finalize financial results (Press release, Spectrum Pharmaceuticals, NOV 3, 2016, View Source [SID1234516234]). The Company is re-examining the accounting treatment of the 2013 acquisition of the rights to CE Melphalan from Ligand Pharmaceuticals. This re-examination is not expected to impact reported revenue or cash balance for this or prior periods. The Company plans to release full financial results as soon as possible.

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Pipeline Update:

ROLONTIS (eflapegrastim), a novel long-acting GCSF: A pivotal non-inferiority Phase 3 study was initiated under a Special Protocol Assessment (SPA) from the FDA in 2016 to evaluate ROLONTIS in the management of chemotherapy-induced neutropenia in patients with breast cancer. The Company is initiating an additional Phase 3 study to enroll patients primarily in Europe. The Company is actively enrolling breast cancer patients in the current trial and expects to file a BLA in 2018. The Phase 2 data demonstrated that ROLONTIS was non-inferior to pegfilgrastim at the middle dose tested, and statistically superior in terms of duration of severe neutropenia at the highest dose tested. ROLONTIS was also shown to have an acceptable safety profile with no significant dose-related or unexpected toxicities.
Poziotinib, a potential best-in-class, novel, pan-HER inhibitor: Spectrum is continuing to enroll a Phase 2 breast cancer trial in the U.S., based on promising Phase 1 efficacy data in breast cancer patients who had failed multiple other HER2-directed therapies. In addition, multiple Phase 2 studies are being conducted in South Korea by Hanmi Pharmaceuticals and National OncoVenture.
Financial Update for Q3 2016:

Total product sales were $30.3 million in the third quarter of 2016. Product sales in the third quarter included: FUSILEV (levoleucovorin) net sales of $4.9 million, FOLOTYN (pralatrexate injection) net sales of $11.3 million, ZEVALIN (ibritumomab tiuxetan) net sales of $2.6 million, MARQIBO (vinCRIStine sulfate LIPOSOME injection) net sales of $1.9 million, BELEODAQ (belinostat for injection) net sales of $3.6 million, and EVOMELA (melphalan) for injection net sales of $5.9 million.

The Company ended the quarter with Cash and Cash Equivalents of $171.9 million.