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Kadmon Reports Financial and Operational Results for the Three and Six Months Ended June 30, 2016

On September 8, 2016 Kadmon Holdings, Inc. (NYSE:KDMN), a fully integrated biopharmaceutical company engaged in the discovery, development and commercialization of small molecules and biologics to address disease areas of significant unmet medical need, reported its financial and operational results for the three and six months ended June 30, 2016 (Press release, Kadmon, SEP 8, 2016, View Source [SID:1234515010]).

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"Kadmon has achieved several key clinical and corporate milestones in 2016, including the recent successful completion of our initial public offering," said Harlan W. Waksal, M.D., President and CEO at Kadmon. "As we continue to rapidly advance our pipeline, we have strengthened operational efficiency and cost-saving measures within the Company to prioritize data delivery from our ongoing and planned clinical studies."

Recent Developments
Corporate Conversion
On July 26, 2016, in connection with the pricing of Kadmon’s initial public offering ("IPO"), Kadmon Holdings, LLC filed a certificate of conversion, whereby Kadmon Holdings, LLC effected a corporate conversion from a Delaware limited liability company to a Delaware corporation and changed its name to Kadmon Holdings, Inc. All of the Company’s outstanding Class A, Class B, Class C and Class D units, and Class E redeemable convertible units converted into common stock and gave effect to a 1-for-6.5 reverse split.

Completion of IPO and Debt Conversion
On August 1, 2016, Kadmon completed its IPO, whereby it issued 6,250,000 shares of common stock at an offering price of $12.00 per share. Aggregate net proceeds received by the Company from the offering were $66.7 million, net of underwriting discounts and commissions of $5.3 million and offering expenses of $3.1 million. Upon the closing of the IPO, 19,034,467 shares of the Company’s common stock were issued as result of the conversion of the Company’s senior secured convertible credit agreement and second-lien convertible paid-in-kind notes.

Financial Results
Second Quarter 2016 Results
Loss from operations for the three months ended June 30, 2016, was $21.9 million compared to a loss from operations of $21.8 million for the same period in 2015. For the six months ended June 30, 2016, the Company’s loss from operations was $42.0 million compared to a loss from operations of $44.2 million for the same period in 2015.

Revenue totaled $6.4 million and $8.8 million for the three months ended June 30, 2016 and 2015, respectively. Revenue totaled $16.1 million and $16.5 million during the six months ended June 30, 2016 and 2015, respectively.

Research and development expenses for the three months ended June 30, 2016, totaled $8.5 million compared to $7.1 million for the same period in 2015. For the six months ended June 30, 2016, research and development expenses totaled $17.6 million compared to $14.9 million for the same period in 2015.

General and administrative expenses for the three months ended June 30, 2016, totaled $18.9 million compared to $21.8 million for the same period in 2015. For the six months ended June 30, 2016, general and administrative expenses totaled $42.3 million compared to $43.0 million for the same period in 2015.

Liquidity and Capital Resources
As of June 30, 2016, Kadmon’s cash and cash equivalents totaled $5.5 million compared to $21.5 million as of December 31, 2015.

Current Report

On September 5, 2016, Horizon Pharma Ireland Limited ("Horizon Ireland"), an indirect wholly-owned subsidiary of Horizon Pharma plc ("Horizon Pharma"), reported that it entered into a Fifth Amendment to Commercial Supply Agreement (the "Fifth Amendment") with Bio-Technology General (Israel) Ltd. ("BTG"), which amends that certain Commercial Supply Agreement, dated March 20, 2007, by and between Horizon Ireland and BTG, as amended (the "Agreement") (Press release, Horizon Pharma, SEP 8, 2016, View Source [SID:1234515008]).

Pursuant to the Fifth Amendment, among other things, BTG rescinded its prior notice of termination that was sent to Crealta Pharmaceuticals LLC in December 2015 (and would have caused the Agreement to terminate on December 15, 2018), the term of the Agreement was extended until December 31, 2030 and renews automatically for successive three year periods unless earlier terminated by either party upon three years prior written notice, and Horizon Ireland agreed to purchase certain minimum annual order quantities. The Agreement, as amended, may be terminated prior to December 31, 2030 by either party in the event of a force majeure, liquidation, dissolution, bankruptcy or insolvency of the other party, uncured material breach by the other party or after January 1, 2024, upon three years prior written notice.

The foregoing description of the Fifth Amendment does not purport to be complete and is qualified in its entirety by reference to the complete text of the Fifth Amendment, which will be filed, with confidential terms redacted, with the Securities and Exchange Commission as an exhibit to Horizon Pharma’s Quarterly Report on Form 10-Q for the quarterly period ending September 30, 2016.

BioLineRx Presents Final Results from Phase 2a Trial for Relapsed/Refractory AML at SOHO Conference

On September 8, 2016 BioLineRx Ltd. (NASDAQ/TASE: BLRX) reported that the successful final results of BL-8040’s Phase 2a clinical trial in relapsed or refractory acute myeloid leukemia (r/r AML) were presented yesterday evening at the 4th Annual Meeting of the Society of Hematologic Oncology (SOHO), being held September 7-10, 2016, in Houston, Texas (Press release, BioLineRx, SEP 8, 2016, View Source;p=RssLanding&cat=news&id=2200457 [SID:1234514998]).

BL-8040, BioLineRx’s lead oncology platform, is a short cyclic peptide that functions as a high-affinity antagonist for CXCR4, a chemokine receptor that is directly involved in tumor progression, angiogenesis, metastasis and cell survival. The Phase 2a study assessed the efficacy of BL-8040, as a single agent and in combination with Cytarabine (Ara-C), for the treatment of r/r AML. The reported data set includes 45 patients. The majority of patients in the study were heavily pretreated, with 45% of patients being refractory to one or two remission induction treatments, 19% of patients having relapsed after a short first remission of less than 12 months, and 17% of patients having undergone two or more relapses. In addition, the treated patient population included patients that had relapsed post allogeneic stem-cell transplantation (17%), as well as secondary AML patients (24%), both conditions which represent difficult-to-treat populations with poor prognoses.

Results show that treatment with BL-8040 in combination with Ara-C was safe and well tolerated at all doses tested up to and including the highest dose level of 2.0 mg/kg. Response to treatment was associated with efficient CXCR4 inhibition, resulting in high mobilization of blasts and induction of their differentiation. The composite complete remission rate, including both complete remission (CR) and complete remission with incomplete blood count recovery (CRi), was 38% in subjects receiving up to two cycles of BL-8040 treatment at doses of 1 mg/kg and higher (n=39). In the 1.5 mg/kg dose selected for the expansion phase of the study (n=22), the composite complete remission rate was 41%. These response rates are superior to the historical response rate of approximately 20% reported for high-risk AML patients treated with Ara-C alone.

In addition, the ongoing follow-up of patients participating in the study’s expansion phase and responding to the combination treatment suggests long durability of the remissions achieved, with two-thirds of these patients still alive, based on a follow-up period to date of up to 12 months.

Philip Serlin, Chief Financial and Operating Officer of BioLineRx, commented, "The results from this study clearly confirm the anti-leukemic activity of BL-8040 and reinforce our interest in the AML space. The data demonstrate that sustained inhibition of the CXCR4-CXCL12 axis with BL-8040 is safe and well tolerated, and when given in combination with Ara-C, improves the response rate historically achieved with Ara-C alone. In addition, treatment with BL-8040 as a single agent rapidly and efficiently induces mobilization, differentiation and cell death of AML cells. This selective effect on chemotherapy-resistant cells may be translated into reduction of residual disease, thus pointing to incorporation of BL-8040 into earlier AML treatment lines."

"As previously reported, we are currently in the midst of a large, randomized, controlled, Phase 2b study in the AML consolidation treatment line. In light of the data seen in the Phase 2a study, we have been allocating additional resources to this Phase 2b study. In this regard, we have recently engaged an additional AML research group to participate in the study, and last month we met with regulatory authorities to discuss the development pathway towards registration for this treatment line. In addition, yesterday we announced a significant new cancer immunotherapy collaboration with Genentech, which includes, among other studies, a Phase 1b study in the AML maintenance treatment line. This new study emphasizes our commitment to further develop BL-8040 as a treatment for AML and validates the anti-leukemic effect of BL-8040 seen in the Phase 2a study," concluded Mr. Serlin.

About BL-8040

BL-8040 is a short peptide for the treatment of acute myeloid leukemia, solid tumors, and certain hematological indications. It functions as a high-affinity antagonist for CXCR4, a chemokine receptor that is directly involved in tumor progression, angiogenesis, metastasis and cell survival. CXCR4 is over-expressed in more than 70% of human cancers and its expression often correlates with disease severity. In a number of clinical and pre-clinical studies, BL-8040 has shown robust mobilization of cancer cells from the bone marrow, thereby sensitizing these cells to chemo- and bio-based anti-cancer therapy, as well as a direct anti-cancer effect by inducing apoptosis. In addition, BL-8040 has also demonstrated robust stem-cell mobilization, including the mobilization of colony-forming cells, and T, B and NK cells. BL-8040 was licensed by BioLineRx from Biokine Therapeutics and was previously developed under the name BKT-140.

Apollo Endosurgery and Lpath Sign Merger Agreement

On September 8, 2016 Lpath, Inc. (Nasdaq: LPTN) and Apollo Endosurgery, Inc. reported that they have entered into a definitive merger agreement under which the security holders of Apollo would become the majority owners of Lpath (Filing, 8-K, Lpath, SEP 8, 2016, View Source [SID:1234515015]). Under terms of the agreement, Lpath will issue new shares of its common stock or rights to acquire its common stock to Apollo security holders. The Apollo security holders are expected to own approximately 95.8 percent of the combined company and the Lpath security holders are expected to own approximately 4.2 percent of the combined company, subject to adjustments as described in the merger agreement.

Concurrent with the closing of the merger, Apollo’s major investors have committed to invest approximately $29 million of new equity in the combined company, which will form part of the Apollo 95.8 percent ownership. The major investors include affiliates of PTV Healthcare Capital, H.I.G. BioHealth Partners, Remeditex Ventures, Novo A/S, and CPMG Inc. As of June 30, 2016 Apollo’s cash was approximately $11.6 million and long term debt was approximately $50 million. Apollo’s consolidated revenue for the calendar year ended December 31, 2015 was approximately $68 million.

The boards of directors of both Lpath and Apollo have unanimously approved the transaction, which is subject to customary closing conditions, including approval by the stockholders of each of Lpath and Apollo. The merger agreement contains certain termination rights for both Lpath and Apollo.

The transaction is expected to close during the fourth quarter of 2016. Upon closing of the transaction Lpath will be renamed Apollo Endosurgery, Inc. and the combined company intends to apply for listing on The NASDAQ Global Market under a new trading symbol.

Todd Newton, chief executive officer of Apollo, said, "Executing this transaction with Lpath is an expedient way to introduce our company to the public market. With the additional equity support we will receive from Apollo’s major investors as part of this transaction, we will have the resources to meet our near-term business needs."

Gary Atkinson, Lpath’s chief executive officer added, "Following an extensive and thorough review of strategic alternatives, we have chosen to merge with Apollo because we believe the transaction provides Lpath stockholders with an attractive opportunity for value appreciation."

Piper Jaffray & Co. is the exclusive financial advisor for Apollo in this transaction and Cooley LLP is Apollo’s legal counsel. Lpath’s exclusive financial advisor in the transaction is Torreya Partners LLC and Lpath’s legal counsel is Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP.

Management and Organization

The directors and executive officers of Lpath will resign from their positions with Lpath upon the closing of the proposed merger, and the combined company will be under the leadership of Apollo’s Newton and its current executive management team. Following the closing of the proposed merger, the Board of Directors of the combined company is expected to consist of nine members all of whom will be designated by Apollo, including representatives of each of Apollo’s five major investors. Chairman of the Board of the combined company will be Richard J. Meelia, former Chairman and Chief Executive Officer of Covidien Ltd. The corporate headquarters will be located in Austin, TX.

Tokai Pharmaceuticals Announces Review of Strategic Alternatives

On September 8, 2016 Tokai Pharmaceuticals Inc. (NASDAQ: TKAI), a biopharmaceutical company focused on developing and commercializing innovative therapies for prostate cancer and other hormonally driven diseases, reported that its Board of Directors has initiated a review of strategic alternatives for the company focused on maximizing stockholder value (Press release, Tokai Pharmaceuticals, SEP 8, 2016, View Source [SID:1234515007]).

Potential strategic alternatives that may be explored or evaluated as part of this review include a sale of the company, a reverse merger, a business combination or a sale, license or other disposition of corporate assets of the company. There is no set timetable for this process and there can be no assurance that this process will result in any such transaction. In conjunction with this process, the company is continuing to assess the best path forward for its galeterone clinical trial program. The company now anticipates all patients enrolled in the ARMOR3-SV clinical trial will discontinue treatment by the end of the year.

As part of its review of strategic alternatives, Tokai has engaged Wedbush PacGrow as its financial advisor.