On August 8, 2017 Ignyta, Inc. (Nasdaq: RXDX), a biotechnology company focused on precision medicine in oncology, reported company highlights and financial results for the second quarter ended June 30, 2017 (Press release, Ignyta, AUG 8, 2017, View Source [SID1234520175]). The company is issuing this press release in lieu of conducting a conference call.

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"During the second quarter, we provided substantial development, regulatory, and commercial strategy updates for our lead product candidate, entrectinib, a novel, investigational, orally available, CNS-active tyrosine kinase inhibitor targeting tumors that harbor TRK, ROS1, or ALK fusions," said Jonathan Lim, M.D., Chairman and CEO of Ignyta. "In addition, we received breakthrough therapy designation for entrectinib, presented exciting preclinical immunomodulation data for RXDX-106, and strengthened our balance sheet via an equity offering, providing us with the resources to continue developing meaningful new therapies for patients with cancer."

Company Highlights

Updated Progress Towards Entrectinib Dual TRK and ROS1 NDA and PMA Submissions

In April 2017, we announced a comprehensive program update on entrectinib and the STARTRK-2 trial. As of that update:

More than 50 patients with ROS1 fusion-positive non-small cell lung cancer (NSCLC) were enrolled; interim data from 32 of these patients (as assessed by investigator) demonstrated 75% confirmed RECIST objective response rate (ORR) (24 partial or complete responses out of 32) and 17.2 months median duration of response (DOR)
Entrectinib demonstrated confirmed RECIST Intracranial ORR (IC-ORR) of 83% (5 partial responses out of 6) in ROS1 NSCLC patients with measurable central nervous system (CNS) metastases
The entrectinib program was more than 85% enrolled to goal for the primary efficacy analysis to potentially support a TRK tissue agnostic NDA submission
The program is tracking towards dual NDA submissions in TRK and ROS1 in 2018, if supported by clinical data, with anticipated U.S. commercial launch in both indications in 2019.

Breakthrough Therapy Designation and Orphan Drug Designation for Entrectinib

In May 2017, the company announced that the U.S. Food and Drug Administration (FDA) granted a Breakthrough Therapy Designation (BTD) to entrectinib "for the treatment of NTRK fusion-positive, locally advanced or metastatic solid tumors in adult and pediatric patients who have either progressed following prior therapies or who have no acceptable standard therapies."

In July 2017, the company announced that FDA granted orphan drug designation to entrectinib for "treatment of NTRK fusion-positive solid tumors."

RXDX-106 AACR (Free AACR Whitepaper) Presentations

In April 2017, we presented preclinical data at the Annual Meeting of the American Association for Cancer Research (AACR) (Free AACR Whitepaper) in Washington D.C. suggesting that RXDX-106 can act as both an anti-tumor immuno-modulator and TYRO3, AXL and MER (or TAM) oncodriver inhibitor, potentially supporting clinical development of RXDX-106 in a wide variety of cancers. RXDX-106 represents a novel class of immunomodulatory agents that appears to restore innate immunity in preclinical models via potent inhibition of the TAM family of receptors.

Financing Transaction

In May 2017, the company issued an aggregate of 14.375 million shares of its common stock in an underwritten public offering at a price to the public of $6.15 per share, which resulted in aggregate gross proceeds of $88.4 million.

Second Quarter 2017 Financial Results

For the second quarter of 2017, net loss was $28.3 million, or $0.56 per share, compared with $26.7 million, or $0.70 per share, for the second quarter of 2016.

Ignyta did not record any revenue for the second quarter of 2017, or for the second quarter of 2016.

Research and development expenses for the second quarter of 2017 were $22.2 million, compared with $20.0 million for the second quarter of 2016. This increase was due to an increase in external clinical development costs and the chemistry, manufacturing and control costs associated with entrectinib and our other product candidates, and increased facilities costs of $1.2 million due to the expansion of our leased facilities space. We also incurred additional stock compensation costs of $0.8 million due in part to the increase in the number of outstanding stock options.

General and administrative expenses were $5.5 million for the second quarter of each of 2017 and 2016, respectively. There was no measurable change in our general and administrative expenses between the two periods, as the increases in facilities costs and outside services expenses were offset by a reduction in our personnel related expenditures.

At June 30, 2017, we had cash, cash equivalents and available-for-sale securities totaling $169.4 million and current and long-term debt of $32.0 million. At December 31, 2016, we had cash, cash equivalents and available-for-sale securities totaling $133.0 million and current and long-term debt of $32.0 million.

On August 8, 2017 Halozyme Therapeutics, Inc. (NASDAQ: HALO), a biotechnology company developing novel oncology and drug-delivery therapies, reported financial results and recent highlights for the second quarter ended June 30 (Press release, Halozyme, AUG 8, 2017, View Source [SID1234520172]).

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"A clear highlight of the second quarter was approval of Genentech’s RITUXAN HYCELATM in the U.S., and the resulting strong interest from new potential partners who seek to coformulate with our ENHANZE technology," said Dr. Helen Torley, president and chief executive officer. "We have strong momentum in the ENHANZE business with continued growth in royalties and a number of catalysts in the second half of 2017, including Lilly’s recent start of their Phase 1 study, Janssen’s upcoming start of their Phase 3 study of subcutaneous daratumumab and our expectation for a new collaboration agreement.

"At the same time, we are executing well in our HALO-301 study of PEGPH20 with screening and enrollment tracking to our expectations and investigator enthusiasm continuing to be strong. I also remain encouraged by recent progress screening and enrolling patients in the dose expansion portion of our Phase 1b study of PEGPH20 in combination with KEYTRUDA and the recent initiation of Genentech’s study of PEGPH20 with TECENTRIQ.

"With strategic and operational progress across both pillars, we look forward to the potential for additional value inflecting events in the coming months."

Second Quarter 2017 and Recent Highlights include:

Approval of Genentech’s RITUXAN HYCELA by the Food and Drug Administration (FDA). The combination of rituximab and Halozyme’s hyaluronidase human ENHANZE technology has been approved for patients with follicular lymphoma, diffuse large B-cell lymphoma and chronic lymphocytic leukemia and is now available to patients in more than 60 countries worldwide.
Eli Lilly initiating a Phase 1 study of an investigational new therapy in combination with Halozyme’s ENHANZE technology as part of the companies’ 2015 Global Collaboration and Licensing agreement.
Johnson and Johnson highlighting progress with the subcutaneous formulation of DARZALEX (daratumumab) during their 2017 Pharmaceutical Business Review. The formulation, which uses Halozyme’s ENHANZE technology to enable a 5-minute infusion, is currently being studied in a Phase 1b clinical trial and planned to begin a Phase 3 study later this year.
Progress in the HALO-301 study of PEGPH20 in combination with ABRAXANE (nab-paclitaxel) and gemcitabine in first line metastatic pancreas cancer patients with high levels of tumor hyaluronan (HA-High). Screening and enrollment in the study continues to track in line with expectations and investigator enthusiasm remains strong.
Initiation of a Genentech-funded Phase 1b/2 multi-arm clinical trial evaluating PEGPH20 with TECENTRIQ (atezolizumab) in patients with previously treated metastatic pancreatic ductal adenocarcinoma. The study is part of a clinical collaboration agreement announced in 2016 to evaluate PEGPH20 and atezolizumab in up to eight tumor types.
Progress in the dose expansion phase of the ongoing Phase 1b clinical study evaluating PEGPH20 in combination with KEYTRUDA (pembrolizumab) in non-small cell lung and gastric cancer patients. Halozyme may report initial response rate data by the end of the year, depending on the pace of enrollment and time to response.
Oral presentations of Halozyme’s Phase 2 randomized HALO-202 study data at the European Society for Medical Oncology’s World Congress on Gastrointestinal Cancer and American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) annual meeting. The presentations expanded on the topline results shared in January with additional data from the study as of December 2016.
Second Quarter 2017 Financial Highlights

Revenue for the second quarter was $33.8 million compared to $33.3 million for the second quarter of 2016. The year-over-year increase was driven by growth in royalties from partner sales of Herceptin SC, MabThera SC and HYQVIA, offset by a decrease in research and development reimbursements and license payments from ENHANZE partners. Revenue for the second quarter included $14.7 million in royalties, an increase of 20 percent from the prior-year period, $8.9 million in sales of bulk rHuPH20 primarily for use in manufacturing collaboration products and $3.9 million in HYLENEX recombinant (hyaluronidase human injection) product sales.
Research and development expenses for the second quarter were $38.3 million, compared to $35.5 million for the second quarter of 2016. The increase was primarily due to a ramp in spending associated with the HALO-301 study.
Selling, general and administrative expenses for the second quarter were $13.1 million, compared to $11.2 million for the second quarter of 2016. The increase was primarily due to personnel expenses, including stock compensation, for the period.
Net loss for the second quarter was $30.8 million, or $0.23 per share, compared to net loss in the second quarter of 2016 of $26.9 million, or $0.21 per share.
Cash, cash equivalents and marketable securities were $297.5 million at June 30, 2017, compared to $179 million at March 31, 2017.
Financial Outlook for 2017

Halozyme increased year-end cash guidance and reiterated all other components of its financial guidance, now expecting:

Net revenue of $115 million to $130 million;
Operating expenses of $240 million to $250 million;
Operating cash burn of $75 million to $85 million; and
Year-end cash balance of $245 million to $260 million, an increase from its prior range of $110 million to $125 million to reflect net proceeds of $135 million from a previously announced public offering of 11.5 million shares of common stock.

On August 8, 2017 Five Prime Therapeutics, Inc. (Nasdaq:FPRX), a clinical-stage biotechnology company focused on discovering and developing innovative immuno-oncology protein therapeutics, reported a corporate update and reported financial results for the quarter ending June 30, 2017 (Press release, Five Prime Therapeutics, AUG 8, 2017, View Source [SID1234520168]).

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"We continued to make significant progress on our clinical and pre-clinical programs during the quarter," said Lewis T. "Rusty" Williams, M.D., Ph.D., president and chief executive officer of Five Prime. "We are advancing our large Phase 1a/1b immuno-oncology trial studying cabiralizumab with OPDIVO in multiple tumor settings. We completed enrollment in some of the cohorts and are on track to complete enrollment in all the cohorts by the end of the year. We and BMS also plan to disclose initial clinical trial data at the SITC (Free SITC Whitepaper) annual meeting in November. At the ASCO (Free ASCO Whitepaper) annual meeting, we announced initial clinical trial data from our Phase 1/2 trial of cabiralizumab in pigmented villonodular synovitis, or PVNS, in which cabiralizumab clearly demonstrated clinical benefit in patients. We also reported encouraging monotherapy activity for FPA144 in heavily pretreated gastric cancer patients, and plan to initiate a front-line chemotherapy combination trial. Additionally, we’re on track to file at least one IND application for a new molecule each year, including this year."

Business Highlights and Recent Developments

Clinical Pipeline:

Cabiralizumab (FPA008): an investigational antibody that inhibits CSF1R and has been shown to block the activation and survival of monocytes and macrophages.

– Advanced the ongoing Phase 1a/1b trial of cabiralizumab/OPDIVO in immuno-oncology.

– Five Prime and Bristol-Myers Squibb (BMS), are evaluating the safety, tolerability and preliminary efficacy of the immunotherapy combination of cabiralizumab with the PD-1 immune checkpoint inhibitor OPDIVO (nivolumab) in advanced solid tumors, including non-small cell lung cancer, squamous cell carcinoma of the head and neck, pancreatic cancer, glioblastoma, renal cell carcinoma and ovarian cancer.

– Five Prime completed enrollment in some of the Phase 1b cohorts and expects to complete enrollment in all the cohorts in the second half of 2017.

– Five Prime and BMS expect to present initial clinical trial data at the Society for Immunotherapy of Cancer (SITC) (Free SITC Whitepaper) meeting in November.

– Advanced the ongoing Phase 1/2 trial of cabiralizumab in patients with PVNS.

– Announced initial clinical trial data at the 2017 American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) Annual meeting in June.
– There were no dose-limiting toxicities (DLTs) observed at doses up to 4 mg/kg.
– Cabiralizumab demonstrated clinical benefit in patients with PVNS.
– Most patients enrolled at the 4 mg/kg dose experienced tumor reduction.
– 5 out of 11 patients had a radiographic response (4 confirmed).
– Improvement in median Ogilvie-Harris composite score of pain and function was reported in both responders and non-responders.

– Five Prime plans to enroll additional patients in the Phase 2 portion of the trial to refine the dosing schedule to optimize the therapeutic index of cabiralizumab in this chronic disease setting. These additional data are intended to support a pivotal trial for cabiralizumab in PVNS.
FPA144: an isoform-selective antibody in development as a targeted immuno-therapy for tumors that overexpress FGFR2b, a splice variant of a receptor for some members of the fibroblast growth factor (FGF) family. Five Prime plans to initiate a global pivotal trial of FPA144 combined with chemotherapy as a front-line treatment for metastatic gastric cancer. In addition, Five Prime is adding a blood-based diagnostic tool to increase the addressable population to 10% of patients with gastric cancer.

– Advanced the Phase 1 monotherapy trial of FPA144 in patients with gastric cancer. Enrollment continues in the expansion portion of the trial, evaluating the safety, PK and efficacy of biweekly 15 mg/kg infusions of FPA144 in patients with gastric cancer whose tumors overexpress FGFR2b.

– Announced updated clinical trial data from the Phase 1 trial of single-agent FPA144 at the 2017 ASCO (Free ASCO Whitepaper) Annual Meeting.

– FPA144 was well tolerated at doses tested up to 15 mg/kg in patients with advanced solid tumors, including patients with gastric cancer.
– FPA144 monotherapy demonstrated early evidence of anti-tumor efficacy in heavily pre-treated patients (median of 3 prior lines of therapy).
– Radiographic responses:
– 5 Partial Responses (4 confirmed, 1 unconfirmed) in 21 patients (across three dose levels)
– Objective Response Rate (ORR): 19%
– Median duration of response of 15.4 weeks

– Activities underway to initiate a global registrational clinical trial in 2018 for FPA144 in combination with chemotherapy as a front-line gastric cancer therapy.

– Launched a Phase 1 safety trial for FPA144 monotherapy in patients with gastric cancer in Japan, where the incidence of gastric cancer is high. Completion of this Phase 1 trial is intended to enable the inclusion of Japanese patients in the planned global Phase 3 clinical trial.

– Developing companion diagnostics to identify the 10% of gastric cancer patients eligible for FPA144 therapy. Five Prime plans to use either immunohistochemistry (IHC) or circulating tumor DNA (ctDNA) tests to identify eligible patients for its global Phase 3 clinical trial. By adding the ctDNA test, Five Prime believes it will double the eligible patient population to 10% from the previous 5% identified by IHC testing alone.

– Preparing for a Phase 1 safety trial to test the combination of FPA144 with chemotherapy. Five Prime plans to begin dosing patients in a Phase 1 clinical trial to test the safety of ascending doses of FPA144 in combination with chemotherapy by the end of 2017. This safety trial will support the start of the global Phase 3 clinical trial.

– Discussing design of Phase 3 clinical trial with regulatory authorities. Five Prime has begun discussions with regulatory authorities and is actively working on the design of the Phase 3 clinical trial of FPA144 in combination with chemotherapy as a front-line gastric cancer therapy.

– Advanced the Phase 1 monotherapy trial of FPA144 in patients with bladder cancer. The company opened an additional cohort in the Phase 1 clinical trial to test FPA144 as a treatment for bladder cancer patients whose tumors overexpress FGFR2b, as assessed by the company’s IHC test. Five Prime is adding sites that specialize in bladder cancer to support enrollment in this cohort.

FP-1039: a protein drug designed to block FGF signaling. As a ligand trap, FP-1039 binds to and neutralizes a subset of FGF ligands (such as FGF2), preventing these growth-promoting and angiogenic proteins from reaching FGFR1 on the surface of tumor cells.

– Clinical data from the phase 1b trial in mesothelioma have been accepted as an oral presentation at the European Society for Medical Oncology (ESMO) (Free ESMO Whitepaper) 2017 Congress in September. Our former partner, GlaxoSmithKline (GSK), is completing the Phase 1b trial combining FP-1039 with front-line pemetrexed and cisplatin in untreated, unresectable mesothelioma. GSK concluded trial recruitment with 25 patients enrolled at the 15 mg/kg dose in June 2016.
Preclinical Research and Development:

Progress in pre-clinical and research programs.
– Five Prime is on track to achieve the goal of filing at least one IND application for a new molecule each year for the foreseeable future, beginning this year.

Continue to advance three preclinical development candidates in IND-enabling studies.
– FPA150 (anti-B7-H4)
– An antibody designed for two mechanisms of action: to block an inhibitory T cell checkpoint pathway and to enhance killing of B7-H4-expressing tumors by ADCC. B7-H4 is frequently overexpressed in breast, ovarian and endometrial cancers.
– Investigational New Drug (IND) application planned for the fourth quarter of 2017.
– FPA150 was selected for an oral poster discussion during the ESMO (Free ESMO Whitepaper) 2017 Congress.

– FPT155 (CD80-Fc)
– A multi-targeting immune modulator that can stimulate T cell responses through three critical pathways: CTLA4 blockade, CD28 agonism (without superagonism) and PD-L1 blockade.
– Potential 2018 IND application.

– FPA154 (GITR agonist antibody)
– A tetravalent agonist antibody designed for greater GITR activation versus conventional antibodies. Conventional GITR agonist antibodies have two GITR binding sites while FPA154 has four.
– Potential 2018 IND application.
Summary of Financial Results and Guidance:

Cash Position. Cash, cash equivalents and marketable securities totaled $350.7 million on June 30, 2017, compared to $421.7 million on December 31, 2016. The decrease in cash was primarily attributable to cash used in operations to advance the FPA144 clinical development program, the cabiralizumab Phase 2 clinical trial in PVNS and preclinical development programs.

Revenue. Collaboration revenue for the second quarter of 2017 decreased by $1.4 million to $7.8 million from $9.2 million in the second quarter of 2016. This decrease was primarily due to completing the research term of our research collaboration with GSK in respiratory diseases in July 2016 offset by revenue recognized under the 2015 cabiralizumab collaboration agreement with BMS, under which Five Prime is reimbursed for the expenses from the cabiralizumab immuno-oncology trial.

R&D Expenses. Research and development expenses for the second quarter of 2017 increased by $19.5 million to $41.7 million from $22.2 million in the second quarter of 2016. This increase was primarily related to advancing cabiralizumab in the Phase 2 clinical trial in PVNS and the Phase 1a/1b clinical trial in immuno-oncology and advancing pre-clinical development programs towards IND filings.

G&A Expenses. General and administrative expenses for the second quarter of 2017 increased by $1.3 million to $9.4 million from $8.1 million in the second quarter of 2016. This increase was primarily due to increases in payroll and stock-based compensation expenses.
Net Loss. Net loss for the second quarter of 2017 was $44.3 million, or $1.58 per basic and diluted share, compared to a net loss of $13.1 million, or $0.49 per basic and diluted share, for the second quarter of 2016.

Shares Outstanding. Total shares outstanding were 28.8 million as of June 30, 2017.
Cash Guidance. Five Prime expects full-year 2017 net cash used in operating activities to be less than $120 million. The company estimates ending 2017 with slightly less than $300 million in cash, cash equivalents and marketable securities.

On August 8, 2017 Endocyte, Inc. (NASDAQ:ECYT), a leader in developing targeted small molecule drug conjugates (SMDCs) and companion imaging agents for personalized therapy, reported financial results for the second quarter ending June 30, 2017, and provided a clinical and pipeline update (Press release, Endocyte, AUG 8, 2017, View Source [SID1234520166]).

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"We’ve continued to make important progress on each of our three development programs," said Mike Sherman, President and CEO of Endocyte. "Dr. Michael Jensen at the Seattle Children’s Research Institute has exceeded our expectations in the breadth of work he has completed in optimizing the vector to be used in our chimeric antigen receptor T-cell (CAR T-cell) therapy, and we are happy to report that we expect to initiate the CAR T-cell manufacturing process for clinical supply in the fourth quarter of this year. In addition, we have filed an Investigational New Drug (IND) application for EC2629, which we believe is the first agent in development that simultaneously targets cancer cells and the tumor associated macrophages (TAMs) that support and protect them – an approach that could continue to evolve the immunotherapy treatment landscape. Finally, we expect to complete enrollment of taxane-exposed prostate cancer patients in the EC1169, PSMA-tubulysin expansion trial this fall."

"We believe our pipeline has significant potential to create value and we are committed to effective, timely execution in bringing these assets forward through clinical development and identifying paths to accelerate value-driving catalysts. With this in mind, our strategy is to select receptor-positive patients in highly-targeted indications from the beginning of development, including during dose escalation," continued Mr. Sherman. "We will also continue to objectively measure our pipeline investments relative to opportunities to outlicense assets or access external opportunities to ensure we are deploying capital productively."

Development Programs Overview

CAR T-Cell (Bi-specific adaptor molecule): Today, Endocyte announced that Dr. Michael Jensen of Seattle Children’s Research Institute will lead the clinical evaluation of Endocyte’s first CAR T-cell adaptor molecule in patients with osteosarcoma. This is primarily a pediatric indication with a significant need for new therapeutic options. Recent results from tumor micro-array analysis and human intravital fluorescent imaging studies have confirmed this disease as positive for the folate receptor, the target of Endocyte’s first bi-specific adaptor. Pre-clinical evaluations for the CAR T-cell program by Dr. Jensen are expected to be completed in the second half of 2017, in anticipation of a potential IND filing in 2018. Multiple additional adaptor molecules designed to be directed to distinct tumor targets including, potentially, PSMA, NK1R and others, are in development through the company’s collaboration with Purdue University.

In April, Endocyte announced new research in a late-breaking poster session at the American Association for Cancer Research (AACR) (Free AACR Whitepaper) Annual Meeting on this application of Endocyte’s SMDC technology. Data demonstrated that Endocyte’s bi-specific adaptor molecules can mitigate or eliminate adverse cytokine storms in animal models which could meaningfully improve the safety and tolerability of CAR T-cell therapies.

EC1169 (PSMA-targeted tubulysin): Endocyte is currently enrolling a phase 1 expansion cohort of 40 metastatic castration-resistant prostate cancer (mCRPC) patients who have previously been treated with a taxane-based therapy. Data presented at the annual meeting of the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) in June demonstrated EC1169’s anti-tumor activity particularly in patients with previous exposure to taxane therapy. Endocyte stopped enrollment of taxane-naïve mCRPC patients in the trial in June. Updated interim results will be presented at the annual meeting of the European Society for Medical Oncology (ESMO) (Free ESMO Whitepaper) in September. This presentation is expected to be an incremental update to data presented at ASCO (Free ASCO Whitepaper) a few months prior. Completion of enrollment is expected in the fall.

EC2629 (Folate-targeted PBD): Endocyte recently filed an IND with the U.S. FDA and is planning to initiate a phase 1 clinical trial in patients selected as positive for the folate receptor in cancers where TAMs are known to be prevalent in the tumor micro-environment, for example, breast, endometrial, ovarian, and non-small cell lung cancers. This novel agent leverages a proprietary DNA crosslinking warhead targeted to cancer cells and the TAMs that both support their growth as well as protect them from the immune system. This mechanism is particularly compelling in light of recent research that has identified mechanisms by which TAMs can mediate resistance to the use of checkpoint inhibitor therapies such as PD-1 and PD-L1.

Financial Expectations

The company anticipates its cash, cash equivalents and investments balance at the end of 2017 to be approximately $105 million. As the full expense impact of the company’s restructuring is expected to be realized by the end of the fourth quarter of 2017, the company anticipates cash expenses to be approximately $5 million per quarter prior to potential increases associated with advancing clinical trials and new investment opportunities currently under evaluation.

Second Quarter 2017 Financial Results

Endocyte reported a net loss of $11.7 million, or $0.28 per basic and diluted share, for the second quarter of 2017, compared to a net loss of $14.0 million, or $0.33 per basic and diluted share for the same period in 2016.

In June 2017, the company stopped enrollment in its EC1456 phase 1b trial as the assessment of trial data did not yield the level of clinical activity necessary to support continued advancement of EC1456. The company is, however, continuing enrollment of a small number of patients in its EC1456 ovarian cancer surgical study to inform other SMDC programs in development. In addition, in June, Endocyte narrowed the focus of its EC1169 development program, refocused its efforts on two pre-clinical programs, and reduced its workforce by approximately 40% to align resources to focus aggressively on the company’s highest value opportunities while maintaining key capabilities. Endocyte recorded $2.3 million of restructuring expenses for the three months ended June 30, 2017 as follows:

Included in research and development expenses were expenses for employee termination benefits of $0.9 million, $0.9 million for the remaining EC1456 phase 1b trial expenses, including site close-out expenses, $0.3 million related to other restructuring expenses, and $0.1 million related to fixed asset impairment charges; and
Included in general and administrative expenses were expenses for employee termination benefits of $0.1 million.
Research and development expenses were $8.7 million for the second quarter of 2017, compared to $6.8 million for the same period in 2016. The increase was primarily attributable to $2.2 million of expenses recorded in June due to the company’s restructuring relating primarily to severance for the workforce reduction, EC1456 trial termination expenses and fixed asset impairment charges. Other increases included expenses for the EC1169 phase 1 trial, development of EC2629 and other pre-clinical and general research. These increases were partially offset by a decrease in non-cash stock compensation expense as a result of employee terminations since the second quarter of 2016.

General and administrative expenses were $3.3 million for the second quarter of 2017, compared to $7.4 million for the same period in 2016. The decrease was due to a decrease in compensation expense, including non-cash stock compensation expense and severance expense related to the resignation of our former Chief Executive Officer in June of 2016.

Cash, cash equivalents and investments were $118.4 million at June 30, 2017, compared to
$154.6 million at June 30, 2016, and $138.2 million at December 31, 2016.

On August 8, 2017 Delcath Systems, Inc. (NASDAQ: DCTH), an interventional oncology Company focused on the treatment of primary and metastatic liver cancers, reported financial results for the three and six months ended June 30, 2017 (Press release, Delcath Systems, AUG 8, 2017, View Source;p=RssLanding&cat=news&id=2292560 [SID1234520165]).

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Highlights from the second quarter of 2017 and recent weeks include:

Revenue for the second quarter of 2017 increased 20% to $0.6 million from $0.5 million in the prior-year quarter;
Revenue for the first six months of 2017 increased 44% to $1.3 million from $0.9 million in the prior-year period;
Inclusion of CHEMOSAT in Dutch Health Authorities Guidelines (published in July 2017) as a recommended treatment for ocular melanoma liver metastases;
Reduction of an additional $9.5 million in principal amount related to the Company’s Convertible Notes, with $12.6 million in debt remaining; and
Raised $2.0 million through the issuance of Series B preferred shares to current noteholders, which are convertible into common shares at $0.153 per share.
Proposal on Effecting a Reverse Stock Split

Delcath recently filed a Definitive Schedule 14A detailing a proposed reverse stock split, subject to shareholder approval. Delcath needs the ability to issue common shares to fund operations, support clinical programs, service the amortization of its Convertible Note and explore alternative equity financing opportunities. However, the Company is currently at the maximum amount of authorized shares of common stock under its Certificate of Incorporation. Without a significant increase in available authorized shares, the Company is unable to access the $11.8 million of cash in the restricted accounts associated with the Convertible Notes issued last year, or to undertake any type of equity financing. The proposed reverse stock split will reduce the number of shares outstanding and provide Delcath with the flexibility to raise equity capital and support its important clinical trials and commercial efforts in Europe.

In addition, the reverse stock split will allow Delcath to regain compliance with NASDAQ Capital Markets continued-listing requirements, which provides liquidity and other important benefits to the Company and its investors. It is important to note that the floor price for the Convertible Note will adjust with the effected reverse stock split ratio to a minimum of $1.00. Delcath believes this will serve to support the stock price following a split and reduce future potential dilution related to the Convertible Notes.

For these reasons, the Company’s Board of Directors encourage all investors to support the proposed reverse stock split. Investors are encouraged to read the Company’s Definitive Schedule 14A in detail for full information regarding the proposed reverse stock split.

Management Commentary

"During the first half of 2017 we continued to advance our clinical development programs in ocular melanoma liver metastases (OM) and intrahepatic cholangiocarcinoma (ICC), while making steady progress with the ongoing commercialization of CHEMOSAT in Europe," said Jennifer K. Simpson, Ph.D., MSN, CRNP President and CEO of Delcath.

"Revenues for the second quarter of 2017 increased 20% from a year ago, demonstrating continued growing demand in our core markets. This increase is largely driven by the recent establishment of ZE diagnostic-related (DRG) reimbursement for CHEMOSAT in Germany. We continue to leverage this positive German reimbursement to support our efforts to obtain market access and payment in other markets such as the U.K. and the Netherlands, where there is growing interest in and use of CHEMOSAT. This is evidenced by the recent inclusion of CHEMOSAT in the Dutch Health Authorities treatment guidelines for ocular melanoma liver metastases, an important step toward eventual reimbursement coverage of CHEMOSAT in the Dutch market.

"Our primary focus continues to be on the clinical trials that comprise our Clinical Development Program (CDP), where we believe shareholder value ultimately lies. Our CDP consists of our FOCUS Phase 3 clinical trial of Melphalan/HDS in hepatic dominant OM (the FOCUS trial) and our intrahepatic cholangiocarcinoma (ICC) pivotal trial, which is scheduled to initiate enrollment by the end of 2017. The objective for our Phase 2 trial program in hepatocellular carcinoma (HCC) and ICC was to identify an efficacy signal worthy of further clinical investigation. This objective was met by the retrospective data collection performed by European investigators last year, which informed our development path for ICC. The U.S. Food and Drug Administration (FDA) endorsed that development pathway via a Special Protocol Assessment agreement negotiated earlier this year. With the Phase 2 trial program goals now met, we have terminated enrollment in the Phase 2 trials in order to devote available resources to the FOCUS Trial and the Phase 3 ICC pivotal trial.

"In March, we announced a SPA with the FDA for a pivotal trial of our Melphalan/HDS to treat ICC. As with the FOCUS trial, this SPA indicates that the trial design adequately addresses objectives that, if met, will support regulatory requirements for approval of Melphalan/HDS in the treatment of ICC. Since announcing the SPA we have been working with potential trial sites with the goal of initiating patient enrollment by the end of 2017. We are committed to executing this trial in a financially prudent manner and for this reason initiation of enrollment is contingent on effecting the reverse stock split as outlined in our consent proposal.

Enrollment in our FOCUS Phase 3 clinical trial of Melphalan/HDS in hepatic dominant OM (the FOCUS trial) has been proceeding more slowly than we expected. We have been continually reviewing the pace of recruitment in this study, and have discovered reluctance among some patients to participate as there was no mechanism to receive the experimental treatment at any time if they were randomized to the best alternative care arm. In a rare and deadly disease such as OM, it is not surprising that patients facing few treatment options would be reluctant to participate in a trial where there is no opportunity to receive the experimental treatment and where treatment is commercially available on a private pay basis in Europe. We are currently exploring options that will allow us to accelerate enrollment, which include adding new sites in both the U.S. and Europe. We have recently added several European clinical sites that are expected to provide increased patient flow starting this fall. We remain on track to conduct an interim safety analysis by the end of this year.

"Throughout the balance of 2017 we remain dedicated to advancing the clinical programs for our innovative Melphalan/HDS as well as to our commercialization efforts for CHEMOSAT in Europe. In order to support these important programs and create value, we need to enhance our capital structure, which begins with a favorable vote on the reverse stock split," concluded Dr. Simpson.

Second Quarter Financial Results

Revenue for the second quarter of 2017 was $0.6 million, an increase of 20% from $0.5 million for the second quarter of 2016. Selling, general and administrative expenses increased modestly to $2.5 million in the 2017 second quarter from $2.3 million in the prior-year quarter. Research and development expenses for the second quarter of 2017 increased to $2.5 million from $1.9 million in the prior-year quarter. Total operating expenses for the current quarter were $5.0 million compared with $4.2 million in the prior-year quarter.

The Company recorded a net loss for the three months ended June 30, 2017, of $2.0 million, a decrease of $4.7 million, or 70.9%, compared to a net loss of $6.7 million for the same period in 2016. This decrease in net loss is primarily due to a $9.6 million gain on the extinguishment of the June 2016 Series C Warrants which was offset by a $5.3 million increase in interest expense related to the convertible note, both non-cash items. Additionally, there was a $1.2 million decrease in the change in the fair value of the warrant liability, a non-cash item, offset by a $0.8 million increase in operating expenses primarily related to increased investment in our clinical trial initiatives.

Six Month Financial Results

Revenue for the first half of 2017 was $1.3 million, an increase of 44% from $0.9 million for the first half of 2016. Selling, general and administrative expenses in the first half of 2017 were approximately $4.9 million compared with $4.7 million in the prior-year period. Research and development expenses for the first six months of 2017 increased to $4.8 million from $3.3 million in the first six months of 2016. Total operating expenses for the first half of 2017 were $9.8 million compared with $8.0 million in the prior-year quarter.

The Company recorded a net loss for the six months ended June 30, 2017, of $13.3 million, an increase of $4.8 million, or 56.5%, compared to a net loss of $8.5 million for the same period in 2016. This increase in net loss is primarily due to a $13.7 million increase in interest expense primarily related to the amortization of debt discounts, offset by a $9.6 million gain on the extinguishment of the June 2016 Series C Warrants, both non-cash items. Additionally, there was a $1.8 million increase in operating expenses primarily related to increased investment in our clinical trial initiatives, offset by $0.4 million increase in gross profit and a $0.7 million increase in the change in the fair value of the warrant liability, a non-cash item.

Balance Sheet Highlights

As of June 30, 2017, Delcath had cash and cash equivalents of $1.8 million, compared with $4.4 million as of December 31, 2016. In addition, the Company has $12.9 million in restricted cash primarily related to the Convertible Notes issued in June 2016. During the six months ended June 30, 2017, the Company used $8.1 million of cash to fund operating activities. Assuming the Company is able to effect a reverse stock split as proposed in its recent consent solicitation statement filed with the SEC on July 26, 2017, management believes that its capital resources are adequate to fund operating activities through the end of 2017.

Recent Financial Transactions

In July 2017 Delcath issued two series of preferred stock (Series A Preferred Stock and Series B Preferred Stock) in transactions with holders of its Convertible Note. The Series A shares were issued to address a short-term valuation issue for common shares delivered to the Note holders to close an installment period. Through the Series A Preferred Shares placement, the Company was able to value the open installment shares such that the amount of debt remaining under the Convertible Note was reduced by $4.2 million. The Series B Preferred Shares, which are convertible to common shares at $0.153, allowed the Company to raise $2.0 million in unrestricted cash.