On August 8, 2016 Clovis Oncology, Inc. (NASDAQ:CLVS) reported financial results for the quarter ended June 30, 2016, and provided an update on the Company’s clinical development programs and regulatory outlook for the remainder of 2016 (Press release, Clovis Oncology, AUG 8, 2016, View Source;p=RssLanding&cat=news&id=2193846 [SID:1234514361]).

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"We are pleased to have completed the submission of our NDA for rucaparib in the treatment of advanced ovarian cancer in late June," said Patrick J. Mahaffy, President and CEO of Clovis Oncology. "We continue to focus on our broader clinical development program for rucaparib, and are actively preparing for a potential U.S. launch of rucaparib."

Second Quarter 2016 Financial Results

Clovis had $378.5 million in cash, cash equivalents and available-for-sale securities as of June 30, 2016. Cash used in operating activities was $68.0 million for the second quarter of 2016 and $151.7 million for the first half of 2016, compared with $57.2 million and $105.6 million for the comparable periods of 2015. Cash used in operating activities in the second quarter of 2016 was down $15.7 million, or 18.8 percent compared to the first quarter of 2016. Clovis had approximately 38.5 million outstanding shares of common stock as of June 30, 2016.

Clovis reported a net loss of $129.3 million, or ($3.37) per share, for the second quarter of 2016 and $212.7 million or ($5.54) per share for the first half of 2016. Net loss for the second quarter of 2016 included share-based compensation expense of $9.5 million and $20.5 million for the first half of 2016, compared to $8.4 million and $17.1 million for the comparable periods of 2015.

Notably, the net loss for the second quarter and first half of 2016 includes a net expense non-cash impact of $49.9 million relating to the lucitanib product rights recorded in 2013 in connection with the Company’s acquisition of Ethical Oncology Science S.p.A. (EOS), comprised of a $104.5 million non-cash expense for the impairment of the intangible asset, a $25.5 million non-cash expense credit for the reduction in the fair value of the contingent purchase consideration liability and a $29.2 million related non-cash income tax benefit. The adjusted net loss excluding these items was $79.4 million or ($2.07) per share in the second quarter of 2016 and $162.8 million or ($4.24) per share for the first half of 2016. The net loss for the second quarter of 2015 was $71.5 million or ($2.10) per share, and $134.7 million or ($3.96) per share for the first half of 2015.

Research and development expenses totaled $67.7 million for the second quarter of 2016, and $142.3 million for the first half of 2016, compared to $60.4 million and $117.1 million for the comparable periods in 2015. The year-over-year increase in expenses is primarily due to increased development activities for the rucaparib program and increased personnel-related expenses, partially offset by lower expenses related to clinical development activities for rociletinib. In addition, research and development expenses in the second quarter of 2016 were down $6.9 million, or 10.2 percent compared to the first quarter of 2016.

General and administrative expenses totaled $9.6 million for the second quarter of 2016, and $19.4 million for the first half of 2016, compared to $7.2 million and $14.0 million for the comparable periods in 2015. The increase year over year is primarily due to higher legal expense, personnel costs for employees engaged in general and administrative activities and consulting fees.

Clovis expects cash used in operating activities for 2016 will total approximately $294 – $309 million, and to end the year with approximately $220 – $235 million in cash, cash equivalents and available-for-sale securities. The Company anticipates being able to continue to fund operations into 2018 from currently available cash, cash equivalents and available-for-sale securities.

As noted above, in the second quarter of 2016 Clovis recorded a non-cash impairment charge of $104.5 million to reflect a reduction in the estimated fair value of the intangible asset related to lucitanib. This reduction in fair value was the result of Clovis and its development partner’s decision to discontinue enrollment in the ongoing trials and any future development of lucitanib for breast cancer. During the fourth quarter of 2015, Clovis and its development partner discontinued the development of lucitanib for lung cancer. The Company expects to make a decision regarding the future development, if any, of lucitanib during the next several quarters.

In connection with its acquisition of EOS, Clovis is obligated to pay additional consideration to the former EOS shareholders if certain future regulatory and sales milestones for lucitanib are achieved. The estimated fair value of these contingent payments is recorded as a liability on the Company’s balance sheet. During the second quarter of 2016, Clovis recorded a $25.5 million reduction to zero in the fair value of the contingent consideration liability due to the uncertainty of achieving any of the milestones. This reduction is included as a non-cash credit to operating expenses in Clovis’ 2016 results of operations. There are no remaining lucitanib-related liabilities on the Company’s balance sheet.

2016 Key Milestones and Objectives for Rucaparib

During the second quarter of 2016, Clovis completed the submission of its New Drug Application (NDA) regulatory filing to the U.S. Food and Drug Administration (FDA) for rucaparib for the monotherapy treatment of patients with advanced ovarian cancer with deleterious BRCA-mutated tumors (inclusive of both germline and somatic BRCA mutations) previously treated with multiple prior therapies. Rucaparib was granted Breakthrough Therapy designation by the FDA in April 2015. The Company expects the FDA to provide notification in late August whether they have accepted the rucaparib NDA filing for review, and provide a PDUFA date in the event the filing is accepted.

Foundation Medicine, Clovis’ companion diagnostic partner, has submitted a Premarket Approval (PMA) application for its diagnostic assay designed to identify both germline and somatic BRCA mutations with the FDA. The timing of the submission is expected to allow for regulatory approval of the companion diagnostic at substantially the same time that rucaparib could be approved.

In addition, the Company intends to submit its Marketing Authorization Application (MAA) for rucaparib to the European Medicines Agency for a comparable ovarian cancer treatment indication in Q4 2016.

Clovis has completed enrollment in the ARIEL3 Phase 3 randomized maintenance study, with data expected to be available in Q4 2017. Pending positive data, the Company intends to follow up with a supplemental NDA for second-line maintenance therapy in women with ovarian cancer who have responded to platinum based therapy.

During the second quarter Clovis entered into a clinical trial collaboration with Genentech, a member of the Roche Group, to evaluate a novel combination therapy of Genentech’s cancer immunotherapy atezolizumab (MPDL3280A; anti-PDL1) and rucaparib for the treatment of gynecological cancers, with a focus on ovarian cancer. The Phase 1b trial is expected to begin screening patients in Q1 2017.

Also during the fourth quarter of 2016, Clovis intends to initiate the ARIEL4 confirmatory study in advanced BRCA mutant (inclusive of germline and somatic) ovarian cancer and an investigator-sponsored study evaluating rucaparib and bevacizumab in combination as a first-line maintenance therapy for advanced ovarian cancer.

Prostate Cancer Development Plan

Clovis intends to initiate two registration studies of rucaparib in the metastatic castrate-resistant prostate cancer (mCRPC) setting.

The Phase 2 single-arm study is expected to include patients with BRCA mutations and ATM mutations (both inclusive of germline and somatic) or other deleterious mutations in other homologous recombination (HR) repair genes and all patients will have progressed after receiving one line of taxane-based chemotherapy and one or two lines of androgen-receptor (AR) targeted therapy, in the castration-resistant setting. The planned primary end points are radiologic overall response rate in patients with measurable disease and PSA response rate in patients who do not have measurable disease. Clovis intends to initiate this trial during the fourth quarter of 2016.

The Phase 3 comparative study is planned to include BRCA mutant and ATM mutant (both inclusive of germline and somatic) patients who have progressed on AR-targeted therapy and who have not yet received chemotherapy in the castrate-resistant setting. The Phase 3 study will compare rucaparib to physician’s choice of AR-targeted therapy or chemotherapy in these patients. The intended primary end point is radiologic progression-free survival. Clovis intends to initiate this trial during the first quarter of 2017.

An abstract based on the ovarian NDA dataset has been accepted for an oral presentation at the ESMO (Free ESMO Whitepaper) 2016 Congress in October 2016.

About Rucaparib

Rucaparib is an oral, small molecule inhibitor of PARP1, PARP2 and PARP3 being developed for advanced ovarian cancer. Rucaparib was granted Breakthrough Therapy designation by the FDA in April 2015; and in late June 2016, Clovis completed the submission of its NDA to the FDA. Additionally, rucaparib is being developed as maintenance therapy in the ARIEL3 trial for patients with tumors with BRCA mutations and other DNA repair deficiencies beyond BRCA, including those with high genomic loss of heterozygosity (LOH) commonly referred to as "BRCA-like." Data from ARIEL3 are expected in Q4 2017, which is expected to be followed by the submission of a sNDA for a second line or later maintenance indication. Clovis is also exploring rucaparib in other solid tumor types with significant BRCA and BRCA-like populations, including prostate, breast and gastroesophageal cancers. Clovis holds worldwide rights for rucaparib.

About Lucitanib

Lucitanib is an oral, potent inhibitor of the tyrosine kinase activity of vascular endothelial growth factor receptors 1 through 3 (VEGFR1-3), platelet-derived growth factor receptors alpha and beta (PDGFRα-β) and fibroblast growth factor receptors 1 through 3 (FGFR1-3). Clovis, which holds exclusive U.S. and Japanese rights, is collaborating with its development partner Les Laboratoires Servier (Servier) on the global clinical development of lucitanib outside of China.

On August 8, 2016 Varian Medical systems reported that The Cincinnati Children’s/UC Health Proton Therapy Center officially opened today equipped with the ProBeam System from Varian Medical Systems (NYSE: VAR). Housing two treatment rooms offering image-guided intensity-modulated proton therapy (IMPT), as well as one room dedicated to research, clinicians at the center are now working with patients and planning to begin treatments in September (Press release, Varian Medical Systems, AUG 8, 2016, View Source [SID:1234514360]). The center will also utilize the ARIA Oncology information system with Eclipse treatment planning, providing a fully integrated solution for adaptive proton therapy.

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With proton therapy, the risk of damage to healthy tissues and potential side effects are reduced because proton beams can be controlled so that they deposit their energy within the tumor site rather than passing all the way through the patient. The treatment is particularly suitable for pediatric cancer cases as well as for adults.

With the ProBeam system, Cincinnati Children’s/UC Health Proton Therapy Center is capable of delivering the most precise form of proton therapy using Varian’s pencil beam scanning technology. The system is designed to precisely deposit doses into tumors layer by layer using a pencil-point beam that scans back and forth across the target area.

Stated in a related release today from Cincinnati Children’s/UC Health Proton Therapy Center titled: Grand Opening of Cincinnati Children’s/UC Health Proton Therapy Center, one treatment room will be devoted to pediatric patients and the other to adult patients. The dedicated research room will focus on several different areas including: imaging, computer-targeting technologies and patient positioning.

"We are excited about our collaboration with Cincinnati Children’s and UC Health on the opening of this new proton center and bringing this advanced cancer fighting technology to the Cincinnati area," said Moataz Karmalawy, general manager of Varian’s Particle Therapy division. "This will be the 3rd center with Varian’s ProBeam System to commence clinical operation in North America. The opening of this center is another important step in the growing availability of ProBeam proton therapy around the world."

Additionally, Varian’s proton therapy technology is being used to treat patients at the Scripps Proton Therapy Center in San Diego, Maryland Proton Therapy Center in Baltimore, the Rinecker Proton Therapy Center in Munich, and at the Paul Scherrer Institute in Switzerland. Varian also has contracts for system installations at 12 other sites around the world.

For more information on Varian’s proton therapy solutions, visit View Source

On August 8, 2016 Verastem, Inc. (NASDAQ: VSTM), focused on discovering and developing drugs to treat cancer, reported financial results for the second quarter ended June 30, 2016, and also provided an overview of certain corporate developments (Press release, Verastem, AUG 8, 2016, View Source;p=RssLanding&cat=news&id=2193720 [SID:1234514355]).

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"We continue to execute on the research and development of our two clinical-stage oncology programs targeting several high unmet need tumor types," said Robert Forrester, President and Chief Executive Officer of Verastem. "The scientific evidence of the importance of focal adhesion kinase in maintaining the tumor microenvironment that leads to immunosuppression and aggressive cancer continues to mount as described in the recent Nature Medicine publication from our collaborators at The Washington University in Saint Louis. Enrollment and dosing continues in the Phase 1 dose-escalation study evaluating our lead focal adhesion kinase inhibitor VS-6063 in combination with Merck’s PD-1 inhibitor pembrolizumab and gemcitabine in patients with pancreatic cancer. We are looking forward to the commencement of a clinical collaboration trial evaluating VS-6063 in combination with Merck-KGaA and Pfizer’s PD-L1 inhibitor avelumab in ovarian cancer during the second half of the year. We closed the quarter with a strong balance sheet totaling $92.9 million in cash, cash equivalents and short-term investments."

Second Quarter 2016 and Recent Highlights:
Focal Adhesion Kinase (FAK) Inhibition Program
Published Preclinical Research in Nature Medicine – In July 2016, the Company announced the publication of preclinical research conducted by our scientific collaborator, David G. DeNardo, PhD, Assistant Professor of Medicine, Division of Oncology, Department of Immunology, Washington University School of Medicine in St. Louis. In the published study, Dr. DeNardo demonstrates that FAK inhibition decreases fibrosis and immunosuppressive cell populations in pancreatic ductal adenocarcinoma, rendering previously unresponsive tumors sensitive to chemo- and immunotherapy. These findings provide important support and rationale for the ongoing Phase 1 dose-escalation clinical studies evaluating Verastem’s FAK inhibitors in combination with pembrolizumab and gemcitabine, and, gemcitabine and Abraxane in patients with pancreatic cancer.

Presented Clinical Data from the Window of Opportunity Study at iMig 2016 – In May 2016, the Company announced results from the ongoing open-label, single-center, neoadjuvant Window of Opportunity study evaluating tolerability, along with biomarker and tumor volume response to VS-6063 (400mg BID) following either 12 days (Cohort 1) or 35 days (Cohort 2) of treatment in surgically-eligible patients with malignant pleural mesothelioma. Data analysis from Cohort 1 and Cohort 2 showed that VS-6063 was generally well tolerated with early signs of tumor reduction observed, with six of the twenty patients demonstrating an encouraging tumor reduction after brief treatment with VS-6063.

Development of VS-6063 in Combination with Immunotherapy Continues in Pancreatic Cancer – Dosing continues in a Washington University-sponsored Phase 1 dose-escalation study evaluating VS-6063 in combination with pembrolizumab and gemcitabine in patients with pancreatic cancer. This is the first clinical trial to evaluate FAK inhibition in combination with an immuno-oncology agent.

Development of VS-4718 Continues in Solid Tumors – Clinical testing of VS-4718 continues in both a Phase 1 single agent dose escalation study in patients with solid tumors and in a Phase 1/1b combination study with gemcitabine and Abraxane for the treatment of patients with newly diagnosed pancreatic cancer.

Dual PI3K and mTORC1/2 Inhibition Program
Recommended Phase 2 Dose of VS-5584 – The maximum tolerated dose of single-agent VS-5584 has been reached in a Phase 1 study, and the recommended Phase 2 dose (RP2D) is being confirmed. Reductions in pharmacodynamic markers of PI3K and mTOR activity and clinical activity have been observed in several tumor types.

Corporate
New Appointments to the Board of Directors – In June 2016, the Company announced that Michael Kauffman, MD, PhD, who has served as a director since November 2012, became Lead Director and Bruce J. Wendel joined the Board as an independent director. Mr. Wendel is an industry veteran with a long history of building companies and bringing oncology drugs to market having served in executive roles at Abraxis, American Pharmaceutical Partners, IVAX Corporation and Bristol-Myers Squibb. He currently serves as Chief Strategic Officer at Hepalink USA and as a director at ProMetic Life Sciences Inc.

Gregory I. Berk, MD Named Chief Medical Officer – In April 2016, the Company announced the appointment of Gregory I. Berk, MD as Chief Medical Officer. Dr. Berk, a medical oncologist with 25 years of both industry and academic experience, will be responsible for leading the Company’s global clinical development strategy and clinical operations.

Second Quarter 2016 Financial Results
Net loss for the second quarter ended June 30, 2016 (2016 Quarter) was $8.6 million, or $0.23 per share, as compared to a net loss of $15.4 million, or $0.42 per share, for the second quarter ended June 30, 2015 (2015 Quarter). Net loss includes non-cash stock-based compensation expense of $1.7 million and $2.6 million for the 2016 Quarter and 2015 Quarter, respectively.
Research and development expense for the 2016 Quarter was $4.5 million compared to $11.0 million for the 2015 Quarter. The $6.5 million decrease from the 2015 Quarter to the 2016 Quarter was primarily related to a decrease of $4.9 million in contract research organization expense for outsourced biology, chemistry, development and clinical services, which includes our clinical trial costs, a decrease in personnel related costs of $1.2 million, a decrease of approximately $584,000 in stock-based compensation, and a net decrease of approximately $193,000 in travel, facilities and other costs. These decreases were partially offset by an increase of approximately $343,000 in consulting fees.

General and administrative expense for the 2016 Quarter was $4.2 million compared to $4.4 million for the 2015 Quarter. The decrease of approximately $200,000 from the 2015 Quarter to the 2016 Quarter primarily resulted from approximate decreases in stock-based compensation expense of $330,000 and $230,000 in consulting fees. These decreases were offset by a net increase of approximately $360,000 in personnel costs, professional fees, and other costs.
As of June 30, 2016, Verastem had cash, cash equivalents and investments of $92.9 million compared to $110.3 million as of December 31, 2015. Verastem used $6.7 million for operating activities during 2016 Quarter.
The number of outstanding common shares as of June 30, 2016, was 36,992,418.

Financial Guidance
Based on current operating plans, we expect to have sufficient cash, cash equivalents and short-term investments to fund our research and development programs and operations into 2018.

About Focal Adhesion Kinase
Focal Adhesion Kinase (FAK) is a non-receptor tyrosine kinase encoded by the PTK-2 gene that is involved in cellular adhesion and, in cancer, metastatic capability. VS-6063 (defactinib) and VS-4718 are orally available compounds that are potent inhibitors of FAK. VS-6063 and VS-4718 utilize a multi-faceted approach to treat cancer by reducing cancer stem cells, enhancing anti-tumor immunity, and modulating the local tumor microenvironment. VS-6063 and VS-4718 are currently being studied in multiple clinical trials for patients with cancer.
About PI3K and mTOR
PI3K and mTOR are components of a central proliferative signaling pathway in multiple types of human cancer. VS-5584 is an orally available compound that has demonstrated potent and highly selective activity against class 1 PI3K enzymes and dual inhibitory actions against mTORC1 and mTORC2. In preclinical studies, VS-5584 has been shown to reduce the percentage of cancer stem cells and induce tumor regression in chemotherapy-resistant models. Verastem is currently conducting a dose escalation trial of VS-5584 in patients with non-hodgkin’s lymphoma and chronic lymphocytic leukemia.

On August 8, 2016 TG Therapeutics, Inc. (NASDAQ:TGTX) reported its financial results for the second quarter ended June 30, 2016 and recent company developments (Press release, TG Therapeutics, AUG 8, 2016, View Source [SID:1234514354]).

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Michael S. Weiss, the Company’s Executive Chairman and Interim Chief Executive Officer, stated, "The second quarter was a busy time for the Company, with data presented at both the ASCO (Free ASCO Whitepaper) and EHA (Free EHA Whitepaper) meetings on the safety and activity of TGR-1202 alone and in combination with TG-1101, which we believe continues to show that TGR-1202 is a differentiated PI3K delta inhibitor. With the recent high profile setbacks encountered for both idelalisib and duvelisib, more than ever there is a need for a PI3K delta inhibitor with a favorable therapeutic index. Outside of mantle cell lymphoma, BTK inhibitors have shown limited activity in lymphoma, making a safe and effective PI3K delta inhibitor critically important. We are committed to bringing TGR-1202 forward in CLL and across aggressive and indolent lymphomas. Accordingly, we remain highly focused on executing our ongoing Phase 3 clinical programs in CLL, our registration directed UNITY-DLBCL study, and commencing additional registration programs in iNHL in the future." Mr. Weiss continued, "During the second quarter we were also very excited to commence our first study of TG-1101 in patients with multiple sclerosis, which we intend to utilize to inform our plans for a registration study in multiple sclerosis, which we hope to commence in the first half of 2017."

Recent Developments and Highlights

Presented long-term follow-up data of TGR-1202 both alone and in combination with TG-1101 in an integrated analysis at the 2016 American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) Annual Meeting and at the European Hematology Association (EHA) (Free EHA Whitepaper) Annual Congress demonstrating a differentiated safety profile and high response rates in CLL and NHL

Presented clinical data from the study of TGR-1202 in combination with ibrutinib in patients with advanced CLL and Mantle Cell Lymphoma at the EHA (Free EHA Whitepaper) Annual Congress demonstrating the safety and efficacy of this all oral combination

Entered into a global collaboration to develop and commercialize novel BET inhibitors for the treatment of hematological malignancies

Enrolled the first patient in the registration-directed UNITY-DLBCL Phase 2b clinical study evaluating TG-1101 and TGR-1202 as a combination compared to TGR-1202 monotherapy in patients with advanced relapsed/refractory DLBCL

Commenced the Company’s first clinical trial evaluating TG-1101 in patients with relapsing remitting multiple sclerosis
Key Remaining 2016 Milestones

Aggressively enroll into our Phase 3 and registration directed trials, including the GENUINE Phase 3, the UNITY-CLL Phase 3, and the UNITY-DLBCL Phase 2b
Continue enrollment into the Phase 2 clinical trial in Multiple Sclerosis
Present clinical data from a variety of Phase 1 and 2 clinical trials at the American Society of Hematology (ASH) (Free ASH Whitepaper) Annual Meeting, in December 2016, held in San Diego, CA
Financial Results for the Second Quarter 2016

At June 30, 2016 the Company had cash, cash equivalents, investment securities, and interest receivable of $75.8 million, which we believe will be sufficient to fund our operations into the second quarter of 2018.

Our net loss for the second quarter ended June 30, 2016, excluding non-cash items, was approximately $14.3 million, which included approximately $3.4 million of manufacturing and CMC expenses for Phase 3 clinical trials and in preparation for potential commercialization. The GAAP net loss for the second quarter ended June 30, 2016, inclusive of non-cash items, was $15.9 million, or $0.33 per basic and diluted share, compared to a net loss of $17.1 million, or $0.38 per basic and diluted share during the comparable quarter in 2015. The decrease in net loss during the second quarter ended June 30, 2016 was the result of a decrease in non-cash compensation expense related to equity incentive grants over the comparable period in 2015, partially offset by an increase in clinical trial expenses (other research and development expenses) related to ongoing and planned future Phase 3 registration programs.

Our net loss for the six months ended June 30, 2016, excluding non-cash items, was approximately $26.4 million, which included approximately $7.7 million of manufacturing and CMC expenses for Phase 3 clinical trials and in preparation for commercialization. The GAAP net loss for the six months ended June 30, 2016, inclusive of non-cash items, was $29.7 million, or $0.61 per diluted share, compared to a consolidated net loss of $31.7 million, or $0.73 per basic and diluted share during the comparable period in 2015. The decrease in net loss of $1.9 million during the six months ended June 30, 2016 was the result of a decrease in non-cash compensation expense related to equity incentive grants over the comparable period in 2015, partially offset by an increase in clinical trial expenses (other research and development expenses) related to ongoing and planned future Phase 3 registration programs.

On August 8, 2016 Pfenex Inc. (NYSE MKT: PFNX), a clinical-stage biotechnology company engaged in the development of biosimilar therapeutics, including high value and difficult to manufacture proteins, reported financial results for the second quarter ended June 30, 2016 and provided a business update (Press release, Pfenex, AUG 8, 2016, View Source [SID:1234514353]).

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Pfenex disclosed today in a separate press release that the company will be regaining the full rights to PF582, a biosimilar candidate to Lucentis (ranibizumab), based on our collaboration partner’s strategic review of the current therapeutic focus of its biosimilar pipeline. In addition, today Pfenex disclosed the Phase 1/2 PF582 data in the separate press release.

Pfenex also announced today the positive interim data from our anthrax vaccine Phase 1a study, which may be referred to in the separate press release issued today.

"We believe that PF582 has significant value as highlighted by the Phase 1/2 data we released this morning. As the program transitions back to Pfenex, we will be moving ahead with strategic options for PF582. Our diverse pipeline continues to advance as demonstrated by the positive anthrax vaccine update today. Additionally, the announcement of the Jazz collaboration on July 28th underscores the value of the Pfenex Expression Technology platform and our development capability," stated Bertrand C. Liang, chief executive officer of Pfenex. "As part of the Jazz collaboration, we have the opportunity to efficiently develop a portfolio of hematology programs. Given this productive collaboration and our recent pipeline review, we have decided to advance the assets that are part of the Jazz collaboration ahead of the PF530 biosimilar Betaseron opportunity and reduce the expenses associated with PF530. The PF530 program is at an important inflection point, having accessed an abbreviated biosimilar development path in the United States, consisting of a pivotal PK/PD study in healthy subjects and an immunogenicity study in multiple sclerosis patients. However, by focusing on pipeline programs that balance value creation with development costs, we will continue to improve our capital efficiency. Potential strategic opportunities for the PF530 program will be explored, given the successful advancement of PF530 and the positive regulatory feedback. This re-alignment underscores our disciplined approach to capital allocation. Over the remainder of 2016, we are looking forward to key data readouts and study initiations which we believe will further highlight our differentiated business strategy and capabilities."

Business Review and Update

Pfenex initiated the Phase 1 trial for its recombinant anthrax vaccine in 2015 and today reported positive interim data from the study in a separate press release. In August 2015, Pfenex announced signing a five year, cost plus fixed fee contract valued at up to $143.5 million with the Biomedical Advanced Research and Development Authority (BARDA) of the Department of Health and Human Services (HHS), for the advanced development of our mutant recombinant protective antigen anthrax vaccine, which offers the potential for a dramatic improvement in the rapid production of large amounts of high value stable recombinant anthrax vaccine for the U.S. Government.

Pfenex has regained full rights to PF582 and announced in a separate release today the results of the phase 1/2 trial. Pfenex enrolled a total of 25 VEGF-inhibitor naïve patients with neovascular age-related macular degeneration (AMD) in the PF582 Phase 1/2 trial (13 received PF582, including 1 sentinel patient who received open label PF582, 12 received Lucentis). All patients received 3 monthly intravitreal injections. The primary endpoint of the study was safety and tolerability of PF582 compared to that of Lucentis in patients with neovascular AMD. With respect to safety, there were no meaningful differences in intra-ocular pressure between PF582 and Lucentis at any of the timepoints. Additionally, there were no imbalances in local or systemic adverse events. The immunogenicity results showed comparable anti-drug antibody findings between PF582 and Lucentis throughout the 3 month study period. The efficacy and pharmacodynamic results indicated that there were no meaningful differences in best corrected visual acuity and the decreases in central retinal thickness between PF582 and Lucentis at any of the timepoints were also similar.

The Pfenex collaboration with Jazz Pharmaceuticals on multiple early stage hematology product candidates also includes an option for Jazz Pharmaceuticals to negotiate a license for a recombinant pegaspargase product candidate with Pfenex. Pfenex received upfront and option payments totaling $15 million and may be eligible to receive additional payments of up to $166 million based on the achievement of certain development-, regulatory-, and sales-related milestones, including up to $41 million for certain non-sales-related milestones. Pfenex may also be eligible to receive tiered royalties on worldwide sales of any products resulting from the collaboration. Both parties will be contributing to development efforts.

We anticipate initiating the PF708 clinical program by year end to satisfy the regulatory filing requirements. PF708 is our peptide product candidate that we are developing as a therapeutic equivalent to Forteo (teriparatide) through the 505(b)(2) regulatory development pathway. The PF708 clinical program is expected to include an immunogenicity/pharmacokinetic study in subjects with osteoporosis.

Process development for PF529, our biosimilar candidate to Neulasta (pegfilgrastim), is ongoing and we anticipate receiving regulatory feedback by the end of 2016.

Given the Jazz collaboration and our recent pipeline review, Pfenex has decided to advance the hematology assets that are part of the Jazz collaboration ahead of the PF530 biosimilar Betaseron opportunity. The expenses associated with PF530 will be reduced as part of the portfolio re-alignment. Pfenex completed a Phase 1 trial of PF530, a biosimilar candidate to Betaseron, in 2015 which enrolled 12 healthy subjects. Based on the analysis of the trial PK and PD parameters, no meaningful differences between PF530 compared to the reference compound were observed. Potential strategic opportunities for the PF530 program will be explored, given the successful advancement of PF530 and the positive regulatory feedback.

Financial Highlights for the Second Quarter

Total Revenue increased by $0.8 million, or 37%, to $3.1 million in the three month period ended June 30, 2016 compared to $2.3 million in same period in 2015. The increase in revenue was due to the stage of development of our anthrax vaccine product candidates under our government contracts, offset by a decrease in product sales. Given the nature of the novel vaccine development process, revenue will fluctuate depending on stage of development.

Cost of revenue of $1.4 million increased by approximately $0.5 million in the three month period ended June 30, 2016 compared to $0.9 million in the same period in 2015. The increase in cost of revenue was due primarily to an increase in costs for our anthrax vaccine product candidates under our government contracts. The increase was offset by a decrease in product sales, which is impacted by our customers’ product development and clinical progression. Given the nature of the novel vaccine development process, these costs will fluctuate depending on stage of development.

Research and development expenses increased by approximately $4.0 million to $7.6 million in the three month period ended June 30, 2016 compared to $3.6 million in same period in 2015. The increase in research and development expense was due to the increase in development activity of our product candidates PF708 and PF530 and the hiring of additional personnel dedicated to our research and development efforts. We expect research and development expenses to increase for the foreseeable future as we advance our lead candidates and pipeline product candidates.

Selling, general and administrative expenses increased by $0.6 million, or 17%, to $4.3 million in the three month period ended June 30, 2016 compared to $3.7 million in the same period in 2015. The increase in selling, general and administrative expenses during the periods presented were primarily due to an increase in headcount, as well as increases in salaries and other personnel costs. We expect general and administrative costs to continue to increase for activities associated with operating as a publicly-traded company.

Cash and cash equivalents as of June 30, 2016 was $89.6 million.