On March 10, 2016 OncoMed Pharmaceuticals, Inc. (Nasdaq:OMED), a clinical-stage company developing novel cancer stem cell (CSC) and immuno-oncology therapeutics, reported financial results for the year and quarter ended December 31, 2015 and provided 2016 guidance (Press release, OncoMed, MAR 10, 2016, View Source [SID:1234509493]). As of December 31, 2015, pro-forma cash and marketable securities totaled $227.3 million, exceeding the company’s 2015 guidance of year-end cash of greater than $120 million. Full-year cash expense was $101.1 million, in line with the 2015 cash expense guidance of $100-$110 million.

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2016 Financial Guidance
For the full year 2016, based on its current plans and expectations, OncoMed anticipates total cash expenses in the range of approximately $110-$120 million. OncoMed projects a 2016 year-end cash balance of more than $100 million, before considering the receipt of any potential collaboration milestones or opt-in payments. Potential milestone and opt-in payments over the course of 2016, 2017, and 2018 total over $270 million. Existing cash is anticipated to fund company operations for at least two years, without taking into account potential future milestones or payments from partners. This is an increase from the 1.5 years of cash guidance announced in January 2016 and is the result of pipeline and budget prioritization and careful fiscal management.

"Having extended our runway to greater than two years cash — without taking into account potential milestones over the course of those two years — OncoMed is well positioned to execute on plan and continue to build value through the advancement and growth of our research and development pipeline," said Paul J. Hastings, Chairman and Chief Executive Officer. "We have a number of things to look forward to in 2016, including the advancement of three randomized Phase 2 trials, data from several earlier-stage clinical programs, and two new immuno-oncology programs moving toward IND filings in late 2016/early 2017."

Key 2016 Milestones and Anticipated Events
Demcizumab (anti-DLL4, OMP-21M18)

Initiate a Phase 1b trial of demcizumab plus anti-PD-1 (pembrolizumab) in solid tumor patients in the first quarter.

Present updated survival data from the demcizumab Phase 1b non-small cell lung cancer (NSCLC) trial mid-year, contingent upon abstract acceptance.

Complete enrollment in the Phase 2 YOSEMITE clinical trial of demcizumab plus Abraxane (paclitaxel protein-bound particles for injectable suspension) (albumin bound) plus gemcitabine in patients with first-line pancreatic cancer by year end. Data from this study are expected to be available in the first half of 2017.

Continue enrollment in the Phase 2 DENALI clinical trial of demcizumab plus carboplatin and pemetrexed in patients with first-line non-squamous NSCLC. Data from the Phase 2 DENALI trial are anticipated in late 2017-2018.

Data from YOSEMITE or DENALI trials could trigger a potential Celgene opt-in, leading to an as-yet undisclosed opt-in payment and the Phase 3 co-development and co-commercialization of demcizumab in the U.S.

Tarextumab (anti-Notch2/3, OMP-59R5)

Complete enrollment in the Phase 2 PINNACLE clinical trial of tarextumab plus platinum chemotherapy and etoposide in subjects with first-line extensive-stage small cell lung cancer by year end. Data from this study are expected to be available in early 2017. Data from PINNACLE could support an opt-in decision from GlaxoSmithKline (GSK) for the tarextumab program in the first half of 2017, resulting in a $25 million milestone payment to OncoMed, and the advancement of the program to a fully funded randomized Phase 3 trial funded and conducted by GSK.

Wnt Programs – Vantictumab (anti-Fzd7, OMP-18R5) and Ipafricept (Fzd8-Fc, OMP-54F28)

Present opt-in packages to Bayer for both vantictumab and ipafricept by late 2016/early 2017. Bayer can elect to exercise its option for vantictumab and/or ipafricept at any time through completion of the Phase 1b clinical trials. OncoMed could receive a total of $40 million with the potential opt-in by Bayer of these two programs, and the programs could be advanced to randomized Phase 2 clinical trials by Bayer.

Present clinical Phase 1b data from the vantictumab breast cancer and pancreatic cancer trials in 2016, contingent upon abstract acceptance.

Present clinical Phase 1b data from the ipafricept ovarian cancer and pancreatic cancer trials in 2016, contingent upon abstract acceptance.

Brontictuzumab (anti-Notch1, OMP-52M51)

Initiate Phase 1b clinical trial of brontictuzumab combined with chemotherapy in colorectal cancer patients including an expansion cohort of biomarker-selected patients. GSK and OncoMed have agreed to share out-of-pocket costs for the Phase 1b clinical trial and are currently in discussions to potentially extend GSK’s option through the end of the Phase 1b clinical trial. Currently, GSK may exercise its option for brontictuzumab at the end of Phase 1a or Phase 2 clinical trials.

Anti-DLL4/VEGF Bispecific (OMP-305B83)

Present data from the Phase 1a dose-escalation clinical trials of anti-DLL4/VEGF bispecific in the second half of the year, contingent upon dose-escalation and abstract acceptance.

In coordination with our partner, Celgene, initiate at least one Phase 1b anti-DLL4/VEGF bispecific clinical trial in combination with standard of care.

Completion of Phase 1b could trigger a potential Celgene opt-in, resulting in an as-yet undisclosed opt-in payment from Celgene and the potential co-development and co-commercialization of the program in the U.S.

Anti-RSPO3 (OMP-131R10)

Present data from the Phase 1a/b dose-escalation clinical trial of anti-RSPO3 in the second half of the year, contingent upon dose-escalation and abstract acceptance.

Completion of the Phase 1a/1b trial and delivery of the data could trigger a potential Celgene opt-in, resulting in an as-yet undisclosed opt-in payment from Celgene and the potential co-development and co-commercialization of the program in the U.S.

Immuno-Oncology Programs

Advance the immuno-oncology product candidate that is part of OncoMed’s collaboration with Celgene (IO#2) and OncoMed’s wholly owned GITRL-Fc program toward at least one Investigational New Drug (IND) application filing by the end of 2016. Both programs are currently advancing in IND-enabling preclinical studies.

OncoMed reiterated that over the course of the next three years (2016, 2017 and 2018), the company may be eligible to receive more than $270 million in potential opt-in and milestone payments from its partners: over $168 million from its collaboration with Celgene, $60 million from Bayer and over $43 million from GSK. OncoMed is eligible for more than $5 billion in total potential milestone and option payments from its collaboration agreements with Celgene, Bayer, and GSK. To date, OncoMed has received over $450 million from its existing partners.

Full Year and Fourth Quarter 2015 Financial Results
Pro-forma cash, cash equivalents and short-term investments at the end of 2015 totaled $227.3 million, including a $70.0 million safety milestone related to the demcizumab program from Celgene, compared to $232.0 million as of December 31, 2014. The cash decrease was driven by increased spending related to pipeline development, partially offset by a recaptured tax payment associated with the Celgene collaboration 2013 upfront payment, and the achievement of milestone revenues from collaborative partnerships.

Revenues for the full year 2015 totaled $25.9 million compared to $39.6 million in 2014. OncoMed achieved the $70.0 million safety milestone for demcizumab from Celgene, which was recorded as deferred revenue and will be amortized over the performance period. The year-over-year decrease was primarily due to the recognition of an $11.0 million development milestone in 2014 related to the tarextumab "ALPINE" clinical trial.

Fourth quarter 2015 recognized revenues decreased to $6.8 million compared to $8.5 million for the fourth quarter of 2014. The decrease was due to revisions to the estimated periods of performance, which extended the amortization of upfront payments for the company’s GSK and Bayer collaborations. In the fourth quarter 2015, OncoMed achieved a $2.5 million milestone from Celgene for the candidate designation of a novel undisclosed immuno-oncology program as well as the $70.0 million safety milestone for demcizumab which was recorded as deferred revenue and will be amortized over the performance period. In the fourth quarter 2014, OncoMed received a $2.5 million milestone from Celgene for the candidate designation of anti-RSPO3 (OMP-131R10).

Research and development (R&D) expenses for the full year ended December 31, 2015 were $92.9 million compared with $76.4 million for the year ended December 31, 2014. For the fourth quarter of 2015, R&D expenses were $26.7 million compared to $20.6 million for the fourth quarter of 2014. Increases in R&D expenditures for the full year and fourth quarter were primarily attributable to increased personnel expenses, as well as increased program costs associated with the advancement of OncoMed’s clinical-stage product candidates and preclinical pipeline.

General and administrative (G&A) expenses for the years ended December 31, 2015 and 2014 were $18.6 million and $13.8 million, respectively. For the fourth quarter of 2015 G&A expenses were $5.0 million compared to $3.6 million for the fourth quarter of 2014. Higher full-year and fourth quarter costs for 2015 were primarily attributable to increased personnel expenses, including an increase in headcount and stock-based compensation, higher legal patent expenses, and financial expenses related to the S-3 shelf registration filing in June 2015.

Net loss for the year ended December 31, 2015 was $85.4 million ($2.84 per share), compared to $50.0 million ($1.69 per share) for the year ended December 31, 2014. Non-GAAP net loss for the year ended December 31, 2015 was $21.4 million ($0.71 per share), compared to $78.1 million ($2.63 per share) for the year ended December 31, 2014. Net loss for the fourth quarter of 2015 was $24.8 million ($0.82 per share) compared to $15.1 million ($0.50 per share) for the same period of 2014. Non-GAAP net income was $45.3 million ($1.50 per share) compared to non-GAAP net loss of $18.9 million ($0.63 per share) for the same period of 2014. The change in net loss for the year and fourth quarter were primarily due to increases in operational expenses and lower milestone revenues. Non-GAAP net income was attributable to the Celgene $70.0 million safety milestone.

Recent Highlights
Demcizumab (anti-DLL4, OMP-21M18)

In December 2015, OncoMed received a $70.0 million safety-related milestone from Celgene based on an analysis of the OncoMed Phase 1b and blinded interim Phase 2 clinical trial safety data that were available at that time.
Data from the pancreatic, non-small cell lung and ovarian cancer clinical trials showed no demcizumab-related Grade 3 or higher cardio-pulmonary toxicities among 155 patients treated with truncated dosing. Of those, 68 patients had received at least two cycles of demcizumab at the Phase 2 dose or higher and had been followed for at least 100 days.
In January 2016, OncoMed presented updated Phase 1b survival data for demcizumab in combination with Abraxane plus gemcitabine in previously untreated pancreatic cancer patients at the Gastrointestinal Cancer Symposium (ASCO GI).
In 32 previously untreated patients, the updated Kaplan-Meier estimated median progression-free survival was 7.1 months and median overall survival was 12.7 months for the patients who received the demcizumab-gemcitabine-Abraxane combination.
OncoMed has completed enrollment of the Phase 1b clinical trial in advanced ovarian cancer patients and as part of budget and pipeline prioritization, and will not conduct the Phase 2 portion of that clinical trial at this time.

Tarextumab (anti-Notch2/3, OMP-59R5)

In January 2016, OncoMed discontinued dosing of the ALPINE randomized Phase 2 clinical trial of tarextumab with Abraxane plus gemcitabine in advanced first-line pancreatic cancer.

A pre-planned data safety monitoring board (DSMB) analysis indicated a statistically significant worsening of response rate and progression-free survival (PFS) in the treatment arm in the overall intent-to-treat population, as well as a negative trend in each Notch biomarker subgroup and a strong trend to lack of benefit in the treatment arm for overall survival (OS), regardless of Notch biomarker levels. OncoMed conducted its own exploratory analysis of the unblinded Phase 2 data and confirmed key findings by the DSMB regarding futility of the ALPINE trial. Post-hoc, exploratory analyses conducted by OncoMed revealed subgroups of patients with decreased survival and a subgroup which appears to exhibit improved survival with tarextumab treatment.

In February 2016, OncoMed determined it would continue the "PINNACLE" Phase 2 trial of tarextumab in small cell lung cancer following a review of unblinded safety and efficacy data from both the ALPINE and PINNACLE studies by the U.S. Food and Drug Administration (FDA) and the PINNACLE DSMB. The PINNACLE study remains blinded to OncoMed, investigators and patients. Data from the Phase 2 PINNACLE trial are anticipated in 2017.

In February 2016, OncoMed presented updated survival data from the Phase 1b clinical trial of tarextumab plus chemotherapy in small cell lung cancer at the 16th Annual Targeted Therapies of Lung Cancer Meeting.

These data showed an apparent correlation between doses of tarextumab and duration of response. In 15 patients who received higher doses of tarextumab (at or above 12.5 mg/kg every three weeks) in combination with standard-of-care therapy, median PFS of 5.8 months and median OS of 16 months were observed.

Wnt Programs – Vantictumab (anti-Fzd7, OMP-18R5) and Ipafricept (Fzd8-Fc, OMP-54F28)

In November 2015, OncoMed and Bayer amended their agreement to enroll up to 12 additional subjects in the ongoing Phase 1b clinical trial of vantictumab in breast cancer and up to 12 additional subjects in the ongoing Phase 1b clinical trial of ipafricept in ovarian cancer. Bayer has agreed to reimburse OncoMed for all out-of-pocket expenses to support this additional patient enrollment.

In February 2016, OncoMed agreed with Bayer to discontinue two of the six ongoing Phase 1b trials of vantictumab and ipafricept due to changing standard-of-care paradigms and to better focus enrollment efforts and resource allocation. OncoMed expects to close out the Phase 1b trials of vantictumab in NSCLC and of ipafricept in hepatocellular carcinoma in the first half of 2016.

Non-GAAP Financial Measures
To supplement OncoMed’s financial results presented on a GAAP basis, OncoMed uses non-GAAP measures of net income and net loss and earnings per share that exclude non-cash expenses related to stock-based compensation expense, depreciation and amortization and deferred rent adjustment, and include deferred revenue. OncoMed management uses these non-GAAP financial measures to monitor and evaluate its operating results and trends on an ongoing basis, and internally for operating, budgeting and financial planning purposes. OncoMed management believes that these non-GAAP measures help investors better evaluate the company’s past financial performance and potential future results. Non-GAAP measures should not be considered in isolation or as a substitute for comparable GAAP accounting and investors should read them in conjunction with the company’s financial statements prepared in accordance with GAAP. The non-GAAP measures of net income and net loss and earnings per share may be different from, and not directly comparable to, similarly titled measures used by other companies. A description of the non-GAAP calculations and reconciliation to comparable GAAP financial measures is provided in the accompanying table entitled "Reconciliation of Non-GAAP Financial Measures."

On March 10, 2016 Galena Biopharma, Inc. (NASDAQ: GALE), a biopharmaceutical company committed to the development and commercialization of targeted oncology therapeutics that address major unmet medical needs, reported its financial results for the quarter and year ended December 31, 2015 (Filing, Q4/Annual, Galena Biopharma, 2015, MAR 10, 2016, View Source [SID:1234509491]).

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"2016 is poised to be a critical year for Galena as we look forward to reaching two significant milestones in our NeuVax Phase 3, PRESENT clinical trial targeting the prevention of breast cancer recurrence," said Mark W. Schwartz, Ph.D., President and CEO. "As anticipated, we expect to reach the 70th event in the PRESENT trial, defined as a recurrence of the primary cancer, occurrence of another cancer, or death from any cause, within the next few weeks. Once we reach this event, we will prepare the data for review by our Independent Data Monitoring Committee (IDMC), and the IDMC will then conduct an interim safety and futility analysis. We expect this analysis to be completed and announced at the end of the second quarter."

Dr. Schwartz continued, "NeuVax is our most advanced program and represents the greatest commercial potential for Galena. In addition to the PRESENT trial, we are excited to have several additional partner and investigator-sponsored trials with NeuVax in both breast and gastric cancers. This year, we expect preliminary safety data from our NeuVax breast cancer combination trial with trastuzumab, and we look forward to initiating Phase 2 studies with our partners in women diagnosed with Ductal Carcinoma in Situ (DCIS) and in patients with gastric cancer. Our goal for 2016 is to continue the development of the NeuVax franchise by investigating a host of cancer indications, patient populations, and treatment regimens both as a stand-alone therapy and in combination with other technologies where NeuVax can be beneficial to cancer patients."

Dr. Schwartz added, "On the corporate side, I have implemented several major strategic initiatives since I took over as President and CEO. Over the last eighteen months, we have taken positive steps to restructure the Company by divesting our commercial business and sharpening our focus on NeuVax and our additional clinical development programs. In December, we also announced the proposed settlement of both the derivative and securities class action litigation and expect those settlements to be approved by the end of the second quarter of this year. Furthermore, led by our Nominating and Governance Committee, we have begun to expand our

Board of Directors with the replacement of one retiring director, and the planned addition of another new director. On the financial side, we successfully raised capital at the beginning of the year to strengthen our balance sheet, and we expect our 2016 quarterly cash burn to be between $9 to $11 million dollars based on our current programs with several non-recurring expenses increasing that burn in the first half of the year, as detailed below. As a result, and given the volatile and unpredictable financial markets, we believe a conservative approach to our clinical spend and maintaining our primary focus on NeuVax, is warranted. Therefore, and in concert with this mission-oriented approach, we are reviewing our non-NeuVax programs and calibrating those programs’ new trial initiation dates in order to optimize the allocation of our resources."

Dr. Schwartz concluded, "Looking ahead, we are taking the necessary steps to move Galena forward with advancing clinical programs and a strong management team who is focused on two main goals: providing therapeutic modalities to prevent or significantly delay cancer recurrence, and maximizing value for our dedicated shareholders."

Galena will host a webcast and conference call today at 2:00 p.m. P.T./5:00 p.m. E.T. to discuss its financial and business results. The live webcast will include slides that can be accessed on the Company’s website under the Investors section/Events and Presentations: View Source The conference call can be accessed by dialing (844) 825-4413 toll-free in the U.S., or (973) 638-3403 for participants outside the U.S. The Conference ID number is: 50939696. The archived webcast replay will be available on the Company’s website for 90 days.

FINANCIAL HIGHLIGHTS

Continuing Operations

Operating loss from Galena’s ongoing development programs, classified as continuing operations, for the fourth quarter of 2015 was $7.6 million, including $0.6 million in stock-based compensation, compared to an operating loss from continuing operations of $9.7 million, including $0.8 million in stock-based compensation for the same period in 2014. Operating loss from continuing operations in 2015 was $34.2 million, including $1.9 million in stock-based compensation, compared to an operating loss from continuing operations of $43.9 million, including $5.4 million in stock-based compensation in 2014. The decrease in net operating loss in the quarter and year ended December 31, 2015 compared to the quarter and year ended December 31, 2014 was primarily the result of the completion of enrollment in the Company’s Phase 3 PRESENT trial for NeuVax, the decrease in stock-based compensation, and a reduction in non-insurance reimbursed legal expenses associated with ongoing litigation and regulatory proceedings.

Non-operating income or expenses include charges related to securities and derivative litigation settlement expense, non-cash changes in the fair value estimates of the Company’s warrant liabilities, non-cash change in the contingent purchase price liability, and interest expense. Because the settlement of the securities and derivative litigation was reached in the fourth quarter of 2015, the settlement amount and related costs were expensed in the fourth quarter of 2015. Non-operating expense for the fourth quarter and year ended December 31, 2015 was primarily attributable to the $5.3 million expense incurred for the securities and derivative settlement. Of the $5.3 million charge, $3.3 million is accrued as of year-end, which Galena expects to pay out upon final court approval of the settlement in the second quarter of 2016 comprising $2.3 million in cash and $1 million in Galena common stock. This expense was partially offset by a non-cash gain of $2.1 million during the fourth quarter of 2015 and $1.2 million during the year ended 2015, related to the change in the value of the Company’s warrant liability during both periods. The fourth quarter and year ended 2014 non-operating income was primarily attributable to the non-cash gains of $3.4 million during the fourth quarter of 2014 and $16.6 million during the year ended 2014, respectively, related to the change in the value of the warrant liability.

Loss from continuing operations for the fourth quarter of 2015 was $10.8 million, including a $2.1 million non-cash gain on warrant liability, or $0.07 per basic and diluted share. Loss from continuing operations for the fourth quarter of 2014 was $6.3 million, including a $3.4 million non-cash gain on warrant liability, or $0.05 per basic and diluted share. Loss from continuing operations in 2015 was $39.0 million, including $5.3 million for the securities and litigation settlement and a $1.2 million non-cash gain on warrant liability, or $0.25 per basic and diluted share. Loss from continuing operations in 2014 was $28.3 million, including a $16.6 million non-cash gain on warrant liability, or $0.24 per basic and diluted share.

Non-recurring Charges

During the second half of 2015, Galena had several one-time, non-recurring charges that materially affected its earnings per share for the fourth quarter and full year 2015. These one-time charges were the result of the divestiture of the commercial operations, which was classified as discontinued operations beginning in the third quarter of 2015, and the securities and derivate litigation settlement expense in the fourth quarter of 2015.

Quarter Ended

Year ended
Non-recurring charges included in loss from discontinued operations:

Impairment charge form classification as held for sale (non-cash)
$
—

$
8,071

Loss on sale of commercial business assets (non-cash)
$
4,549

$
4,549

Severance and exit costs
$
1,349

$
1,349

Non-recurring charges included in loss from continuing operations:

Litigation settlement
$
5,282

$
5,282

Discontinued Operations

Loss from discontinued operations for the fourth quarter of 2015 was $8.9 million, or $0.05 per basic and diluted share, compared to $1.7 million, or $0.01 per basic and diluted share, for the same period of 2014. Of note, the Company has retrospectively recast its previously issued 2014 annual financial statements to present the commercial business as discontinued operations. The loss from discontinued operations for the fourth quarter of 2015 includes a non-cash charge of $4.5 million on the loss on sale of the commercial business assets and $1.3 million of severance and exit costs. Loss from discontinued operations in 2015 was $24.9 million, or $0.16 per basic and diluted share, compared to $8.3 million, or $0.07 per basic and diluted share, for the same period of 2014. Loss from discontinued operations in 2015 also includes an $8.1 million non-cash impairment charge from classification of assets held for sale in addition to the loss on sale of commercial business assets and severance and exit costs described above.

Cash and Cash Equivalents

As of December 31, 2015, Galena had cash and cash equivalents of $29.7 million, compared with $23.7 million as of December 31, 2014. The $6.1 million increase in cash through the fourth quarter of 2015 represents $47.4 raised from issuance of common stock and $11.3 net proceeds from the sale of commercial assets, partially offset by $38.8 million used in continuing operating activities, $9.4 million used in discontinued operating activities, and $3.9 million in debt service payments.

For the Year Ended December 31,

2015

2014
Cash flows from continuing operations:

Cash flows used in continuing operating activities
$
(38,802
)

$
(37,037
)
Cash flows used in continuing investing activities
(354
)

(2,472
)
Cash flows provided by continuing financing activities
43,845

24,260

Total cash flows provided by (used in) continuing operating activities
4,689

(15,249
)

Cash flows from discontinued operations:

Cash flows used in discontinued operating activities
(9,358
)

(5,832
)
Cash flows used in discontinued investing activities
10,749

—

(3,056
)
Total cash flows provided by (used in) discontinued operating activities
1,391

(8,888
)

Total cash flows:

Cash flows used in operating activities
(48,160
)

(42,869
)
Cash flows used in investing activities
10,395

(5,528
)
Cash flows provided by financing activities
43,845

24,260

Total increase (decrease) in cash and cash equivalents
6,080

(24,137
)
Beginning cash
$
23,650

$
47,787

Ending cash
$
29,730

$
23,650

Net Loss and Net Loss Per Share

Net loss for the fourth quarter of 2015 was $19.7 million, or $0.12 per basic and diluted share, compared to $8.0 million, or $0.06 per basic and diluted share, for the same period of 2014. Net loss in 2015 was $63.9 million, or $0.41 per basic and diluted share, compared to $36.6 million, or $0.31 per basic and diluted share, for the same period of 2014.

FOURTH QUARTER AND RECENT HIGHLIGHTS

Clinical Development Highlights

Received a Notice of Allowance of a U.S. Patent for NeuVax (nelipepimut-S). Galena announced the United States Patent Office issued a Notice of Allowance for an additional U.S. patent application covering multiple uses of NeuVax (nelipepimut-S): inducing and maintaining an immune response to HER2 expressing tumor cells in patients in clinical remission with a tumor having a fluorescence in situ hybridization (FISH) rating of less than about 2.0 (FISH <2.0); inducing and sustaining a cytotoxic T-lymphocyte (CTL) response to HER2 in patients in clinical remission from a tumor with a FISH rating of less than about 2.0 (FISH < 2.0); reducing risk of cancer recurrence in patients in clinical remission from a tumor with a FISH rating of less than about 2.0 (FISH < 2.0); and preventing bone only recurrence of a HER2 expressing cancer. This patent will expand both the protection and the potential population of cancer patients NeuVax may address. Once issued, the patent will expire in 2028, not including any patent term extensions.

Presented Observational Study Data in Gastric Cancer Patients at the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) 2016 Gastrointestinal Cancers Symposium. The Company presented data from an observational study in gastric cancer patients at the ASCO (Free ASCO Whitepaper) 2016 Gastrointestinal Cancers Symposium. The study was conducted by Galena’s partner, Dr. Reddy’s Laboratories Ltd, who will conduct a Phase 2 clinical trial of NeuVax in gastric cancer patients in India. The poster, entitled, "An observational study evaluating the expression of HER2 (1+, 2+, and 3+) with HLA A2+/A3+ in gastric adenocarcinoma patients," showed that approximately 25% of the patients met the projected clinical protocol population of all levels of expression of HER2 and HLA A2+ and/or A3+ as defined for the planned NeuVax Phase 2 clinical trial. Results indicate an acceptable potential for enrollment rate, given the high incidence of gastric cancer in this population, and will inform the screen failure rate in the planned Phase 2 clinical study.

Presented GALE-302 Preliminary Immunological Data Optimizing GALE-301 at the Society for Immunotherapy of Cancer (SITC) (Free SITC Whitepaper) 30th Anniversary Annual Meeting. The poster, entitled, "Preliminary report of a clinical trial supporting the sequential use of an attenuated E39 peptide (E39’) to optimize the immunologic response to the FBP (E39+GM-CSF) vaccine," compared three primary vaccine series (PVS) sequences of GALE-301 (E39) and GALE-302 (E39’) in ovarian and breast cancer patients to optimize the ex vivo immune responses, local reactions (LR), and delayed type hypersensitivity (DTH) reactions. The data demonstrated that the in vivo immune response is enhanced with the use of the attenuated E39’ (GALE-302) after E39 (GALE-301). The optimal vaccination sequence utilizing three inoculations of GALE-301 followed by three inoculations of GALE-302 produced the most prominent and statistically significant LR and DTH responses.

Announced a collaboration with the National Cancer Institute (NCI) to initiate a new, Phase 2 Clinical Trial With NeuVax in Ductal Carcinoma in Situ (DCIS) Patients. The trial will be entitled, "VADIS: Phase 2 trial of the Nelipepimut-S Peptide VAccine in Women with DCIS of the Breast," and The University of Texas M.D. Anderson Cancer Center (MDACC) Phase I and II Chemoprevention Consortium is the lead for this multi-center trial. The Consortium is funded through the Division of Cancer Prevention at the NCI, which will provide financial and administrative support for the trial. Galena will provide NeuVax, as well as additional financial and administrative support.

Corporate Highlights

Announced Proposed Settlement of Derivative and Securities Class Action Lawsuits. On February 4, 2016, the United States District Court for the District of Oregon (the "Court") issued an order preliminarily approving the proposed settlement by and among the Company, the Court-appointed co-lead plaintiffs, and all named defendants in the shareholder derivative action entitled In Re Galena Biopharma, Inc. Derivative Litigation, Case No. 3:10­cv­00382­SI. A hearing to determine whether the Court should issue an order of final approval of the settlement has been scheduled for April 21, 2016. On February 16, 2016, the Court also issued an order preliminarily approving the proposed settlement by and among the Company and the current and former officers and directors in the consolidated putative federal class action, In Re Galena Biopharma, Inc. Securities Litigation, pending in the United States District Court for the District of Oregon. A hearing to determine whether the Court should issue an order of final approval of the Settlement has been scheduled for June 23, 2016.

Announced Changes to Board of Directors and Management Team. Galena announced that Steven A. Kriegsman will be retiring as a director of the Company when his current term expires the day prior to the June 2016 Annual Meeting of Stockholders. The Company plans to replace Mr. Kriegsman’s position on the Board of Directors and add one new director. The Company also announced the departure of Chief Financial Officer (CFO), Mr. Ryan Dunlap, due to his inability to relocate to the Company’s headquarters in California. Galena has instituted a search for the two new members to its Board of Directors and for a new CFO.

Galena appointed Bijan Nejadnik, M.D., as its Executive Vice President and Chief Medical Officer. Dr. Nejadnik is responsible for managing all of Galena’s clinical development programs. Dr. Nejadnik has more than twenty two years of academic and industry experience, including twelve years with pharmaceutical and biotech companies including Jazz Pharmaceuticals, Johnson & Johnson, and Purdue Pharma. During his career, Dr. Nejadnik has successfully developed numerous biologics and small molecules, advancing these agents towards Biologics License Application (BLA) and New Drug Application (NDA) submissions.

Closed a Public Offering. On January 12, 2016, Galena closed the previously announced underwritten public offering of common stock and warrants. The net proceeds to the Company were approximately $20.1 million.

GALENA BIOPHARMA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(Amounts in thousands, except share and per share data)

Three Months Ended December 31,

Year Ended December 31,

2015

2014

2015

2014
Operating expenses:

Research and development
$
4,849

$
6,211

$
23,611

$
27,674

General and administrative
2,740

3,482

10,609

16,226

Total operating expenses
7,589

9,693

34,220

43,900

Operating loss
(7,589
)

(9,693
)

(34,220
)

(43,900
)
Non-operating income (expense):

Litigation settlement
(5,282
)

—

(5,282
)

—

Change in fair value of warrants potentially settleable in cash
2,143

3,382

1,162

16,556

Interest expense, net
(153
)

(185
)

(760
)

(1,110
)
Other income
440

229

509

170

Total non-operating income (expense), net
(2,852
)

3,426

(4,371
)

15,616

Loss before income taxes
(10,441
)

(6,267
)

(38,591
)

(28,284
)
Income tax expense
365

—

365

—

Loss from continuing operations
$
(10,806
)

$
(6,267
)

$
(38,956
)

$
(28,284
)
Discontinued operations

Loss from discontinued operations

(8,872
)

(1,689
)

(24,946
)

(8,322
)
Net loss
$
(19,678
)

$
(7,956
)

$
(63,902
)

$
(36,606
)

Net loss per common share:

Basic and diluted net loss per share, continuing operations
$
(0.07
)

$
(0.05
)

$
(0.25
)

$
(0.24
)
Basic and diluted net loss per share, discontinued operations
$
(0.05
)

$
(0.01
)

$
(0.16
)

$
(0.07
)
Basic net loss per share
$
(0.12
)

$
(0.06
)

$
(0.41
)

$
(0.31
)
Weighted-average common shares outstanding: basic and diluted
161,905,422

122,917,163

155,264,729

119,388,366

GALENA BIOPHARMA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)

December 31, 2015

December 31, 2014
ASSETS

Current assets:

Cash and cash equivalents
$
29,730

$
23,650

Restricted cash
401

200

Litigation settlement insurance recovery
21,700

—

Prepaid expenses and other current assets
1,398

1,237

Current assets of discontinued operations
392

27,013

Total current assets
53,621

52,100

Equipment and furnishings, net
335

285

In-process research and development
12,864

12,864

GALE-401 rights
9,255

9,255

Goodwill
5,898

5,897

Deposits
171

87

Total assets
$
82,144

$
80,488

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable
$
1,597

$
1,886

Accrued expense and other current liabilities
5,292

8,885

Litigation settlement payable
25,000

—

Fair value of warrants potentially settleable in cash
14,518

5,383

Current portion of long-term debt
4,739

3,910

Current liabilities of discontinued operations
5,925

7,169

Total current liabilities
57,071

27,233

Deferred tax liability, non-current
5,418

5,053

Contingent purchase price consideration, net of current portion
6,142

6,651

Long-term debt, net of current portion
—

4,492

Total liabilities
68,631

43,429

Stockholders’ equity
13,513

37,059

Total liabilities and stockholders’ equity
$
82,144

$
80,488

On March 10, 2016 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 fourth quarter and full year ending December 31, 2015 (Filing, Q4/Annual, Five Prime Therapeutics, 2015, MAR 10, 2016, View Source [SID:1234509490]).

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"2015 was a transformational year for Five Prime," said Lewis T. "Rusty" Williams, M.D., Ph.D., president and chief executive officer of Five Prime. "Of note, our license and collaboration agreement with Bristol-Myers Squibb (BMS) maximizes the clinical and commercial potential of FPA008 and the exceptional terms have strengthened our financial position. In addition, we are encouraged by the early safety and efficacy data from FPA144 in patients with gastric cancer, and we look forward to assessing its potential in other indications. Beyond our clinical programs, we also made progress in our internal immuno-oncology research programs, and continue to be on track to file an IND application in 2017."

2015 Business Highlights and Recent Developments

Clinical Development:

• FPA008: an investigational antibody that inhibits CSF1R and has been shown in preclinical models to block the activation and survival of monocytes and macrophages.

• Established Exclusive Worldwide License and Collaboration Agreement with BMS for FPA008. In October 2015, Five Prime and BMS entered into an exclusive worldwide license and collaboration agreement for the development and commercialization of FPA008. Five Prime received a $350 million upfront payment during the fourth quarter and is eligible to receive up to $1.4 billion in development and regulatory milestone payments as well as royalty percentages ranging from the high teens to the low twenties on future worldwide net sales of FPA008. Five Prime also has an option to co-promote FPA008 in the United States.

• Initiated Phase 1a/1b FPA008/OPDIVO Combination Trial. In September 2015, Five Prime initiated patient dosing in the Phase 1a/1b clinical trial evaluating the safety, tolerability and preliminary efficacy of the immunotherapy combination of FPA008 with OPDIVO (nivolumab), BMS’s PD-1 immune checkpoint inhibitor. Five Prime expects to expand into Phase 1b in multiple tumor settings in the second half of 2016.

•
Initiated Phase 1/2 Clinical Trial of FPA008 in Pigmented Villonodular Synovitis (PVNS). In the third quarter of 2015, Five Prime initiated patient dosing in its Phase 1/2 clinical trial in PVNS, a CSF1R-driven tumor and an orphan indication. The company expects to begin

Phase 2 expansion, which will evaluate tumor response rate and duration as well as measures of pain and joint function, in mid-2016. The company submitted an epidemiology study focusing on the incidence and prevalence of this rare disease for presentation at the 2016 American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) Annual Meeting.

• FPA144: an anti-FGF receptor 2b (FGFR2b) Monoclonal Antibody Engineered to Recruit NK Cells into the Tumor Microenvironment. During the fourth quarter of 2015, Five Prime completed dose escalation in the ongoing Phase 1 trial of single-agent FPA144 and began dose expansion at a selected dose in new cohorts of gastric cancer patients whose tumors overexpress FGFR2b. In January 2016, Five Prime presented preliminary data from the dose escalation portion of the trial at the ASCO (Free ASCO Whitepaper) Gastrointestinal Cancers Symposium, which showed:

• Two partial responses in six gastric cancer patients with IHC 3+ FGFR2b-positive gastric cancer;

• A partial response in a patient whose bladder cancer overexpressed FGFR2b; and

• FPA144 was well tolerated and differentiated from small molecule kinase inhibitors targeting the pathway, which often cause hyperphosphatemia and other dose-limiting toxicities.
Based on results to date, Five Prime continues to evaluate FPA144 as a monotherapy in refractory gastric cancer, as a combination therapy for gastric cancer, and as a potential treatment for other types of cancer. The company submitted an abstract for presentation at the ASCO (Free ASCO Whitepaper) 2016 Annual Meeting in June and will present preclinical data regarding FPA144’s ability to reprogram immune cells in the tumor microenvironment at the American Association for Cancer Research (AACR) (Free AACR Whitepaper) Annual Meeting in April 2016.

• FP-1039/GSK3052230, an FGF Ligand Trap. GlaxoSmithKline (GSK) presented data from the ongoing open-label Phase 1b trial in patients with squamous non-small cell lung cancer (sqNSCLC) and mesothelioma at the World Conference on Lung Cancer in September 2015. In January 2016, GSK and Five Prime agreed to stop enrollment in the sqNSCLC patient cohorts given the change in treatment paradigms following approvals of immuno-oncology agents and the increasingly competitive landscape in sqNSCLC. In addition, the companies agreed that GSK would continue to enroll mesothelioma patients based on encouraging preliminary data from the mesothelioma arm of the trial.

On March 9, 2016, GSK notified Five Prime that it was providing 180-day notice of termination of the FP-1039 license and collaboration agreement for convenience. Five Prime plans to work with GSK to ensure completion of enrollment in the ongoing mesothelioma arm of the Phase 1b study and to transfer the asset and program back to Five Prime. Five Prime continues to be encouraged by the progress of this Phase 1b trial. Mesothelioma could represent a potentially attractive market opportunity for a company like Five Prime. Five Prime will base decisions on future development of FP-1039 on whether the quality and durability of responses in this population is maintained in this trial. GSK has submitted mesothelioma data for presentation at the ASCO (Free ASCO Whitepaper) 2016 Annual Meeting.
Preclinical Research and Development:

• Progressed Internal Immuno-Oncology Research Programs. During 2015, Five Prime continued to expand its immuno-oncology research efforts and advanced multiple candidates into preclinical development. The company continues to be on track to file an IND application in 2017.
• Established New GITR Agonist Program. Five Prime in-licensed novel, potentially best-in-class, multivalent glucocorticoid-induced tumor necrosis factor receptor (GITR) antibodies from Inhibrx during the third quarter of 2015. Their unique multivalent format facilitates clustering of GITR on T cells, which should result in superior T cell activation compared to conventional antibodies.

• Enhanced the Company’s Ability to Generate Therapeutic Antibodies and Move Them More Rapidly Toward IND Applications. In October 2015, Five Prime secured a license from Open Monoclonal Technology (OMT) to access mono- and bi-specific antibody platforms and antibody repertoire sequencing technology for the generation of novel therapeutic candidates. In December 2015, Five Prime obtained a license from Xoma Ltd. to one of Xoma’s proprietary phage display libraries for antibody discovery.
Other Licenses and Collaborations:

• Entered into License Agreement with bluebird bio for Antibodies to Develop CAR T Cell Therapy. In May 2015, Five Prime granted an exclusive license to bluebird bio to research, develop and commercialize chimeric antigen receptor (CAR) T cell therapies using Five Prime’s proprietary human antibodies to an undisclosed target for hematologic malignancies and solid tumors. The agreement included a $1.5 million upfront payment and subsequent milestone payments to Five Prime, which together could total over $130 million per licensed product if certain development, regulatory, and commercial milestones are achieved. Five Prime is also eligible to receive tiered royalties on product sales.

• GSK Exercised Options to Reserve Multiple Protein Targets Discovered by Five Prime for Respiratory Disease. GSK paid Five Prime $600,000 in target reservation fees.
Finance:

• Completed Public Offering of Common Stock. In January 2015, Five Prime completed an underwritten public offering of common stock, raising net proceeds of $78.7 million.
Summary of Financial Results and Guidance:

• Cash Position. Cash, cash equivalents and marketable securities totaled $517.5 million on December 31, 2015 compared to $149.1 million on December 31, 2014. The increase in year-end 2015 cash was primarily attributable to the $350 million upfront payment received in December 2015 from BMS for the FPA008 license and collaboration agreement.

•
Revenue. Collaboration revenue for the fourth quarter of 2015 increased by $358.7 million to $363.3 million from $4.6 million in the fourth quarter of 2014, primarily due to revenue recognized under the FPA008 license and

collaboration agreement with BMS. Collaboration revenue for the full year 2015 increased by $360.6 million to $379.8 million in 2015 from $19.2 million in 2014 primarily due to revenue recognized under the collaborations with BMS, UCB and GSK.

• R&D Expenses. Research and development expenses for the fourth quarter of 2015 increased by $8.4 million, or 67%, to $21.0 million from $12.6 million in the fourth quarter of 2014. Full year 2015 research and development expenses increased by $27.0 million, or 63%, to $70.2 million in 2015 from $43.2 million in 2014. This increase was primarily related to advancing the FPA008 program in immuno-oncology and PVNS, and advancing internal immuno-oncology research and preclinical activities, including expenses related to in-licensing GITR antibodies.

• G&A Expenses. General and administrative expenses for the fourth quarter of 2015 increased by $4.6 million, or 115%, to $8.6 million from $4.0 million in the fourth quarter of 2014. Full year 2015 general and administrative expenses were $22.6 million, an increase of $9.0 million, or 66%, from $13.6 million in 2014. This increase was primarily due to increases in personnel related expenses, including stock-based compensation, facility costs and recruiting related to expansion of operations.

• Net Income (Loss). Net income for the fourth quarter of 2015 was $296.1 million, or $11.37 per basic share and $10.63 per diluted share, compared to a net loss of $11.8 million, or $0.55 per basic and diluted share, for the fourth quarter of 2014. Full year 2015 net income was $249.6 million, or $9.73 per basic share and $9.23 per diluted share, compared to a net loss of $37.4 million, or $1.79 per basic and diluted share in 2014. These increases in net income were primarily related to the revenue recognized under the FPA008 license and collaboration agreement with BMS.

Cash Guidance. Five Prime expects full-year 2016 net cash used in operating activities to be less than $120 million, comprising less than $90 million used in operations and less than $30 million used for income tax payments. The company estimates ending 2016 with approximately $400 million in cash, cash equivalents and marketable securities.

On March 11, 2016 CytRx Corporation (NASDAQ: CYTR), a biopharmaceutical research and development company specializing in oncology, reported financial results for the year ended December 31, 2015, and provided an overview of recent accomplishments and upcoming milestones for its research and development programs (Filing, Annual, CytRx, 2015, MAR 10, 2016, View Source [SID:1234509488]).

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"2015 was an important year as CytRx achieved several key milestones, including completing the enrollment of our global, pivotal Phase 3 trial with aldoxorubicin one quarter ahead of schedule," said Steven A. Kriegsman, CytRx’s Chairman and CEO. "We unveiled our LADRTM technology platform and nominated DK049 as the next drug candidate for clinical development. Additionally, as we prepare for aldoxorubicin’s commercial launch, we welcomed Olivia Ware as Chief Commercial Officer and three new members to the Board of Directors: Cheryl Cohen, former Chief Commercial Officer at Medivation who led the launch of Xtandi, Anita Chawla, Ph.D., a health economics, pricing and reimbursement expert formerly at Genentech, and Eric Selter, an investment professional at Morton Capital Management, LLC."

Fourth Quarter 2015 and Recent Highlights

Announced $40 Million Long-Term Debt Facility. In February 2016, CytRx announced that it entered into a long-term loan agreement with Hercules Technology Growth Capital and received an initial amount of $25 million. An additional $15 million can be accessed at CytRx’s option, subject to achieving certain R&D milestones by December 31, 2016.

Appointed Olivia Ware as Chief Commercial Officer. In January 2016, Ms. Ware joined CytRx as Chief Commercial Officer. She brings more than 20 years of biotechnology and pharmaceutical experience including 13 years at Genentech where she was responsible for key aspects of the launches of the oncology drugs Rituxan, Herceptin and Avastin.

Completed Enrollment in Pivotal Global Phase 3 Trial Ahead of Schedule. In December 2015, CytRx announced that the Phase 3 clinical trial with aldoxorubicin for the treatment of second-line soft tissue sarcomas reached the target enrollment of 400 patients. It was originally estimated to be completed in Q1 2016. Top-line results from this trial are expected in Q2 2016.

Nominated DK049 for Clinical Development. In December 2015, CytRx announced that DK049 has been selected for advancement into clinical trials. DK049 incorporates a novel two-stage linker from the LADRTM technology platform and has demonstrated significant anti-tumor activity in animal models of non-small cell lung cancer, ovarian and pancreatic cancers.

Announced the Settlement of Consolidated Securities Class Action Lawsuit. In December 2015, CytRx agreed to settle its class action lawsuits to avoid potentially lengthy and costly litigation. The Company believes the allegations are completely without merit and the settlement contains no admission of liability or wrongdoing. The agreement provides for a payment in cash of $4,000,000 of which CytRx’s insurance carriers will cover at least $3,500,000, and between 1,200,000 and 1,800,000 shares of common stock depending on the prevailing stock price at the time of the court’s final approval of the settlement.

Presented Aldoxorubicin Combination Data at the 2015 CTOS Annual Meeting. In November 2015, Sant Chawla, M.D., F.R.A.C.P., Director of the Sarcoma Oncology Center, presented data from the Phase 1b/2 clinical trial of aldoxorubicin in combination with ifosfamide/Mesna at the 21st Annual Connective Tissue Oncology Society (CTOS) Annual Meeting in Salt Lake City, Utah. At the time of the meeting, eight of 10 patients with soft and non-soft tissue sarcomas treated with the combination demonstrated tumor shrinkage include three partial responses. This trial is ongoing.

Reported Update on Aldoxorubicin Clinical Trial in Glioblastoma. In November 2015, CytRx announced the completion of enrollment in the Phase 2 clinical trial evaluating aldoxorubicin in patients with unresectable glioblastoma (GBM). To date, aldoxorubicin has shown evidence of tumor shrinkage. Patients continue to be followed as overall survival has not yet been reached.

Upcoming Milestones

· Present data on DK049 and the LADRTM technology platform at the American Association for Cancer Research (AACR) (Free AACR Whitepaper) Annual (AACR) (Free AACR Whitepaper) Meeting in April 2016

· Announce top-line data from the global, pivotal Phase 3 clinical trial of aldoxorubicin as second-line treatment in patients with soft tissue sarcomas in the next quarter ending June 30, 2016. Subject to FDA approval, the Company projects aldoxorubicin’s market launch in 2017

· Initiate rolling New Drug Application (NDA) submission by the end of 2016

· Announce overall survival data from the ongoing Phase 2 glioblastoma trial in the second half of 2016

· Complete Phase 1b clinical trial with combination of aldoxorubicin and ifosfamide/mesna as first-line treatment for advanced sarcomas in the second half of 2016

· Complete Phase 1b clinical trial with combination of aldoxorubicin and gemcitabine in metastatic solid tumors in the second half of 2016

· File Investigational New Drug (IND) Application for DK049 by the end of 2016

· Announce top-line results from the Phase 2b clinical trial of aldoxorubicin as second-line treatment in patients with small cell lung cancer

· Nominate next drug candidate using LADRTM technology for clinical development by the end of 2016.

Full Year 2015 Results

CytRx reported cash, cash equivalents and short-term investments of $57.3 million as of December 31, 2015. CytRx then added $25.0 million in February 2016 to its cash through a $40.0 million long-term debt facility.

Net loss for the year ended December 31, 2015, was $58.6 million, or $(0.97) per share, compared with a net loss of $30.1 million, or $(0.55) per share, for the year ended December 31, 2014. In 2015, the Company recognized a non-cash gain of $4.4 million on the fair value adjustment of warrant derivative liability related to warrants issued in August 2011 and July 2009, compared to a non-cash gain of $19.1 million in 2014. The Company reported licensing revenue of $100,000 in 2015, compared to $100,000 in 2014.

Research and development (R&D) expenses were $43.4 million for 2015, and included development expenses of $37 million for aldoxorubicin, approximately $1.7 million for pre-clinical development of new albumin-binding cancer drugs (German lab), and approximately $3.6 million for general operation of our clinical programs. R&D expenses were $36.7 million for 2014.

General and administrative (G&A) expenses were $19.7 million for 2015, compared with $12.8 million for 2014. G&A expenses for 2015 included a non-cash litigation settlement expense of $4.5 million for the eventual issuance of our common shares. They also included non-cash stock-compensation expense of $5.8 million and $4.1 million for 2015 and 2014, respectively.

On March 10, 2016 Threshold Pharmaceuticals, Inc. (Nasdaq:THLD), a clinical-stage biopharmaceutical company developing novel therapies for cancer, reported financial results for the fourth quarter and year ended December 31, 2015 and provided an update on the Company’s corporate and clinical development activities (Press release, Threshold Pharmaceuticals, MAR 10, 2016, View Source [SID:1234509483]).

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"A key focus for Threshold has been to analyze all of the evofosfamide clinical data to determine whether there might be a path forward in patients with pancreatic cancer as well as other cancer indications," said Barry Selick, Ph.D., Chief Executive Officer of Threshold. "We have finalized an agreement with Merck KGaA, Darmstadt, Germany to license back all rights to evofosfamide and, based upon a detailed ongoing analysis of the data from the Phase 3 MAESTRO trial, we have seen a meaningful improvement in median overall survival and other secondary efficacy endpoints in the 116 Japanese patients with pancreatic cancer who were enrolled in that trial."

Corporate Highlights
On March 10, 2016, the Company terminated the global license and co-development agreement (License Agreement) with Merck KGaA, Darmstadt, Germany, originally entered into February 2, 2012 for evofosfamide, Threshold’s investigational hypoxia-activated prodrug of a cytotoxic DNA-alkylating agent. Under the terms of the Termination Agreement, all rights to evofosfamide under the original agreement were returned to Threshold, as well as all rights to Merck KGaA, Darmstadt, Germany technology developed under the License Agreement. The Termination Agreement provides tiered royalties on sales and milestone payments to Merck KGaA, Darmstadt, Germany contingent upon the future successful development and commercialization of evofosfamide.

In January 2016 at the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) 2016 Gastrointestinal Cancers Symposium (ASCO GI), Merck KGaA, Darmstadt, Germany’s analysis of the results from the Phase 3 MAESTRO trial were presented. While the primary efficacy endpoint of overall survival narrowly missed statistical significance, secondary efficacy endpoints of progression-free survival and confirmed overall response rates demonstrated significant improvements for patients treated with gemcitabine plus evofosfamide (the "treatment arm") compared to gemcitabine plus placebo (the "control arm"). No new safety findings were identified in the MAESTRO study and the safety profile was consistent with that previously reported in other studies of evofosfamide plus gemcitabine.

As previously reported, a meaningful improvement in overall survival was reported for the subgroup of 123 Asian patients enrolled at Japanese and South Korean sites in which the risk of death was reduced by 42 percent for patients on the treatment arm compared to patients on the control arm with an associated hazard ratio of 0.58 (95% CI: 0.36 – 0.93).

Of particular note, based upon Merck KGaA, Darmstadt, Germany’s MAESTRO data, the Company reported that the 116 patients from Japan from the treatment arm had a median overall survival of 13.6 months compared to 9.1 months for those patients in the control arm. The patients from Japan also had significant improvements in progression free survival, objective response rates, and reductions in the pancreatic cancer biomarker, CA19-9.

The Company is conducting additional analyses of data from the MAESTRO study in pancreatic cancer and intends to discuss potential registration pathways with health regulatory authorities. While the Company has ongoing clinical development collaborations investigating evofosfamide in patients with pancreatic neuroendocrine tumors (pNET), recurrent glioblastoma (GBM) and hepatocellular carcinoma (HCC), it has suspended the development of evofosfamide in various other tumor types.

"The detailed analysis of the MASTRO data combined with our previous Phase 2 experience strongly suggests that evofosfamide plus gemcitabine is an active regimen in patients with pancreatic cancer, most notably in the Japanese patients, and we look forward to being able to share our future plans based on these data," added Dr. Selick. "Beyond evofosfamide, we continue to make progress with our two Phase 2 proof-of-concept trials of tarloxotinib, our hypoxia-activated EGFR tyrosine kinase inhibitor, and plan to share preliminary results of those clinical trials in mid-2016."

Fourth Quarter and Year End 2015 Financial Results

As of December 31, 2015 and 2014, Threshold had $48.7 million and $58.6 million in cash, cash equivalents and marketable securities, respectively. The net decrease of $9.9 million in cash, cash equivalents and marketable securities during 2015 is primarily due to the Company’s operating cash requirements for 2015, partially offset by the $28.1 million in net proceeds from our public offering in February 2015 and $0.7 million in cash proceeds from the exercise of stock options and purchase rights related to our stock-based equity incentive plans.

Revenue for the fourth quarter and year ended December 31, 2015 was $65.9 million and $76.9 million, respectively, compared to $3.7 million and $14.7 million for the same periods in 2014, respectively. Revenue for the years ended December 31, 2015 and December 31, 2014, related to the amortization of the aggregate of $110 million in upfront and milestone payments earned in 2013 and 2012 from the Company’s collaboration with Merck KGaA, Darmstadt, Germany. The revenue from the upfront payment and milestone payments earned under the agreement was previously being amortized over the relevant performance period, rather than being immediately recognized when the upfront payment and milestone were earned or received. As a result of Merck KGaA, Darmstadt, Germany’s and our decision to cease further joint development of evofosfamide in December 2015, we immediately recognized $65.9 million of the remaining deferred revenue into revenue during the quarter ending December 31, 2015. Also as a result of the termination of the agreement, we are no longer eligible to receive any further milestone payments from Merck KGaA, Darmstadt, Germany.

Research and development expenses were $11.4 million for the fourth quarter ended December 31, 2015, compared to $8.6 million for the same period in 2014. The increase in research and development expenses, net of reimbursement for Merck KGaA, Darmstadt, Germany’s 70% share of total development expenses for evofosfamide, was due primarily to a $1.2 million increase in employee related expenses, including a $0.3 million increase in non-cash stock-based compensation expense and a $1.6 million increase in clinical development expenses and consulting expenses. Research and development expenses were $40.3 million for 2015, compared to $35.8 million in 2014. The increase in research and development expenses, net of reimbursement for Merck KGaA, Darmstadt, Germany’s 70% share of total development expenses for evofosfamide, was due primarily to a $2.1 million increase in clinical development expenses and an increase of $2.7 million in employee related expenses, including a $1.0 million increase in non-cash stock-based compensation expense. Partially offsetting these increases was a $0.4 million decrease in consulting expenses.

General and administrative expenses were $2.2 million for the fourth quarter of 2015 versus $2.6 million for the fourth quarter of 2014. The decrease in general and administrative expenses was due primarily to a $0.2 million decrease in consulting expenses and a $0.2 million decrease in employee related expenses. General and administrative expenses were $9.7 million for 2015 versus $10.1 million for 2014. The decrease in general and administrative expenses was due primarily to a $0.4 million decrease in consulting expenses.

Non-cash stock-based compensation expense included in total operating expenses was $2.0 million for the fourth quarter of 2015 versus $1.6 million for the fourth quarter of 2014. Non-cash stock-based compensation expense included in total operating expenses was $6.8 million for 2015 versus $5.5 million for 2014. The increase in stock-based compensation expense was due to the amortization of a greater number of options with higher fair values.

Net income for the fourth quarter of 2015 was $69.7 million compared to a net loss of $6.0 million for the fourth quarter of 2014. Included in the net income for the fourth quarter of 2015 was an operating income of $52.3 million and non-cash income of $17.4 million compared to an operating loss of $7.6 million and non-cash income of $1.6 million in the fourth quarter of 2014. The net income for 2015 was $43.8 million compared to a net loss of $21.6 million in 2014. Included in the net income for 2015 was an operating income of $26.9 million and non-cash income of $16.8 million compared to an operating loss of $31.3 million and non-cash income of $9.3 million in 2014. The non-cash income or expense is related to changes in the fair value of the Company’s outstanding and exercised warrants that was classified as other income (expense).

About Evofosfamide
Evofosfamide (previously known as TH-302) is an investigational hypoxia-activated prodrug of a bis-alkylating agent that is preferentially activated under severe hypoxic tumor conditions, a feature of many solid tumors. Areas of low oxygen levels (hypoxia) in solid tumors are due to insufficient blood vessel supply. Similarly, the bone marrow of patients with hematological malignancies has also been shown, in some cases, to be severely hypoxic. On December 6, 2015, the Company announced the outcomes of two Phase 3 studies (MAESTRO and TH-CR-406/SARC021) of evofosfamide stating that neither study met its primary endpoint. The related news release can be accessed on the Company’s website.

About Tarloxotinib Bromide
Tarloxotinib bromide (the proposed International Nonproprietary Name, previously known as TH-4000), or "tarloxotinib", is a prodrug designed to selectively release a covalent (irreversible) EGFR tyrosine kinase inhibitor under severe hypoxia, a feature of many solid tumors. Accordingly, tarloxotinib has the potential to effectively shut down aberrant EGFR signaling in a tumor-selective manner, thus potentially avoiding or reducing the systemic side effects associated with currently available EGFR tyrosine kinase inhibitors. Tarloxotinib is currently being evaluated in two Phase 2 proof-of-concept trials: one for the treatment of patients with mutant EGFR-positive, T790M-negative advanced non-small cell lung cancer progressing on an EGFR tyrosine kinase inhibitor, and the other for patients with recurrent or metastatic squamous cell carcinomas of the head and neck or skin. Threshold licensed exclusive worldwide rights to tarloxotinib from the University of Auckland, New Zealand, in September 2014.