On November 1, 2018 Emergent BioSolutions Inc. (NYSE: EBS) reported financial results for the quarter and nine months ended September 30, 2018 (Press release, Emergent BioSolutions, NOV 1, 2018, View Source;p=RssLanding&cat=news&id=2374998 [SID1234530510]).

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"Our financial and operational performance is solidly in line with expectations and we are confident in a strong finish to the year, driven by our organic business as well as the impact of the PaxVax and Adapt Pharma acquisitions," said Daniel J. Abdun-Nabi, CEO of Emergent BioSolutions. He continued, "Strategically, we have broadened our reach into the public health threats market, strengthened our portfolio of unique products, and expanded the patients and customers that we serve. Operationally, we have added substantial manufacturing and sales capabilities, diversified our product development pipeline, and strengthened our pool of engaged and talented employees. Financially, we now expect to achieve our 2020 revenue goal of at least $1 billion in 2019, a full year ahead of schedule, bolstering our ability to create long-term shareholder value."

Richard S. Lindahl, CFO of Emergent BioSolutions, said, "The acquisitions of Adapt Pharma and PaxVax create a step-change forward for Emergent. On a combined basis, we expect the two entities to contribute between $270 and $300 million of incremental revenue and to be accretive to adjusted net income and adjusted EBITDA in 2019. We are actively engaged in integration and our entire team is excited to move forward together as we continue to diversify our revenue sources, realize scale efficiencies and drive strong cash flow from the now larger Emergent business operations."

Q3 2018 AND RECENT BUSINESS ACCOMPLISHMENTS

Acquisitions

Acquired specialty vaccines company PaxVax and its U.S. Food and Drug Administration (FDA) approved vaccines for typhoid, Vivotif (Typhoid Vaccine Live Oral Ty21a), and cholera, Vaxchora (Cholera Vaccine, Live, Oral), along with a development pipeline focused on infectious disease vaccines and related U.S.- and Europe-based manufacturing infrastructure.

Acquired Adapt Pharma and its flagship product NARCAN (naloxone HCl) Nasal Spray, the first and only needle-free presentation of naloxone approved by the FDA and Health Canada, for the emergency treatment of known or suspected opioid overdose, and the leading community-use option for naloxone delivery.
Product Development

Initiated a Phase 1 clinical study of ZIKV-IG, the Company’s anti-Zika virus immune globulin being developed as a therapeutic intervention against Zika virus disease; the candidate was granted Fast Track designation by the FDA in December 2017.
Financing

To fund the recent acquisitions of PaxVax and Adapt Pharma and pay related fees, costs, and expenses for both transactions, the Company incurred a total of $768 million of debt; this debt was incurred pursuant to an amended and restated credit facility that provides up to $1.05 billion of financing through a $600 million revolver and a $450 million term loan.
2018 FINANCIAL PERFORMANCE

(I) Quarter Ended September 30, 2018 (Unaudited)

Revenues

Total Revenues

For Q3 2018, total revenues were $173.7 million, an increase of 16% over 2017. Total revenues reflect a significant increase in product sales.

Product Sales

For Q3 2018, product sales were $133.3 million, an increase of $19.0 million or 17% as compared to 2017. The increase primarily reflects sales of ACAM2000, (Smallpox (Vaccinia) Vaccine, Live) and Raxibacumab injection, a fully human monoclonal antibody, both acquired in Q4 2017, (included in Other product sales).

(in millions)
(unaudited) Three Months Ended
September 30,
2018 2017 % Change
Product Sales
BioThrax $45.9 $83.5 (45%)
Other 87.4 30.8 184%
Total Product Sales $133.3 $114.3 17%

Contract Manufacturing

For Q3 2018, revenue from the Company’s contract manufacturing operations was $22.2 million, an increase of $3.3 million or 17% as compared to 2017. The increase primarily reflects increased manufacturing services for existing commercial customers at the Company’s Camden site.

Contracts and Grants

For Q3 2018, revenue from the Company’s development-based contracts and grants was $18.2 million, an increase of $2.0 million or 12% as compared to 2017. The increase primarily reflects increased R&D activities related to certain ongoing funded development programs.

Operating Expenses

Cost of Product Sales and Contract Manufacturing

For Q3 2018, cost of product sales and contract manufacturing was $73.2 million, an increase of $28.7 million or 64% as compared to 2017. The increase primarily reflects the impact of an increase in Other product sales associated principally with ACAM2000 and Raxibacumab, which were acquired in the fourth quarter of 2017, offset by lower BioThrax (Anthrax Vaccine Adsorbed) sales during the quarter.

Research and Development (Gross and Net)

For Q3 2018, gross R&D expenses were $37.0 million, an increase of $14.3 million or 63% as compared to 2017. The increase primarily reflects an increase in costs associated with contract development services.

For Q3 2018, net R&D expense, which reflects investments made in development programs that are not currently funded in whole or in part by third-party partners and is calculated as gross research and development expenses minus contracts and grants revenue, was $18.8 million, an increase of $12.3 million or 189% as compared to 2017. The increase primarily reflects investment in process improvements related to ACAM2000 at the Canton site and increased costs associated with the Phase 2 clinical trial for the FLU-IGIV program. The Q3 2018 net R&D expense was 12% of net revenue (total revenue less contracts & grants).

(in millions)
(unaudited) Three Months Ended
September 30,
2018 2017 % Change
Research and Development Expenses $37.0 $22.7 63%
Adjustments:
– Contracts and grants revenue $18.2 $16.2 12%
Net Research and Development Expenses $18.8 $6.5 189%

Selling, General and Administrative

For Q3 2018, selling, general and administrative expenses were $42.1 million, an increase of $7.6 million or 22% as compared to 2017. The increase primarily reflects higher acquisition related (diligence and legal) costs associated with the PaxVax and Adapt Pharma transactions.

Income Taxes

For Q3 2018, the provision for income tax expense in the amount of $0.6 million includes a discrete benefit of $5.6 million primarily related to finalizing positions taken on the Company’s 2017 U.S. federal and state income tax filings and stock compensation activity, resulting in an effective tax rate of 3%.

Net Income & Adjusted Net Income

For Q3 2018, the Company recorded net income of $20.9 million, or $0.41 per diluted share, versus net income of $33.6 million, or $0.68 per diluted share, in 2017. (1)

For Q3 2018, the Company recorded adjusted net income of $28.2 million, or $0.55 per diluted share, versus adjusted net income of $37.1 million, or $0.73 per diluted share, in 2017. (2)

EBITDA & Adjusted EBITDA

For Q3 2018, the Company recorded EBITDA of $34.4 million, or $0.67 per diluted share, versus $57.5 million, or $1.14 per diluted share, in 2017. (2)

For Q3 2018, the Company recorded adjusted EBITDA of $39.6 million, or $0.77 per diluted share, versus $60.5 million, or $1.20 per diluted share, in 2017. (2)

(II) Nine Months Ended September 30, 2018 (Unaudited)

Revenues

Total Revenues

For the nine months of 2018, total revenues were $511.7 million, an increase of $144.6 million or 39% over 2017. Total revenues reflect a significant increase in product sales and contract development and manufacturing services revenue.

Product Sales

For the nine months of 2018, product sales were $389.1 million, an increase of $129.2 million or 50% as compared to 2017. The increase primarily reflects sales of ACAM2000 and Raxibacumab, both acquired in Q4 2017.

For the nine months of 2018, revenue from the Company’s contract manufacturing operations was $72.0 million, an increase of $19.3 million or 37% as compared to 2017. The increase primarily reflects the completion of a milestone related to the expansion of certain contract manufacturing capabilities at the Company’s Lansing site and manufacturing services at the Company’s Canton site.

Contracts and Grants

For the nine months of 2018, revenue from the Company’s development-based contracts and grants was $50.6 million, a decrease of $3.9 million or 7% as compared to 2017. The decrease primarily reflects a reduction in revenue associated with the successful completion of multiple U.S. government development contracts, as well as reduced R&D activities related to certain ongoing funded development programs.

Operating Expenses

Cost of Product Sales and Contract Manufacturing

For the nine months of 2018, cost of product sales and contract manufacturing was $220.4 million, an increase of $95.0 million or 76% as compared to 2017. The increase primarily reflects the impact of an increase in Other product sales associated principally with ACAM2000 and Raxibacumab, which were acquired in the fourth quarter of 2017, and increased CMO revenue, offset by lower BioThrax sales during the period.

Research and Development (Gross and Net)

For the nine months of 2018, gross R&D expenses were $90.8 million, an increase of $21.9 million or 32% as compared to 2017. The increase primarily reflects an increase in costs associated with contract development services.

For the nine months of 2018, net R&D expense was $40.2 million, an increase of $25.8 million or 179% as compared to 2017. The increase primarily reflects investment in process improvements related to ACAM2000 at the Canton site and increased costs associated with the Phase 2 clinical trial for the FLU-IGIV program. The nine months of 2018 net R&D expense was 9% of net revenue (total revenue less contracts & grants).

Selling, General and Administrative

For the nine months of 2018, selling, general and administrative expenses were $121.8 million, an increase of $20.3 million or 20% as compared to 2017. The increase primarily reflects higher acquisition related (diligence and legal) costs associated with the PaxVax and Adapt Pharma transactions, as well as non-capitalized costs associated with critical IT systems improvements and higher non-cash compensation expenses associated with the Company’s equity awards program.

Income Taxes

For the nine months of 2018, the provision for income tax expense in the amount of $11.8 million includes a discrete benefit of $8.7 million primarily related to stock compensation activity and finalizing positions taken on the Company’s 2017 US federal and state income tax filings, resulting in an effective tax rate of 15%.

Net Income & Adjusted Net Income

For the nine months of 2018, the Company recorded net income of $66.2 million, or $1.29 per diluted share, versus net income of $48.7 million, or $1.03 per diluted share, in 2017. (1)

For the nine months of 2018, the Company recorded adjusted net income of $81.4 million, or $1.59 per diluted share, versus adjusted net income of $57.8 million, or $1.15 per diluted share, in 2017. (2)

EBITDA & Adjusted EBITDA

For the nine months of 2018, the Company recorded EBITDA of $116.7 million, or $2.28 per diluted share, versus $100.8 million, or $2.01 per diluted share, in 2017. (2)

For the nine months of 2018, the Company recorded adjusted EBITDA of $123.9 million, or $2.42 per diluted share, versus $108.7 million, or $2.17 per diluted share, in 2017. (2)

2018 FINANCIAL FORECAST & OPERATIONAL GOALS

The company is revising its financial forecast for 2018. The revised forecast reflects:

the strength of the organic business performance (excluding acquisitions, financing and other related costs), which is expected to be at the higher end of the previous forecast;
the incremental impact in the fourth quarter of the operations of PaxVax and Adapt Pharma;
a total of approximately $50 million in pre-tax transaction and integration costs, preliminary purchase accounting impacts and additional interest expense related to these recent acquisitions; and
an estimated effective tax rate of approximately 22% to 23%.

The Company is also reaffirming its full year 2018 operational goals.

OPERATIONAL GOAL Status
• Advance NuThrax development to enable Emergency Use Authorization filing with the FDA in 2018 • PPQ lots work in process; EUA submission on track to be filed by year end
• Complete ACAM2000 deliveries and establish a multi-year follow-on contract with the U.S. government • Deliveries on track; Follow-on contract negotiations underway
• Deliver Raxibacumab doses under current contract; advance technology transfer to the Company’s Bayview facility in Baltimore, Maryland • Deliveries on track; Technology transfer on track
• Progress pipeline to have at least four product candidates in advanced development • Completed
• Complete an acquisition that generates revenue within 12 months of closing • Completed

FOOTNOTES

(1) See "Calculation of Diluted Earnings Per Share."
(2) See "Reconciliation of Net Income to Adjusted Net Income, EBITDA and Adjusted EBITDA" for a definition of terms and a reconciliation table.
(3) The Company reintroduced the use of Adjusted EBITDA following the closing of the acquisitions of PaxVax and Adapt Pharma, which excludes additional specified items that can be highly variable and the non-cash impact of certain purchase accounting adjustments, in order to provide a more complete understanding of factors and trends affecting the Company’s business.

CONFERENCE CALL AND WEBCAST INFORMATION

Company management will host a conference call at 5:00 pm (Eastern Time) today, November 1, 2018, to discuss these financial results. This conference call can be accessed live by telephone or through Emergent’s website:

Live Teleconference Information:
Dial in: [US] (855) 766-6521; [International] (262) 912-6157
Conference ID: 93346559
Live Webcast Information:
Visit View Source for the live webcast feed

On November 1, 2018 CTI BioPharma Corp. (NASDAQ:CTIC) reported financial results for the third quarter and nine months ended September 30, 2018 (Press release, CTI BioPharma, NOV 1, 2018, View Source;p=RssLanding&cat=news&id=2374745 [SID1234530509]).

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In October 2018, CTI BioPharma announced the continuation of the PAC203 Phase 2 study without modification, following a planned second interim review by an Independent Data Monitoring Committee (IDMC). The IDMC did not identify significant drug- or dose-related safety concerns and specifically did not identify any concerns around hemorrhagic or cardiac toxicity. A complete dataset from the full enrollment of 150 patients (including efficacy, safety, pharmacokinetic and pharmacodynamic data) will now be used to determine the optimal dose of pacritinib for further clinical development. The PAC203 study is expected to complete enrollment by the end of 2018, with the next planned interim safety review to be conducted in the first quarter of 2019. Top-line data from the study are expected in the second quarter of 2019. The Company has scheduled a Type C meeting with the U.S. Food and Drug Administration (FDA) to take place before the end of the year to discuss the design of a new registrational Phase 3 study of pacritinib in myelofibrosis patients with severe thrombocytopenia (platelet counts of less than 50,000 per microliter). Following the identification of the optimal dose from the PAC203 study, the Company expects to begin Phase 3 patient recruitment mid-year in 2019.

In the third quarter of 2018, the Company submitted comprehensive responses to the Day 180 List of Outstanding Issues from the European Medicines Agency (EMA) regarding the marketing authorization application (MAA) for pacritinib. These responses include new data from the PAC203 trial. The Company expects an opinion from the EMA Committee for Medicinal Products for Human Use (CHMP) on the MAA for pacritinib by the end of 2018.

"We continue to progress with pacritinib development and look forward to our meeting with the FDA to discuss the design of a registrational Phase 3 trial expected to address the needs of myelofibrosis patients with severe thrombocytopenia," commented Adam R. Craig, M.D., Ph.D., President and Chief Executive Officer of CTI BioPharma. "Regarding PAC203, we expect to determine the optimal dose of pacritinib in the first half of 2019 and initiate patient recruitment for the Phase 3 trial in mid-2019, adapting the PAC203 study from a Phase 2 to a Phase 3."

Third Quarter Financial Results
Total revenues for the third quarter and nine months ended September 30, 2018, were $0.7 million and $11.8 million, respectively, compared to $1.7 million and $24.7 million for the respective periods in 2017. The decrease in total revenues for the third quarter in 2018 compared to the same period in 2017 is primarily due to the recognition of license and contract revenue in 2017 related to the achievement of a regulatory milestone under the license and collaboration agreement for PIXUVRI with Servier. The decrease in total revenues for the nine months ended September 30, 2018 compared to the same period in 2017 is primarily due to license and contract revenue that included the recognition of payments received from the expansion of the license and collaboration agreement for PIXUVRI with Servier in 2017.

GAAP operating loss was $14.8 million and $33.1 million for the third quarter and nine months ended September 30, 2018, respectively, compared to GAAP operating loss of $11.8 million and $25.8 million for the respective periods in 2017. Non-GAAP operating loss, which excludes non-cash share-based compensation expense, for the third quarter and nine months ended September 30, 2018, was $12.2 million and $28.2 million, respectively, compared to non-GAAP operating loss of $10.4 million and $21.5 million for the respective periods in 2017. Non-cash share-based compensation expense for the third quarter and nine months ended September 30, 2018, was $2.5 million and $4.9 million, respectively, compared to $1.4 million and $4.3 million for the respective periods in 2017. Operating loss in the third quarter of 2018 as compared to the same period in 2017 resulted primarily from the decrease in license and contract revenue as mentioned above and a decrease in selling, general and administrative expenses. Operating loss for the nine months ended September 30, 2018, as compared to the same period in 2017 resulted primarily from the decrease in license and contract revenue as mentioned above and an increase in research and development expenses. For information on CTI BioPharma’s use of non-GAAP operating loss and a reconciliation of such measure to GAAP operating loss, see the section below titled "Non-GAAP Financial Measures."

Net loss attributable to common stockholders for the third quarter of 2018 was $14.8 million, or $(0.26) per share, compared to $12.0 million, or $(0.28) per share, for the same period in 2017. Net loss attributable to common stockholders for the nine months ended September 30, 2018, was $30.2 million, or $(0.55) per share, compared to a net loss of $30.8 million, or $(0.90) per share, for the same period in 2017.

As of September 30, 2018, cash, cash equivalents and short-term investments totaled $80.9 million, compared to $43.2 million as of December 31, 2017.

Conference Call Information
CTI BioPharma management will host a conference call to review its third quarter 2018 financial results and provide an update on business activities. The event will be held today at 1:30 p.m. PT / 4:30 p.m. ET. Participants can access the call at 877-260-1479 (domestic) or +1 334-323-0522 (international). To access the live audio webcast or the subsequent archived recording, visit www.ctibiopharma.com. Webcast and telephone replays of the conference call will be available approximately two hours after completion of the call. Callers can access the replay by dialing 1-888-203-1112 (domestic) or +1 719-457-0820 (international). The access code for the replay is 4559931. The telephone replay will be available until November 8, 2018.

On November 1, 2018 Constellation Pharmaceuticals, Inc., a clinical-stage biopharmaceutical company using its expertise in epigenetics to discover and develop novel therapeutics, reported that it has received Fast Track designation from the United States Food and Drug Administration (FDA) for CPI-0610 in treatment of myelofibrosis (MF) based on preliminary results from the Company’s Phase 2 study, MANIFEST (Press release, Constellation Pharmaceuticals, NOV 1, 2018, View Source [SID1234530508]).

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Constellation is developing CPI-0610 with the goal of providing a new treatment option for patients with MF who have progressed after treatment with Jakafi (ruxolitinib), the only approved therapy for MF. Enrollment is ongoing in the Phase 2 portion of the open-label Phase 1/2 MANIFEST clinical trial, which is exploring CPI-0610’s potential both as a monotherapy and as a combination therapy with Jakafi. As previously reported, preliminary data demonstrated clinical activity, such as spleen volume reduction, symptom improvement, increase in hemoglobin levels, and conversion to transfusion independent status in a patient who was transfusion dependent. Constellation recently expanded the MANIFEST study to include a third cohort, designed to evaluate CPI-0610 as a first-line therapy in combination with ruxolitinib in JAK 1/2-inhibitor-naïve MF patients.

"We believe there is an opportunity to improve the standard of care for MF patients with agents that modify the underlying disease," said Adrian Senderowicz, Senior Vice President and Chief Medical Officer of Constellation Pharmaceuticals. "This Fast Track designation highlights CPI-0610’s potential to address a significant unmet need. Based on promising early data and our progress with site initiation and patient enrollment, we continue to expect to determine proof of concept in mid-2019."

The FDA grants Fast Track designation to facilitate the development and expedite the review of drugs to treat serious or life-threatening diseases and fill unmet medical needs. A drug that receives Fast Track designation is

eligible for more frequent meetings with the FDA to discuss the drug’s development plan and ensure collection of appropriate data needed to support drug approval, more frequent written communication about the design of the proposed clinical trials and use of biomarkers, eligibility for accelerated approval and priority review, and rolling review.

About Myelofibrosis

MF is part of a collection of progressive blood cancers known as myeloproliferative neoplasms and is associated with significantly reduced quality of life and shortened survival. As the disease progresses, the bone marrow produces fewer red blood cells. Within one year of diagnosis, the incidence of thrombocytopenia (a condition characterized by low platelet counts in the blood) and severe anemia (a condition characterized by low red blood cell counts) and the need for red blood cell transfusion increase significantly. Among other complications, most patients with MF have enlarged spleens, as well as many other physical symptoms, including abdominal discomfort, bone pain, and extreme fatigue.

About CPI-0610

CPI-0610 is a potent and selective small molecule designed to promote anti-tumor activity by selectively inhibiting the function of BET proteins to decrease the expression of abnormally expressed genes in cancer. Constellation’s epigenetics platform includes a deep understanding of the biological contexts in which BET proteins operate, including cancer pathways that are highly sensitive to CPI-0610. The results from preclinical studies, as well as translational insights from the successful first-in-human study of CPI-0610, led to prioritizing the clinical development of CPI-0610 in myelofibrosis (MF). Enrollment is ongoing in the Phase 2 portion of the open-label Phase 1/2 MANIFEST clinical trial of CPI-0610, either as a monotherapy or in combination with ruxolitinib, in patients with MF who are refractory or intolerant or have relapsed or lost response to the standard of care. MANIFEST also includes a third cohort designed to evaluate treatment with CPI-0610 in combination with ruxolitinib as a first-line therapy in JAK 1/2-inhibitor-naïve MF patients. The company expects to determine proof of concept for CPI-0610 in MF in mid-2019.

On November 1, 2018 Conatus Pharmaceuticals Inc. (Nasdaq:CNAT), a biotechnology company focused on the development and commercialization of novel medicines to treat liver disease, reported financial results for the quarter and nine months ended September 30, 2018, and provided updates on its clinical development programs (Press release, Conatus Pharmaceuticals, NOV 1, 2018, View Source [SID1234530507]).

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Program Updates
The company is conducting three Phase 2b clinical trials in collaboration with Novartis – the EmricasaN, a Caspase inhibitOR, for Evaluation (ENCORE) trials, designed to evaluate emricasan, a first-in-class pan-caspase inhibitor, in patients with fibrosis or cirrhosis caused by nonalcoholic steatohepatitis (NASH).

The ENCORE-PH (for Portal Hypertension) clinical trial, initiated in the fourth quarter of 2016, has enrolled approximately 240 patients with compensated or early decompensated NASH cirrhosis and severe portal hypertension. The primary endpoint is the mean change in hepatic venous pressure gradient (HVPG) for each of three treatment groups compared with placebo at week 24. ENCORE-PH remains on track with prior guidance, with top-line results expected in the current quarter followed by an integrated 24-week treatment extension period for clinical outcomes.

The ENCORE-NF (for NASH Fibrosis) clinical trial, initiated in the first quarter of 2016, has enrolled approximately 330 patients with NASH fibrosis. The primary endpoint is a one point or greater improvement in NASH Clinical Research Network (CRN) fibrosis score compared with placebo at week 72, with no worsening of steatohepatitis. ENCORE-NF enrolled patients with baseline NASH CRN fibrosis scores of F1 (up to 20% of enrolled patients), F2, and F3. The primary endpoint will be evaluated and can be achieved in either of two prospectively defined patient populations – the F1/F2/F3 population or the F2/F3 population. Either of these populations may be used in a future Phase 3 trial. The company believes that the ENCORE-NF analysis plan as described has the potential to facilitate discussions with regulatory authorities regarding its use as a study to support regulatory approval. Top-line results from ENCORE-NF are expected in the first half of 2019.

The ENCORE-LF (for Liver Function) clinical trial, initiated in the second quarter of 2017, is expected to enroll approximately 210 patients with decompensated NASH cirrhosis. The primary endpoint is event-free survival, with an event-driven stopping point. All subjects will be treated for a minimum of 48 weeks. Guidance for the ENCORE-LF clinical trial has been updated, with top-line results previously expected in the second half of 2019 now expected in mid-2019.
During the third quarter, the company announced the publication of results from preclinical studies of emricasan, demonstrating improvements in portal hypertension and survival in mouse models of secondary biliary cirrhosis. In October, the company announced accepted abstracts for two oral presentations and a poster at The Liver Meeting, the annual meeting of the American Association for the Study of Liver Diseases (AASLD) in San FranciscoNovember 9-13, 2018. In addition, the company will be meeting with institutional investors at the Stifel 2018 Healthcare Conference in New York on Tuesday, November 13, 2018.

Financial Results
The net loss for the third quarter of 2018 was $4.6 million compared with $4.0 million for the third quarter of 2017. The net loss for the first nine months of 2018 was $14.1 million compared with $13.0 million for the first nine months of 2017.

All revenues were related to the company’s collaboration with Novartis. Total revenues were $7.7 million for the third quarter of 2018 compared with $9.6 million for the third quarter of 2017. Total revenues were $26.2 million for the first nine months of 2018 compared with $26.6 million for the first nine months of 2017. The decreases in revenues for both periods were primarily due to lower emricasan-related research and development expenses resulting in corresponding lower revenues from Novartis, partially offset by the effects of adopting the ASC 606 revenue recognition standard.

Research and development expenses were $9.7 million for the third quarter of 2018 compared with $11.2 million for the third quarter of 2017. The decrease in research and development expenses was primarily due to lower spending related to the ENCORE-NF and ENCORE-PH clinical trials and manufacturing activities, partially offset by higher spending related to the ENCORE-LF clinical trial. Research and development expenses were $32.5 million for the first nine months of 2018 compared with $32.3 million for the first nine months of 2017. The increase in research and development expenses was primarily due to higher spending related to the ENCORE-LF and ENCORE-PH clinical trials and new product candidate development, partially offset by lower spending related to the ENCORE-NF clinical trial and manufacturing activities.

General and administrative expenses were $2.7 million for the third quarter of 2018 compared with $2.4 million for the third quarter of 2017. General and administrative expenses were $8.0 million for the first nine months of 2018 compared with $7.4 million for the first nine months of 2017. The increases in general and administrative expenses for both periods were primarily due to higher personnel costs.

Cash, cash equivalents and marketable securities were $49.6 million at September 30, 2018, compared with $74.9 million at December 31, 2017, and a projected year-end 2018 balance of between $35 million and $40 million. The company believes that current financial resources, together with the anticipated reimbursements for 50% of the costs for the ongoing clinical trials, without including any potential milestone payments under the Novartis collaboration, are sufficient to maintain operations through the end of 2019, as well as to fund initial pipeline expansion activities.

Conference Call and Audio Webcast
Conatus will host a conference call and audio webcast at 4:30 p.m. Eastern Time today to discuss the financial results and provide a corporate update. To access the conference call, please dial 877-312-5857 (domestic) or 970-315-0455 (international) at least five minutes prior to the start time and refer to conference ID 5773926. A live and archived audio webcast of the call will also be available in the Investors section of the Conatus website at www.conatuspharma.com.

On November 1, 2018 Clinical Genomics, a leading innovator of tests for colorectal cancer, and Quest Diagnostics (NYSE: DGX), the world’s leading provider of diagnostic information services, reported a 5-year extension to their U.S. supply agreement for the InSure ONE fecal immunochemical test (FIT) (Press release, Clinical Genomics, NOV 1, 2018, View Source [SID1234530506]). This agreement builds upon a long standing collaboration to provide InSure FIT and the new InSure ONE FIT for colorectal cancer screening programs.

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Clinical Genomics manufactures FIT tests, including InSure ONE, which Quest provides to physicians and organized provider groups across the United States. These provider groups include specialized programs to improve screening adherence rates for Accountable Care Organizations (ACOs) and other organizations focused on improving quality metrics under value-based care models. Quest is also an investor in the company. Under the agreement, Quest will continue to offer broad access to both the Insure FIT and Insure ONE FIT products in the U.S.

"We are pleased to continue this important partnership with Quest Diagnostics ensuring that screening programs have broad access to InSure ONE, an easy to use FIT that may lead to improved patient compliance," says Betsy Hanna, Chief Commercial Officer, Clinical Genomics.

"Barriers to screening often delay or prevent early diagnosis," said Kristie Dolan, General Manager, Oncology, Quest Diagnostics. "Insure ONE FIT helps overcome several of these screening barriers to prompt earlier screening. Our collaboration with Clinical Genomics will ensure that patients and providers in the U.S. continue to have broad access to the innovative Insure FIT and the new InSure ONE FIT."

InSure ONE is an FDA 510(k) cleared FIT for detecting blood in stool as an aid in the detection of lower gastrointestinal bleeding. A number of medical conditions may be associated with lower gastrointestinal bleeding, including colorectal cancer, iron deficiency anemia, diverticulitis, ulcerative colitis, polyps, and adenomas.

Unlike other FIT’s, InSure ONE is the only test that is performed using toilet water collected from a single bowel movement. InSure ONE employs a patented brush sampling method which has been preferred by many doctors and patients for more than 15 years. A water sample is collected from the toilet bowel by simply brushing the surface of the stool to release any blood into the surrounding water, rather than having to collect a stool sample or smear feces.

Annual FIT is recommended by the American Cancer Society (ACS) for screening programs to detect the early signs of adenomatous polyps, precursors to cancer, and colorectal cancer. Recently, the ACS updated its recommendations lowering the screening age from 50 to 45 years. FIT, along with colonoscopy, is also recommended as a ‘Tier 1’ preferred test for colorectal cancer screening programs by the U.S. Multi-Society Task Force (MSTF). When considering large, organized colorectal cancer screening programs, the U.S. MSTF also recognizes that given the annual nature of FIT and the performance characteristics of this assay in identifying blood in the stool, FIT is "more effective and less costly" than the use every 3 years of FIT-fecal DNA, approved by FDA specifically for use in colorectal cancer screening.1

Colorectal cancer is the second leading cause of cancer death in the United States, with more than 140,000 people per year expected to be diagnosed with the disease and an estimated 50,000 who will die from it. According to U.S. Preventative Service Task Force recommendations, screening for colorectal cancer in adults who are 50 to 75 years old and at average risk reduces colorectal cancer mortality. Many people, however, are not screened according to guidelines, and studies show aversion to colonoscopy and other methods may factor into decisions not to screen. The disease is often highly treatable when caught in early stages.

Rex DK, et.al. U.S. MSTF Consensus Guideline, Gastroenterology 2017; 153:307-323