On August 10, 2020 Verastem, Inc. (Nasdaq:VSTM) (also known as Verastem Oncology), a biopharmaceutical company committed to developing and commercializing new medicines for patients battling cancer, reported financial results for the three months ending June 30, 2020, and provided an overview of recent corporate highlights (Press release, Verastem, AUG 10, 2020, View Source [SID1234563359]).

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"The first half of 2020 has been a time of transformational change at Verastem Oncology. We recently announced our newest strategic transaction, the sale of COPIKTRA to Secura Bio, which allows us to monetize this asset while focusing our resources and efforts on advancing the VS-6766 and defactinib combination program in KRAS mutant solid tumors," commented Brian Stuglik, Chief Executive Officer of Verastem Oncology. "We are now looking forward to a catalyst-driven second half of 2020, including reporting updated data from the LGSOC arm of the investigator-initiated Phase 1/2 FRAME study in September and commencing registration-directed clinical trials in low-grade serous ovarian cancer (LGSOC) and KRAS mutant non-small cell lung cancer (NSCLC) by the end of this year."

Second Quarter 2020 and Recent Highlights

Announced Path Forward for VS-6766/Defactinib Combination in LGSOC Following Meeting with U.S. FDA. Verastem announced today that the company met with the FDA in July 2020 to discuss the registration-directed study design for the VS-6766/defactinib combination in patients with LGSOC. The FDA was supportive of the Company’s development strategy and adaptive design for LGSOC. Verastem’s NSCLC study will also be an adaptive design with a focus on patients with KRAS-G12V mutant tumors. Verastem intends to seek input from the FDA after completing the initial cohort of the lung cancer study. Verastem expects to commence registration-directed clinical trials for potential accelerated approval in LGSOC and KRAS mutant NSCLC by the end of 2020.

Selling COPIKTRA Franchise to Secura Bio in a Deal Totaling $311 Million, Plus Royalties. Verastem recently announced its entry into a definitive agreement to sell its global commercial and development rights to COPIKTRA in all oncology indications to Secura Bio, Inc. The transaction, which carries a total deal value of up to $311 million, plus royalties, will provide Verastem’s current programs with a cash runway until at least 2024 and will allow the Company to focus its resources and efforts on the clinical development of VS-6766, its RAF/MEK inhibitor, and defactinib, its FAK inhibitor, in KRAS mutant solid tumors. Verastem is pursuing development of this combination in LGSOC and KRAS mutant NSCLC.

Presented Preliminary Results from Investigator-initiated Phase 1 FRAME Study Evaluating the Combination of VS-6766 and Defactinib in KRAS Mutant Solid Tumors at AACR (Free AACR Whitepaper) 2020 Virtual Meeting I. In a virtual poster presentation, Udai Banerji, MBBS, MD, DNB, PhD, FRCP, NIHR, Professor of Molecular Cancer Pharmacology at The Institute of Cancer Research and Honorary Consultant in Medical Oncology at The Royal Marsden NHS Foundation Trust, highlighted data from this ongoing, open-label, dose-escalation and expansion study in patients with KRAS mutant advanced solid tumors, including LGSOC and NSCLC. Preliminary data demonstrated a 67% overall response rate and long duration of therapy among patients with LGSOC. Based on higher response rates seen in NSCLC patients with KRAS-G12V mutations, Verastem will also be further exploring the role of the VS-6766/defactinib combination in KRAS-G12V NSCLC. Expansion cohorts remain ongoing in LGSOC and NSCLC and the study will be expanding to include new cohorts in pancreatic, KRAS mutant endometrial and KRAS-G12V NSCLC.

Presented New Preclinical VS-6766/Defactinib Combination Data in Uveal Melanoma at AACR (Free AACR Whitepaper) 2020 Virtual Meeting II. In this study, researchers identified and reinforced that FAK inhibition is a viable pathway to inhibit downstream from the GNAQ pathway, which is constitutively active in uveal melanoma. It was observed that co-targeting FAK and RAF/MEK signaling led to tumor collapse in uveal melanoma xenograft and liver metastasis models in vivo. Based on these encouraging results, Verastem plans to support an investigator-sponsored, Phase 2 clinical testing of the VS-6766/defactinib combination in uveal melanoma, which is expected to commence by the end of 2020.

Appointed John H. Johnson to the Board of Directors. In April, Verastem Oncology announced the appointment of John H. Johnson to its Board of Directors. Mr. Johnson’s career spans multiple executive management roles at leading global corporations where he was responsible for overseeing oncology and immunology drug development initiatives and commercialization. Mr. Johnson will serve on the Compensation and Nominating and Governance Committees.
Upcoming Milestones

Close transaction with Secura Bio during the third quarter of 2020.

Present updated data from the LGSOC cohort of the investigator-initiated Phase 1/2 FRAME study evaluating VS-6766 and defactinib in KRAS mutant solid tumors in September, including at the 2nd Annual RAS-Targeted Drug Development Conference on September 16, 2020.

Present new preclinical data from studies investigating VS-6766 and defactinib in combination with KRAS-G12C inhibitors in September, including at the 2nd Annual RAS-Targeted Drug Development Conference on September 16, 2020.

Commence registration-directed clinical trials in LGSOC and KRAS mutant NSCLC by the end of 2020.

Submit updated data from the NSCLC cohort of the investigator-initiated Phase 1/2 FRAME study to the International Association for the Study of Lung Cancer (IASLC) World Lung Cancer Conference, taking place in January 2021.
Second Quarter 2020 Financial Results

Net product revenue for the three months ending June 30, 2020 (2020 Quarter) was $4.2 million, compared to $3.0 million for the three months ending June 30, 2019 (2019 Quarter). License and collaboration revenue for both the 2020 Quarter and 2019 Quarter was $0.1 million.

Total operating expenses for the 2020 Quarter were $25.6 million, compared to $41.4 million for the 2019 Quarter.

Research and development (R&D) expense for the 2020 Quarter was $9.3 million, compared to $11.3 million for the 2019 Quarter. The decrease of $2.0 million, or 18%, was primarily related to a decrease in contract research organization (CRO) costs and lower employee related expense.

Selling, general and administrative (SG&A) expense for the 2020 Quarter was $15.4 million, compared to $29.3 million for the 2019 Quarter. The decrease of $13.9 million, or 47%, primarily resulted from the company’s shift in strategic direction which led to lower commercial program and employee related expense.

Net loss for the 2020 Quarter was $23.0 million, or $0.14 per share (basic and diluted), compared to $42.2 million, or $0.57 per share (basic and diluted), for the 2019 Quarter.

For the 2020 Quarter, non-GAAP adjusted net loss was $20.5 million, or $0.12 per share (diluted), compared to non-GAAP adjusted net loss of $35.6 million, or $0.48 per share (diluted), for the 2019 Quarter. Please refer to the GAAP to Non-GAAP Reconciliation attached to this press release.

Verastem Oncology ended the second quarter of 2020 with cash, cash equivalents and short-term investments of $160.8 million.

Financial Guidance and Outlook

With the proceeds from the sale of COPIKTRA, Verastem has a cash runway until at least 2024 to deliver on the current programs for VS-6766 and defactinib, including clinical and regulatory milestones and development in LGSOC and KRASmt NSCLC. Verastem expects its 2020 operating expenses to be approximately 40% lower than its 2019 operating expenses. As a result of its new strategic direction and operating plans, along with the expected sale of the COPIKTRA franchise during the third quarter and associated transition activities, the Company expects total operating expenses for the full year 2020 to be in the range of $80 million to $90 million. Beginning in 2021 Verastem expects its annual operating expenses to be approximately $50 million.

Use of Non-GAAP Financial Measures

To supplement Verastem Oncology’s condensed consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States (GAAP), the Company uses the following non-GAAP financial measures in this press release: non-GAAP adjusted net loss and non-GAAP net loss per share. These non-GAAP financial measures exclude certain amounts or expenses from the corresponding financial measures determined in accordance with GAAP. Management believes this non-GAAP information is useful for investors, taken in conjunction with the Company’s GAAP financial statements, because it provides greater transparency and period-over-period comparability with respect to the Company’s operating performance and can enhance investors’ ability to identify operating trends in the Company’s business. Management uses these measures, among other factors, to assess and analyze operational results and trends and to make financial and operational decisions. Non-GAAP information is not prepared under a comprehensive set of accounting rules and should only be used to supplement an understanding of the Company’s operating results as reported under GAAP, not in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. In addition, these non-GAAP financial measures are unlikely to be comparable with non-GAAP information provided by other companies. The determination of the amounts that are excluded from non-GAAP financial measures is a matter of management judgment and depends upon, among other factors, the nature of the underlying expense or income amounts. Reconciliations between these non-GAAP financial measures and the most comparable GAAP financial measures for the three months ended March 31, 2020 and 2019 are included in the tables accompanying this press release after the unaudited condensed consolidated financial statements.

About VS-6766

VS-6766 (formerly known as CH5126766, CKI27 and RO5126766) is a unique inhibitor of the RAF/MEK signaling pathway. In contrast to other MEK inhibitors in development, VS-6766 blocks both MEK kinase activity and the ability of RAF to phosphorylate MEK. This unique mechanism allows VS-6766 to block MEK signaling without the compensatory activation of MEK that appears to limit the efficacy of other inhibitors.

About Defactinib

Defactinib (VS-6063) is an oral small molecule inhibitor of FAK and PYK2 that is currently being evaluated as a potential combination therapy for various solid tumors. The Company has received Orphan Drug designation for defactinib in ovarian cancer and mesothelioma in the US, EU and Australia. Preclinical research by Verastem Oncology scientists and collaborators at world-renowned research institutions has described the effect of FAK inhibition to enhance immune response by decreasing immuno-suppressive cells, increasing cytotoxic T cells, and reducing stromal density, which allows tumor-killing immune cells to enter the tumor.i,ii

About the VS-6766/Defactinib Combination

RAS mutant tumors are present in 30% of all human cancers and have historically presented a difficult treatment challenge and are often associated with significantly worse prognosis. Challenges associated with identifying new treatment options for these types of cancers include resistance to single agents, identifying tolerable combination regimens with MEK inhibitors and new RAS inhibitors in development addressing only a minority of all RAS mutated cancers.

The combination of VS-6766 and defactinib has been found to be clinically active in KRAS mutant tumors. In an ongoing investigator-initiated Phase I/2 FRAME study, the combination of VS-6766 and defactinib is being evaluated in patients with LGSOC, KRAS mutant NSCLC and colorectal cancer (CRC). Preliminary data from this study presented at the American Association for Cancer Research (AACR) (Free AACR Whitepaper) 2020 Virtual Annual Meeting I demonstrated a 67% overall response rate and long duration of therapy among patients with KRASmt LGSOC. Based on an observation of higher response rates seen in patients with KRAS-G12V mutations in the study, Verastem will also be further exploring the role of VS-6766 and defactinib in KRAS-G12V NSCLC. The FRAME study is expanding in August 2020 to include new cohorts in pancreatic, KRAS mutant endometrial and KRAS-G12V NSCLC.

About COPIKTRA (duvelisib)

COPIKTRA is an oral inhibitor of phosphoinositide 3-kinase (PI3K), and the first approved dual inhibitor of PI3K-delta and PI3K-gamma, two enzymes known to help support the growth and survival of malignant B-cells. PI3K signaling may lead to the proliferation of malignant B-cells and is thought to play a role in the formation and maintenance of the supportive tumor microenvironment.iii,iv,v COPIKTRA is indicated for the treatment of adult patients with relapsed or refractory chronic lymphocytic leukemia/small lymphocytic lymphoma (CLL/SLL) after at least two prior therapies and relapsed or refractory follicular lymphoma (FL) after at least two prior systemic therapies. COPIKTRA is also being developed by Verastem Oncology for the treatment of peripheral T-cell lymphoma (PTCL), for which it has received Fast Track status and Orphan Drug Designation, and is being investigated in combination with other agents through investigator-sponsored studies.vi For more information on COPIKTRA, please visit www.COPIKTRA.com. Information about duvelisib clinical trials can be found on www.clinicaltrials.gov.

On August 10, 2020 Sangamo Therapeutics, Inc. (Nasdaq: SGMO), a genomic medicine company, reported that Sandy Macrae, CEO of Sangamo, will present at the 2020 Wedbush PacGrow Healthcare Conference on August 12, 2020 at 2:55 p.m. Eastern Time (Press release, Sangamo Therapeutics, AUG 10, 2020, View Source [SID1234563358]).

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The presentation will be webcast live and may be accessed via a link on the Sangamo Therapeutics website in the Investors and Media section under Events and Presentations.

On August 10, 2020 SCYNEXIS, Inc. (NASDAQ: SCYX), a biotechnology company pioneering innovative medicines to overcome and prevent difficult-to-treat and drug resistant infections, reported financial results for the quarter ended on June 30, 2020 and provided an update on recent clinical and corporate developments (Press release, Scynexis, AUG 10, 2020, View Source [SID1234563357]).

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"We have recently achieved some key milestones with the successful completion of our pivotal VANISH Phase 3 program evaluating oral ibrexafungerp for the treatment of vaginal yeast infections, followed by productive pre-NDA meetings with the FDA," said Marco Taglietti, M.D., President and Chief Executive Officer of SCYNEXIS. "In both our VANISH Phase 3 trials, ibrexafungerp treatment resulted in clinically meaningful improvement and statistically significantly greater cure rates when compared to placebo, and we remain on track to submit our NDA for the treatment of vaginal yeast infections in the fourth quarter of this year, setting us up for a potential regulatory approval in mid-2021. I am extremely proud of our team’s commitment to advancing this program as we transition SCYNEXIS to a fully integrated drug development and commercial company with an initial focus on vaginal yeast infections."

Ibrexafungerp Update

Ibrexafungerp achieved superiority over placebo with a high degree of statistical significance on key study endpoints required for regulatory approval for the treatment of VVC in both VANISH pivotal trials. The two VANISH studies are among the first placebo-controlled trials of an antifungal agent in VVC. The results of these studies provide evidence of ibrexafungerp’s robust and clinically meaningful efficacy with no safety signals identified. Below are the top-line efficacy results of the VANISH pivotal trials:

In both VANISH pivotal trials, oral ibrexafungerp was generally well-tolerated. Below is a summary of the higher frequency treatment-emergent adverse events (TEAEs) of the VANISH pivotal trials:

Substantial commercial opportunity for oral ibrexafungerp in VVC as a potential novel treatment of choice for the large number of women currently underserved by existing agents.

Ibrexafungerp has the potential to address vaginal yeast infections across a broad range of patients and could be an ideal treatment option for the many patients for whom current treatment options are suboptimal. With over six million women experiencing a yeast infection each year in the U.S., VVC is an under-appreciated, under-reported, and under-served women’s health condition. There are over 15.4 million prescriptions written for VVC in the U.S. annually, all of which belong to a single drug class, the azoles. There has been no new oral treatment for VVC in over 25 years, and we believe health care providers are eager for a novel alternative to treat their patients.

Ibrexafungerp, if approved, would be the first and only oral, non-azole treatment for vaginal yeast infections. SCYNEXIS believes that ibrexafungerp’s unique combination of features, including its novel class, oral dosing, broad-spectrum, and fungicidal activity in all Candida species (albicans and non-albicans) including fluconazole resistant strains, will differentiate it from competing products.
SCYNEXIS recently announced the successful completion of pre-NDA meetings with U.S. Food and Drug Administration (FDA) on ibrexafungerp for the treatment of VVC. The purpose of the meetings was to discuss and confirm the clinical, non-clinical and chemistry, manufacturing and controls (CMC) requirements for SCYNEXIS’s proposed NDA submission and ensure that all elements of submission are met. SCYNEXIS submitted a pre-NDA briefing document to the FDA ahead of the meetings. Based on FDA feedback, SCYNEXIS believes its regulatory package will be sufficient to support an NDA submission of ibrexafungerp to the FDA for the treatment of VVC in the fourth quarter of this year.

SCYNEXIS plans to present top-line efficacy and safety results from its Phase 3 VANISH-303 dataset at the Infectious Diseases Society for Obstetrics and Gynecology (IDSOG) virtual conference. VANISH-306 data will be presented at a future scientific conference.

Enrollment is ongoing in the Phase 3 CANDLE study, investigating the efficacy and safety of oral ibrexafungerp for the prevention of recurrent VVC, for which there is no approved therapy in the U.S. Pending successful completion of this trial, SCYNEXIS anticipates top-line results and the submission of a supplemental NDA for this indication in the second half of 2021.

Enrollment is ongoing in our refractory invasive fungal infections (rIFI) program, which comprises two open-label Phase 3 studies (FURI and CARES).

Enrollment is ongoing in the Phase 2 SCYNERGIA study for patients with invasive aspergillosis and pre-clinical activities are also ongoing in the development of a liposomal intravenous formulation of ibrexafungerp.

Data presentations. SCYNEXIS continues to educate the scientific community about ibrexafungerp’s clinical potential against a number of pathogens. On July 14, SCYNEXIS held an investor event featuring two KOLs Barbara Dehn, a nurse practitioner who specializes in women’s health, and Caroline Mitchell, M.D., an Associate Professor, Obstetrics, Gynecology and Reproductive Biology and Director, Vulvovaginal Disorders Program at Massachusetts General Hospital. The two KOLs provided insight into the patient experience with VVC, the current VVC treatment landscape and unmet needs, and our management team provided an overview of the commercial opportunity in this indication. A replay of the event is available at View Source

In July 2020, SCYNEXIS presented data from an interim analysis of the Phase 3 FURI trial in patients with fungal infections that are refractory or resistant to standard of care as well as data from three preclinical studies demonstrating ibrexafungerp’s broad-spectrum antifungal activity at the American Society for Microbiology (ASM) Microbe Online. In June 2020, SCYNEXIS also presented at the BIO Digital International Convention and provided an overview of SCYNEXIS, its progress towards transitioning to a fully integrated commercial-stage organization, and ibrexafungerp’s clinical potential. Some of the posters presented are available at View Source
Corporate Developments Subsequent to June 30, 2020

On July 17, 2020, SCYNEXIS executed a 1-for-10 reverse split of its issued and outstanding common stock. As of August 1, 2020, there are 10.6 million shares outstanding, and 100 million authorized shares available.
Second Quarter Financial Results

Cash, cash equivalents and short-term investments totaled $37.6 million as of June 30, 2020, compared to $48.4 million in cash, cash equivalents, and short-term investments at December 31, 2019.

For the three months ended June 30, 2020, research and development expense of $8.5 million was comparable with the research and development expense for the three months ended June 30, 2019. During the three months ended June 30, 2020, SCYNEXIS incurred an increase of $0.5 million in chemistry, manufacturing, and controls (CMC) costs, an increase of $0.3 million in regulatory expense, and a net increase in other research and development expenses of $0.6 million, partially offset by a decrease of $1.4 million in clinical development costs.

Selling, general and administrative expenses for the quarter ended June 30, 2020 increased to $3.4 million from $2.8 million for the quarter ended June 30, 2019. The increase of $0.6 million, or 21%, was primarily driven by a $0.3 million increase in professional fees and commercial related expenses.

Total other income was $2.3 million for the quarter ended June 30, 2020, compared to total other income of $2.8 million for the quarter ended June 30, 2019. During the quarter ended June 30, 2020 and 2019, SCYNEXIS recognized non-cash gains of $3.6 million and $2.0 million, respectively, on the fair value adjustment of the warrant liabilities and during the quarter ended June 30, 2020 and 2019, recognized non-cash gains of $0.7 million and $1.3 million on the fair value adjustment of the derivative liabilities, respectively.

Net loss for the quarter ended June 30, 2020 was $6.4 million, or ($0.64) per basic and diluted share, compared to a net loss of $8.4 million, or ($1.58) per basic and diluted share, for the quarter ended June 30, 2019.

About Ibrexafungerp

Ibrexafungerp [pronounced eye-BREX-ah-FUN-jerp] is an investigational antifungal agent and the first representative of a novel class of structurally-distinct glucan synthase inhibitors, triterpenoids. This agent combines the well-established activity of glucan synthase inhibitors with the potential flexibility of having oral and intravenous (IV) formulations. Ibrexafungerp is currently in development for the treatment of fungal infections caused primarily by Candida (including C. auris) and Aspergillus species. It has demonstrated broad-spectrum antifungal activity, in vitro and in vivo, against multidrug-resistant pathogens, including azole- and echinocandin-resistant strains. The FDA has granted Qualified Infectious Disease Product (QIDP) and Fast Track designations for the formulations of ibrexafungerp for the indications of invasive candidiasis (IC) (including candidemia), invasive aspergillosis (IA) and VVC, and has granted Orphan Drug Designation for the IC and IA indications. Ibrexafungerp is formerly known as SCY-078.

On August 10, 2020 BioSpecifics Technologies Corp. (NASDAQ: BSTC), a biopharmaceutical company that originated and continues to develop collagenase-based therapies with a first-in-class collagenase-based product marketed as XIAFLEX in North America, reported its financial results for the second quarter ended June 30, 2020 (Press release, BioSpecifics Technologies, AUG 10, 2020, View Source [SID1234563356]).

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"While we anticipated an impact on second quarter 2020 royalty revenue due to COVID-19, our cash position remains strong, and we are projecting a rebound in XIAFLEX royalties in the second half of 2020. With the recent addition of Alex Monteith as our CBO, the approval of Qwo, or CCH-aaes, by the FDA and the initiation of patient dosing for XIAFLEX in plantar fibromatosis and adhesive capsulitis, we are well positioned to continue to execute on our strategic initiatives of expanding the uses of the XIAFLEX platform and adding additional assets to the BioSpecifics portfolio," said Joseph Truitt, Chief Executive Officer of BioSpecifics.

Second Quarter 2020 Financial Results
As of June 30, 2020, BioSpecifics had cash and cash equivalents and investments of $119.8 million, compared to $105.8 million as of December 31, 2019.

BioSpecifics reported GAAP net income of $0.1 million for the second quarter ended June 30, 2020, or $0.02 per basic share and $0.02 per share on a fully diluted basis, compared to GAAP net income of $6.4 million, or $0.88 per basic share and $0.87 per share on a fully diluted basis, for the same period in 2019.

BioSpecifics reported non-GAAP net income of $0.8 million for the second quarter ended June 30, 2020, or $0.11 per basic share and $0.11 per share on a fully diluted basis, compared to non-GAAP net income of $6.5 million, or $0.89 per basic share and $0.89 per share on a fully diluted basis, for the same period in 2019.

Total revenue for the second quarter ended June 30, 2020 was $3.9 million, compared to $8.9 million for the same period in 2019. Revenues decreased 56% year-over-year in the second quarter ended June 30, 2020, and 60% from the first quarter ended March 31, 2020, due to the impacts of the COVID-19 pandemic, including, without limitation, the effect of significant office closures and less office visits for physician-administered products.

GAAP research and development expenses were $0.2 million for both the second quarter ended June 30, 2020 and for the same period in 2019. Non-GAAP research and development expenses for the second quarter ended June 30, 2020 were $0.1 million, compared to $0.2 million for the same period in 2019.

GAAP general and administrative expenses for the second quarter ended June 30, 2020 were $4.0 million, compared to $1.7 million for the same period in 2019. Non-GAAP general and administrative expenses for the second quarter ended June 30, 2020 were $3.2 million, compared to $1.6 million for the same period in 2019.

Provision for income taxes for the second quarter ended June 30, 2020 were $24,000, compared to $1.1 million for the same period in 2019.

As of June 30, 2020, BioSpecifics had 7,344,955 shares of common stock outstanding.

XIAFLEX Franchise Highlights

BioSpecifics’ royalty revenues from the XIAFLEX commercial franchise down 56% year-over-year: Royalty revenue from XIAFLEX for the second quarter was down as a result of the impacts of the COVID-19 pandemic, including, without limitation, physician office closures and a decline in patients electing to be treated. Endo expects quarter-over-quarter revenue growth in the third quarter of 2020 to be in the mid to high 40 percent range as physician and patient activities continue returning toward pre-COVID-19 levels.
Qwo (collagenase clostridium histolyticum-aaes), the first and only U.S Food and Drug Administration (FDA)-approved injectable treatment for cellulite : In July 2020, CCH-aaes was approved by the FDA for the treatment of cellulite. Endo’s commercial launch is expected to occur in the first half of 2021.
New studies for plantar fibromatosis and adhesive capsulitis initiated in June and July 2020, respectively: Endo dosed the first patient in a clinical trial in plantar fibromatosis in June 2020 and adhesive capsulitis in July 2020. Plantar fibromatosis is a non-malignant thickening of the feet’s deep connective tissue or fascia that occurs in five to 11 percent of the adult population in the U.S. Adhesive capsulitis, also known as frozen shoulder, is an inflammation and thickening of the shoulder capsule due to collagen which causes decreased motion in the shoulder that occurs in two to five percent of the adult population in the U.S. There are currently no FDA-approved pharmaceutical therapies available to treat either condition.
Corporate Highlights

Alex Monteith appointed Chief Business Officer: In July 2020, BioSpecifics announced the appointment of Alex Monteith as Senior Vice President and Chief Business Officer. Mr. Monteith has extensive business development experience and industry knowledge, and last served as Vice President of Business Development for Deerfield Management, LLC.
Non-GAAP Financial Information
This press release contains financial measures that do not comply with U.S. generally accepted accounting principles (GAAP), such as non-GAAP net income, non-GAAP net income per share, non-GAAP research and development expense, and non-GAAP general and administrative expense, because such measures exclude stock-based compensation, restructuring expense and separation costs.

These measures supplement BioSpecifics’ financial results prepared in accordance with GAAP. BioSpecifics utilizes these financial measures, along with financial measures in accordance with GAAP, to evaluate the Company’s operating performance. Additionally, the Company believes that non-GAAP financial measures will be used by certain investors to measure the Company’s operating results. In management’s opinion, these non-GAAP measures are useful to investors and other users of our financial statements by providing greater transparency into the operating performance of BioSpecifics and its future outlook. Such measures should not be deemed to be an alternative to GAAP requirements or a measure of BioSpecifics’ liquidity. Non-GAAP measures are also unlikely to be comparable with non-GAAP disclosures released by other companies. See the tables below for a reconciliation of GAAP to non-GAAP measures.

On August 11, 2020 Reata Pharmaceuticals, Inc. (Nasdaq: RETA) ("Reata," the "Company," or "we"), a clinical-stage biopharmaceutical company, reported financial results for the quarter ended June 30, 2020, and provided an update on the Company’s business operations and clinical development programs (Press release, Reata Pharmaceuticals, AUG 10, 2020, View Source [SID1234563355]).

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Regulatory Update

Bardoxolone Methyl ("Bardoxolone") for Alport Syndrome

Since the announcement of positive, Year 1 data from the Phase 3 CARDINAL study, we have been engaged in discussions with the U.S. Food and Drug Administration ("FDA") regarding the Year 1 efficacy and safety results. We have had a Type C meeting and have provided written responses to the FDA’s questions and comments. We believe that we have addressed the FDA’s questions and comments regarding the Year 1 results, and, accordingly, we recently requested and were granted a pre-NDA meeting by the FDA to discuss the NDA submission content and plans.

One of the key questions to be resolved in the pre-NDA meeting is how the data from Year 2 of the CARDINAL study should be handled during the NDA review process. Our plan has been, and continues to be, to submit the NDA for bardoxolone in Alport syndrome during fourth quarter of 2020 for accelerated approval based on the one-year data from the Phase 3 portion of CARDINAL. If the second-year results are available during an acceptable time frame, we may be able to submit the second-year data to the NDA during the review process and before the FDA makes a determination about accelerated approval. This may extend the PDUFA date, but could also result in consideration of full approval, rather than accelerated approval. The FDA could recommend that we wait for the second-year data from CARDINAL to file the NDA. This would permit us to file for full approval but would delay the filing until the first quarter of 2021, compared to our current guidance of filing by the end of this year.

Omaveloxolone for Friedreich’s Ataxia

Following the announcement of the positive data from the MOXIe Part 2 study in October 2019, we have planned, subject to discussion with regulatory authorities, to proceed with a submission for marketing approval of omaveloxolone for the treatment of Friedreich’s ataxia ("FA") in the United States. We recently completed a Type C meeting in which the FDA provided us with guidance that it does not have any concerns with the reliability of the mFARS primary endpoint results in the MOXIe Part 2 study. Nevertheless, the FDA is not convinced that the MOXIe Part 2 results will support a single study approval without additional evidence that lends persuasiveness to the results. In preliminary comments for the meeting, the FDA stated that we will need to conduct a second pivotal trial that confirms the mFARS results of the MOXIe Part 2 study with a similar magnitude of effect.

In response to the preliminary comments, the Friedreich’s Ataxia Research Alliance ("FARA"), key FA clinicians, and we provided the FDA with information to demonstrate that it will be difficult to conduct an additional, prospective clinical trial in FA because of the very slow progression rate of FA, the limited number of FA patients available for clinical research, the small number of clinical trial investigators who can conduct the mFARS exam, and the impact of the COVID-19 pandemic on the ability to conduct neuroscience clinical trials. Thus, conducting an additional pivotal study would result in a long delay in the availability of a potentially effective therapy to patients with a progressive, life-threatening disease with no treatment options. The FDA acknowledged the unmet need of patients with FA, reiterated its commitment to facilitate the development of omaveloxolone within the constraints of the regulatory standards, and emphasized its willingness to consider all available options to meet the regulatory standards. The FDA also acknowledged that launching a new, neuroscience clinical trial now may not be possible because of the COVID-19 pandemic.

At the Type C meeting, to address the FDA’s requirement, FARA, key opinion leaders, and Reata proposed a second study (the "crossover study") to provide additional evidence of effectiveness. The study would measure the effect of omaveloxolone on mFARS in patients who were previously randomized to placebo in the MOXIe Part 2 study and are being treated with omaveloxolone in the MOXIe open-label extension study. The FDA acknowledged that a study like the proposed crossover study could provide important additional information and asked us to submit a design for the crossover study for their consideration.

If the FDA accepts this approach, we expect to complete the crossover study as early as the fourth quarter of this year. Assuming that the FDA views the crossover study data as sufficiently positive to provide confirmatory evidence, our plan would be to submit an NDA during the first quarter of 2021. If the FDA rejects the proposal or if the data are not supportive, we will evaluate whether it is feasible to conduct a second pivotal study in FA patients as suggested by the FDA. Regardless of the interaction with the FDA, we plan to pursue marketing approval outside of the United States.

Clinical Development Update

CARDINAL Phase 3 Study of Bardoxolone in Alport Syndrome

We are in the process of completing the second year of CARDINAL and anticipate that the study will be completed this year. The last study visits are anticipated to occur during the fourth quarter of 2020, which is consistent with our pre-COVID-19 trial timeline. As a result of the measures taken in response to the pandemic, at this time we believe that the timeline for Year 2 data availability is unlikely to be affected by COVID-19.

FALCON Phase 3 Study of Bardoxolone in Autosomal Dominant Polycystic Kidney Disease ("ADPKD")

In March 2020, we temporarily paused screening and enrollment of new patients in the FALCON Phase 3 study due to the emergence of COVID-19. We began to lift the screening hold in June 2020, and currently all sites are able to screen patients and approximately one-half of all sites are able to randomize patients. The measures we implemented to the conduct of FALCON in response to COVID-19 have been effective, and we anticipate no meaningful impact on data integrity due to COVID-19.

BARCONA Study of Bardoxolone in Patients with COVID-19

Reata recently announced the start of an investigator-sponsored trial, led by researchers at New York University’s ("NYU") Grossman School of Medicine, to study the effect of bardoxolone in patients with COVID-19. The Phase 2 BARCONA study is a randomized, placebo-controlled, double-blind trial that will enroll 40 patients with a primary endpoint of safety and a treatment duration of up to 29 days. Reata was involved in the design of the trial, has a representative on the study’s executive steering committee, and is providing drug supply for the study, as requested by NYU.

Second Quarter Financial Highlights

Reata recently announced a strategic investment from Blackstone Life Sciences ("BXLS") of $350 million, which includes $300 million in return for various percentage royalty payments by the Company on worldwide net sales of bardoxolone by the Company and its licensees, other than Kyowa Kirin Co., Ltd ("KKC"), and a $50 million investment in 340,793 shares of Reata’s Class A common stock at $146.72 per share. The royalty percentage will initially be in the mid-single digits and in future years can vary between higher-mid single digit percentages to low-single digit percentages depending on various milestones, including indication approval dates, cumulative royalty payments, and cumulative net sales.

In connection with the closing of the BXLS investment, the Company paid off in full its senior loan with Oxford Finance LLC and Silicon Valley Bank, which included $155.0 million in principal and $12.1 million in exit and prepayment fees, and which resulted in a charge for extinguishment of debt of $11.2 million.

Cash and Cash Equivalents

On June 30, 2020, we had cash and cash equivalents of $610.4 million, as compared to $664.3 million at December 31, 2019.

Collaboration Revenue

Collaboration Revenue was $3.1 million in the second quarter of 2020, as compared to $7.8 million for the same period of the year prior. Revenue for the second quarter of 2020 included $1.2 million from the KKC license agreement and $1.9 million in reimbursements of expenses from KKC.

GAAP and Non-GAAP Research and Development ("R&D") Expenses

R&D expenses according to generally accepted accounting principles in the U.S. ("GAAP") were $36.8 million for the second quarter of 2020, as compared to $29.6 million for the same period of the year prior.

Non-GAAP R&D expenses were $29.3 million for the second quarter of 2020, as compared to $27.9 million for the same period of the year prior.1

GAAP and Non-GAAP General and Administrative ("G&A") Expenses

GAAP G&A expenses were $16.6 million for the second quarter of 2020, as compared to $11.7 million for the same period of the year prior.

Non-GAAP G&A expenses were $9.3 million for the second quarter of 2020, as compared to $8.9 million for the same period of the year prior.1

GAAP and Non-GAAP Net Loss

The GAAP net loss for the second quarter of 2020 was $67.6 million, or $2.03 per share, on both a basic and diluted basis, as compared to a GAAP net loss of $34.4 million, or $1.14 per share, on both a basic and diluted basis, for the same period of the year prior.

The increase in GAAP net loss for the second quarter of 2020 is driven primarily by the loss on extinguishment of debt related to the payoff of our loan to Oxford Finance LLC and Silicon Valley Bank, higher stock-based compensation expense, and decreased collaboration revenue related to AbbVie since the reacquisition of licensing rights.

The non-GAAP net loss for the second quarter of 2020 was $40.9 million, or $1.23 per share on both a basic and diluted basis, as compared to a non-GAAP net loss of $29.9 million, or $0.99 per share, on both a basic and diluted basis, for the same period of the year prior.1

Reiterates Cash Guidance

The Company reiterated that it expects existing cash and cash equivalents will be sufficient to enable it to fund operations through the end of 2023.

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1 See "Use of Non-GAAP Financial Measures" below for a description of non-GAAP financial measures and a reconciliation between GAAP and non-GAAP R&D expenses, GAAP and non-GAAP G&A expenses, and GAAP and non-GAAP net loss, respectively, appearing later in the press release.

Non-GAAP Financial Measures

This press release contains non-GAAP financial measures, including non-GAAP R&D expenses, non-GAAP G&A expenses, non-GAAP operating expenses, non-GAAP net loss and non-GAAP net loss per common share – basic and diluted. These measures are not in accordance with, or an alternative to, GAAP, and may be different from non-GAAP financial measures used by other companies.

The Company defines non-GAAP R&D expenses as GAAP R&D expenses less stock-based compensation expense; non-GAAP G&A expenses as GAAP G&A expenses less stock-based compensation expense; non-GAAP operating expenses as GAAP operating expenses less stock-based compensation expense; non-GAAP net loss as GAAP net loss plus stock-based compensation expense, loss on extinguishment of debt, and non-cash interest expense from liability related to sale of future royalties; and non-GAAP net loss per common share – basic and diluted as GAAP net loss per common share – basic and diluted plus stock-based compensation expense, loss on extinguishment of debt, and non-cash interest expense from liability related to sale of future royalties. During the three and six months ended June 30, 2020 and 2019, the Company did not incur any reacquired license rights expense; therefore, this expense is not included in the reconciliations below for the measures for non-GAAP operating expenses, non-GAAP net loss, and non-GAAP net loss per common share – basic and diluted for these periods. The Company has excluded the impact of stock-based compensation expense, which may fluctuate from period to period based on factors including the variability associated with performance-based grants for stock options and restricted stock units and changes in the Company’s stock price, which impacts the fair value of these awards. The Company has excluded the impact of loss on extinguishment of debt in connection with the Term Loan payoff because the Company has no other similar loan obligation and we believe it is a non-recurring transaction, that makes it difficult to compare its results to peer companies who also provide non-GAAP disclosures. The Company has excluded the impact of accreted non-cash interest expense from liability related to sale of future royalties as it may be calculated differently from, and therefore may not be comparable to peer companies who also provide non-GAAP disclosures. The Company has excluded the impact of stock-based compensation expense, loss on extinguishment of debt, non-cash interest expense from liability related to sale of future royalties, and reacquired license rights expense because the Company believes its impact makes it difficult to compare its results to prior periods and anticipated future periods.

Because management believes certain items, such as stock-based compensation expense, loss on extinguishment of debt, non-cash interest expense from liability related to sales of future royalties, and reacquired license rights expense can distort the trends associated with the Company’s ongoing performance, the following measures are often provided, excluding special items, and utilized by the Company’s management, analysts, and investors to enhance consistency and comparability of year-over-year results, as well as to industry trends, and to provide a basis for evaluating operating results in future periods: non-GAAP net loss; non-GAAP net loss per common share – basic and diluted; non-GAAP R&D expenses; non-GAAP G&A expenses; and non-GAAP operating expenses.

The Company believes the presentation of these non-GAAP financial measures provides useful information to management and investors regarding the Company’s financial condition and results of operations. When GAAP financial measures are viewed in conjunction with these non-GAAP financial measures, investors are provided with a more meaningful understanding of the Company’s ongoing operating performance and are better able to compare the Company’s performance between periods. In addition, these non-GAAP financial measures are among those indicators the Company uses as a basis for evaluating performance, allocating resources and planning and forecasting future periods. These non-GAAP financial measures are not intended to be considered in isolation or as a substitute for GAAP financial measures. A reconciliation between these non-GAAP measures and the most directly comparable GAAP measures is provided later in this press release.

Conference Call Information

Reata’s management will host a conference call on August 10, 2020 at 8:30 a.m. ET. The conference call will be accessible by dialing (800) 708-4539 (toll-free domestic) or (847) 619-6396 (international) using the access code: 49873533. The webcast link is View Source

Second quarter 2020 financial results to be discussed during the call will be included in an earnings press release that will be available on the company’s website shortly before the call at View Source and will be available for 12 months after the call. The audio recording and webcast will be accessible for at least 90 days after the event at View Source.