On June 22, 2020 Ayala Pharmaceuticals, Inc. (Nasdaq: AYLA), a clinical-stage oncology company focused on developing and commercializing small molecule therapeutics for patients suffering from rare and aggressive cancers, primarily in genetically defined patient populations, reported financial results for the first quarter ended March 31, 2020 and highlighted recent progress and upcoming milestones for its pipeline programs (Press release, Ayala Pharmaceuticals, JUN 22, 2020, View Source [SID1234561323]).

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"Despite the challenges presented by the COVID-19 pandemic, Ayala continues to operate from a position of strength both clinically and operationally. We remain on track to report additional data from our ongoing Phase 2 ACCURACY study in R/M ACC and to initiate our Phase 2 AL101 study of TNBC before year end," said Roni Mamluk, Ph.D., Chief Executive Officer of Ayala. "In addition, in May 2020, we completed our upsized IPO, providing us the financial stability to further develop both AL101 and AL102 across a wide range of genetically defined cancer indications, as well as in multiple myeloma in collaboration with Novartis."

Key Business and Clinical Highlights

Completed Upsized Initial Public Offering: In May 2020, Ayala successfully completed its initial public offering (IPO) of 3,666,667 shares of common stock and additional 274,022 shares in connection with the partial exercise of the underwriters’ option to purchase additional shares, at a public offering price of $15.00 per share. The total gross proceeds from the IPO were approximately $59.1 million. Through this offering Ayala broadened its shareholder base with a number of U.S. healthcare dedicated funds.

Received Fast Track Designation for AL101 for the Treatment of Recurrent/Metastatic Adenoid Cystic Carcinoma (R/M ACC): In March 2020, Ayala received Fast Track designation from the U.S. Food and Drug Administration (FDA) for AL101 for the treatment of R/M ACC with Notch-activating mutations. Ayala’s lead product candidate, AL101 is a potent, selective, injectable small molecule gamma secretase inhibitor (GSI) and was granted Orphan Drug Designation in May 2019 for the treatment of R/M ACC.

Commenced Dosing of Patients in 6mg Cohort of R/M ACC Study: Ayala commenced dosing of the second patient cohort in its ACCURACY study for the treatment of R/M ACC with Notch-activating mutations at the higher dose of 6mg. In the first cohort of the study, 45 patients were dosed at 4mg where clear signs of clinical activity were observed along with a favorable safety profile. The study is expected to dose 42 patients in the 6mg cohort.

Investigational New Drug (IND) Accepted by FDA for Phase 2 Study of AL101 For Treatment of TNBC: In April 2020, the FDA accepted the IND for the Phase 2 study of AL101 for treatment of triple negative breast cancer (TNBC.) The FDA approved the dosing to commence at 6mg in a monotherapy study to evaluate TNBC patients bearing Notch activating mutations who have undergone 3 prior lines of therapies or less.

Upcoming Milestones

On Track to Report Additional Phase 2 Data of AL101 in Patients with R/M ACC Data in The Second Half of 2020: Ayala plans to report additional data from its ongoing Phase 2 ACCURACY study of AL101 for the treatment of patients with R/M ACC with Notch-activating mutations, a rare malignancy of the secretory glands, at an upcoming medical meeting in the second half of 2020. Initial data demonstrating a 15% response rate and 69% disease control rate were previously reported out of the first 39 evaluable patients in the 4mg cohort.

On Track to Initiate Phase 2 Study of AL101 in Patients with Recurrent/Metastatic Triple Negative Breast Cancer (R/M TNBC) in The Second Half of 2020: Ayala plans to initiate a Phase 2 clinical trial of AL101 for the treatment of patients with R/M TNBC with Notch-activating mutations in the second half of 2020, subject to the impact of COVID-19.

First Quarter 2020 Financial Results

Cash Position: Cash and cash equivalents were $10.1 million as of March 31, 2020, as compared to $16.7 million as of December 31, 2019. Total cash, cash equivalents and marketable securities at March 31, 2020 did not include total net proceeds of approximately $55.0 million, after deducting underwriting discounts and commissions, from the Company’s IPO of 3,940,689 shares of common stock, including the partial exercise of the underwriters’ option to purchase additional shares, in May 2020. We expect the cash balance to fund operations into the second half of 2022 through potentially multiple key clinical and development milestones.

Collaboration Revenue: Collaboration revenue was $1.0 million for the first quarter of 2020, compared to $0.3 million for the same period in 2019. The increase in revenue was due to the advancement of our collaboration with Novartis on AL102 in combination with Novartis’ anti BCMA agent.

R&D Expenses: Research and development expenses were $5.1 million for the first quarter of 2020, compared to $2.8 million for the same period in 2019. The increase was primarily driven by higher costs related to the advancement of our ongoing Phase 2 study of AL101 in ACC and preparations for the initiation of the Phase 2 study in our TNBC trial.

G&A Expenses: General and administrative expenses were $1.3 million for the first quarter of 2020, compared to $0.8 million for the same period in 2019. The increase was primarily related to higher professional services and personnel costs to support the growth of the company.

Net Income/Loss: Net loss was $6.6 million, or $1.32 loss per share, for the first quarter of 2020, compared to $3.5 million, or $0.71 loss per share, for the same period in 2019, attributable mainly to the increase in our clinical operations.