On November 3, 2016 Ironwood Pharmaceuticals, Inc. (NASDAQ: IRWD), a commercial biotechnology company, reported an update on its third quarter 2016 results and recent business activities (Press release, Ironwood Pharmaceuticals, NOV 3, 2016, View Source [SID1234516300]).

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"Ironwood demonstrated outstanding third quarter performance, including a 67% increase in revenue year-over-year driven by strong growth in LINZESS demand. With the launch of ZURAMPIC, our salesforce is now bringing three products for chronic, debilitating conditions to roughly 30,000 of the highest prescribing primary care physicians in the U.S.," said Peter Hecht, chief executive officer of Ironwood. "Over the coming year, we expect continued revenue and prescription growth and a number of value-creating milestones, including three additional commercial launches and at least three Phase II data readouts from our pipeline. We remain on track to deliver positive cash flow beginning in 2018 and believe our continued execution and financial discipline will provide the opportunity for sustained revenue growth and shareholder returns."

Third Quarter 2016 and Recent Highlights

Irritable Bowel Syndrome with Constipation (IBS-C) / Chronic Idiopathic Constipation (CIC) Franchise

LINZESS. U.S. net sales, as provided by Ironwood’s U.S. collaboration partner Allergan plc, were $164.4 million in the third quarter of 2016, a 40% increase compared to the third quarter of 2015. Ironwood and Allergan share equally in brand collaboration profits or losses.
Approximately 700,000 total LINZESS prescriptions were filled in the third quarter of 2016, a 26% increase compared to the third quarter of 2015, according to IMS Health.
Net profit for the LINZESS U.S. brand collaboration, including commercial and research and development (R&D) expenses, was $81.5 million in the third quarter of 2016, a 128% increase compared to the third quarter of 2015. LINZESS commercial margin was 61% in the third quarter of 2016, compared to 44% in the third quarter of 2015.
Ironwood and Allergan expect to launch a 72 mcg dose of linaclotide in early 2017 that, if approved by the Food and Drug Administration (FDA), could increase physician prescribing of LINZESS among the estimated 35 million adult CIC patients.
Linaclotide Colonic Release. Ironwood and Allergan expect data from the Phase IIb clinical trial later this year. Linaclotide colonic release is a second-generation guanylate cyclase-C (GC-C) agonist product candidate that, if approved by the FDA, has the potential to provide better symptom improvement, including improved abdominal pain relief in adult IBS-C patients, to expand the IBS-C and CIC markets, and to extend patent protection for linaclotide to the mid-2030s.
In October 2016, Ironwood and Allergan received Paragraph IV certification notice letters regarding Abbreviated New Drug Applications (ANDAs) submitted to the FDA by generic drug manufacturers seeking approval to manufacture, use and sell generic versions of LINZESS. One of the ANDAs was submitted to the FDA by Teva Pharmaceuticals USA, Inc. (Teva). Teva contends that the U.S. patents for LINZESS listed in the FDA’s Approved Drugs Product with Therapeutic Equivalence Evaluations list, commonly known as the Orange Book, are invalid, unenforceable and/or would not be infringed by Teva’s manufacture, use or sale of a generic version of LINZESS. Ironwood and Allergan are evaluating filing patent infringement suits against such generic drug manufacturers. Filing of a patent infringement suit would trigger a 30-month stay of any approval of the subject ANDA that will not expire until 2020, unless the court earlier decides that the relevant patents are invalid, unenforceable and/or not infringed. LINZESS is currently covered by nine patents listed in the Orange Book, which expire between 2024 and 2031.
Uncontrolled Gout Franchise

ZURAMPIC. In October 2016, Ironwood’s clinical sales specialists began promoting ZURAMPIC for the treatment of hyperuricemia in patients with uncontrolled gout who are already taking a xanthine oxidase inhibitor (XOI), such as allopurinol or Uloric (febuxostat). Gout is a form of inflammatory arthritis caused by an underlying metabolic disorder, hyperuricemia – or high levels of uric acid in the blood. An estimated two million patients in the U.S. suffer from uncontrolled gout in which traditional first-line XOI treatment alone is not sufficient to achieve target serum uric acid (sUA) levels. ZURAMPIC is not recommended for the treatment of asymptomatic hyperuricemia and should not be used as monotherapy.
Lesinurad-allopurinol fixed-dose combination product. A New Drug Application (NDA) for the fixed-dose combination of lesinurad and allopurinol was submitted in October 2016 for review by the FDA. If approved, Ironwood expects to launch the fixed-dose combination product by late 2017.
Refractory Gastroesophageal Reflux Disease (rGERD) Franchise

IW-3718. Ironwood continues to enroll patients in a dose-ranging Phase IIb clinical trial of IW-3718, a wholly-owned asset being studied as a potential treatment of rGERD. IW-3718 is a novel, investigational gastric retentive formulation of a bile acid sequestrant designed to work with a proton pump inhibitor (PPI) to reduce the detrimental effects of bile and acid on the esophagus. An estimated 10 million people in the U.S. suffer from rGERD and continue to experience heartburn symptoms despite treatment with PPIs.
Vascular and Fibrotic Franchise

IW-1973. Ironwood initiated a Phase IIa open-label, placebo-controlled study in patients with Type 2 diabetes and hypertension. This study is designed to explore the tolerability, pharmacokinetic and pharmacodynamic effects of IW-1973 across multiple doses, as well as to explore its effects on biomarkers. Data from this study are expected in the first quarter of 2017.
IW-1701. Data from the IW-1701 Phase Ib multiple ascending dose study are expected by year-end. Ironwood initiated a Phase IIa randomized, double-blind, placebo-controlled single-dose study of IW-1701 designed to evaluate its safety, tolerability, pharmacokinetics and pharmacodynamics in patients with Type II achalasia. Data from this study are expected in 2017.
Global Collaborations and Partnerships

Linaclotide is currently under review by the Pharmaceuticals and Medical Devices Agency (PMDA) in Japan for potential approval for the treatment of adult patients with IBS-C. Under the terms of Ironwood’s license agreement with Astellas Pharma Inc., Ironwood will earn a $15 million development milestone payment upon approval of linaclotide by the PMDA.
Astellas continues to enroll patients in the Phase III clinical trial of linaclotide in Japan for adults with chronic constipation.
Ironwood continues co-promoting Allergan’s VIBERZI (eluxadoline) in the U.S. for adults suffering from IBS with diarrhea.
Ironwood and Exact Sciences Corp. terminated their agreement for the U.S. co-promotion of Cologuard, a noninvasive stool DNA screening test for colorectal cancer.
Corporate and Financials

Collaborative Arrangements Revenue
Collaborative arrangements revenue was $66.1 million in the third quarter of 2016, compared to $39.6 million in the third quarter of 2015. Included in collaborative arrangements revenue was $60.0 million associated with Ironwood’s share of the net profits from the sales of LINZESS in the U.S., up from $34.8 million in the third quarter of 2015.
Operating Expenses
Operating expenses were $94.4 million in the third quarter of 2016, compared to $65.8 million in the third quarter of 2015. Operating expenses in the third quarter of 2016 consisted of $37.5 million in R&D expenses and $45.0 million in selling, general and administrative (SG&A) expenses, as well as $3.2 million in acquired intangible asset amortization expenses and an $8.7 million loss on fair value remeasurement of contingent consideration resulting from Ironwood’s U.S. licensing agreement with AstraZeneca for the exclusive rights to all products containing lesinurad.
Other Expense
Interest Expense. Net interest expense was $9.5 million in the third quarter of 2016, in connection with the $175 million Linaclotide PhaRMA 11% Note debt financing executed in January 2013 and the approximately $336 million convertible debt financing executed in June 2015 and due in 2022. Interest expense recorded in the third quarter of 2016 includes $6.0 million in cash expense and $3.8 million in non-cash expense. Both the cash and non-cash components of the 2022 convertible notes are recorded quarterly.
In September 2016, Ironwood closed a $150 million debt refinancing with an annual interest rate of 8.375%. The transaction is expected to fund on January 5, 2017, with the net proceeds from this transaction being used to redeem the remaining principal balance of the existing PhaRMA Notes.
Gain/Loss on Derivatives. Ironwood records a gain/loss on derivatives related to the change in fair value of the convertible note hedges and note hedge warrants issued in connection with the convertible debt financing in June 2015. A gain on derivatives of $4.5 million was recorded in the third quarter of 2016.
Net Loss
GAAP net loss was $33.2 million, or $0.23 per share, in the third quarter of 2016, compared to $47.4 million, or $0.33 per share, in the third quarter of 2015.
Non-GAAP net loss was $25.9 million, or $0.18 per share, in the third quarter of 2016, compared to $36.1 million, or $0.25 per share, in the third quarter of 2015. Non-GAAP net loss excludes the impact of mark-to-market adjustments on the derivatives related to Ironwood’s convertible debt, as well as the amortization of acquired intangible assets and the fair value remeasurement of contingent consideration related to Ironwood’s U.S. lesinurad license. See Non-GAAP Financial Measures below.
Cash Position
Ironwood ended the third quarter of 2016 with $320 million of cash, cash equivalents and available-for-sale securities, a decrease of $5 million from the end of the second quarter of 2016. Cash used in operations was $645,000 in the third quarter of 2016.
2016 Financial Guidance
Ironwood now expects to use less than $50 million in cash for operations in 2016, down from previous guidance of less than $70 million.
Ironwood continues to expect:
R&D expenses to be within a range of $140 million to $150 million,
SG&A expenses to be within a range of $170 million to $180 million,
amortization of intangible assets to be $8 million (not applicable prior to the U.S. lesinurad license), and
combined Allergan and Ironwood total 2016 LINZESS marketing and sales expenses to be in the mid to higher end of $230 million to $260 million.
Non-GAAP Financial Measures

The company presents non-GAAP net loss and non-GAAP net loss per share to exclude the impact of net gains and losses on the derivatives related to our convertible notes that are required to be marked-to-market, as well as the amortization of acquired intangible assets and the fair value remeasurement of contingent consideration associated with Ironwood’s U.S. licensing agreement with AstraZeneca for the exclusive rights to all products containing lesinurad. The derivative gains and losses may be highly variable, difficult to predict and of a size that could have a substantial impact on the company’s reported results of operations in any given period. The acquired intangible assets are valued at the time of acquisition and are amortized over their estimated economic useful life, and management believes excluding the amortization of acquired intangible assets provides more consistency with the treatment of internally developed intangible assets for which research and development costs were previously expensed. The contingent consideration balance is remeasured each reporting period, and the resulting change in fair value impacts the company’s reported results of operations. The changes in the fair value remeasurement of contingent consideration do not correlate to the company’s actual cash payment obligations in the relevant period. The company has presented non-GAAP net loss and non-GAAP net loss per share in prior calendar quarters, and this is the first calendar quarter in which the company has contingent consideration that is excluded from such non-GAAP financial measures. Management believes this non-GAAP information is useful for investors, taken in conjunction with Ironwood’s GAAP financial statements, because it provides greater transparency and period-over-period comparability with respect to Ironwood’s operating performance. These measures are also used by management to assess the performance of the business. Investors should consider these non-GAAP measures only as a supplement to, not as a substitute for or as superior to, measures of financial performance prepared in accordance with GAAP. In addition, these non-GAAP financial measures are unlikely to be comparable with non-GAAP information provided by other companies. For a reconciliation of these non-GAAP financial measures to the most comparable GAAP measures, please refer to the table at the end of this press release.

On November 3, 2016 Sunesis Pharmaceuticals, Inc. (Nasdaq:SNSS) reported financial results for the third quarter ended September 30, 2016. Loss from operations for the three months ended September 30, 2016 was $8.5 million (Press release, Sunesis, NOV 3, 2016, View Source;p=RssLanding&cat=news&id=2219049 [SID1234516331]). As of September 30, 2016, cash, cash equivalents and marketable securities totaled $24.3 million.

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"Since the beginning of the third quarter we have made significant progress in advancing both our vosaroxin and BTK inhibitor programs. In addition, in October, we secured the financial resources from leading life sciences investors which will help us reach several potential value inflection points," said Daniel Swisher, Chief Executive Officer of Sunesis. "The potential milestones include a marketing authorization decision on vosaroxin in Europe, the potential for a corresponding partnership and product launch in this territory, and the initiation and prosecution of a Phase 1B/2 study of SNS-062, our differentiated, non-covalent BTK-inhibitor, in patients with B-cell malignancies."

"The European regulatory review of vosaroxin has now resumed, following our response to the Day 120 List of Questions, and we look forward to receiving the EMA Day 180 List of Outstanding Issues before year-end. We were also pleased to present Phase 1A Healthy Volunteer Study results demonstrating a favorable safety, pharmacokinetic and pharmacodynamic profile for SNS-062 at the ESH Conference on New Concepts in B-Cell Malignancies in September."

Third Quarter 2016 and Recent Highlights

Submission of Responses to the EMA Day 120 List of Questions for the Marketing Authorization Application for Vosaroxin. In October, Sunesis announced that it submitted its responses to European Medicines Agency (EMA) Day 120 List of Questions issued by the Committee for Medicinal Products for Human Use (CHMP) as part of the centralized review process of the Marketing Authorization Application (MAA) for vosaroxin based on data from the VALOR trial, as a treatment for relapsed/refractory acute myeloid leukemia (AML) in patients aged 60 years and older. Sunesis expects to receive the EMA Day 180 List of Outstanding Issues before year-end.

Presentation of Dose Escalation Results from the Phase 1A Healthy Volunteer Study Evaluating Oral Non-Covalent BTK inhibitor SNS-062. In September, Sunesis announced results from the Company’s Phase 1A study in healthy volunteers evaluating oral non-covalent BTK inhibitor SNS-062. The study demonstrated a favorable safety, pharmacokinetic (PK) and pharmacodynamic (PD) profile for SNS-062 in healthy subjects. The results were presented on Saturday, September 10th at the European School of Haematology’s (ESH) 2nd International Conference on New Concepts in B-Cell Malignancies at the Estoril Congress Centre in Estoril, Portugal. The presentation, titled "A Phase 1A Study to Investigate the Safety, Pharmacokinetics, and Pharmacodynamics of the Noncovalent Bruton Tyrosine Kinase (BTK) Inhibitor SNS-062 in Healthy Subjects: Preliminary Results" is available on the Sunesis website at www.sunesis.com.

Completion of $25.9 million Financing. In October, Sunesis announced the completion of an equity financing with net proceeds of $25.9 million. The financing attracted participation from leading biotechnology investors.

Announced Publication in "Drugs" Detailing Molecular and Pharmacologic Properties of Vosaroxin. In August, Sunesis announced the publication of an article detailing the molecular and pharmacologic properties of vosaroxin as a new therapeutic for acute myeloid leukemia (AML) in the journal Drugs. Vosaroxin is the first quinolone-based topoisomerase II inhibitor studied in clinical trials in oncology. The article, titled "Molecular and Pharmacologic Properties of the Anticancer Quinolone Derivative Vosaroxin: A New Therapeutic for Acute Myeloid Leukemia," is available online and appeared in the September 2016 print issue of Drugs. The authors describe how the unique chemical and pharmacologic characteristics of vosaroxin may contribute to the efficacy and safety profile observed in Sunesis’ Phase 3 VALOR trial in first relapsed or refractory AML.
Financial Highlights

Cash, cash equivalents and marketable securities totaled $24.3 million as of September 30, 2016, as compared to $46.4 million as of December 31, 2015. The decrease of $22.1 million was primarily due to $28.9 million of net cash used in operating activities, $8.0 million of payments against notes payable, partially offset by $14.8 million in net loan proceeds. An additional $25.9 million in net proceeds was raised in the October 2016 equity financing, resulting in pro-forma September 30, 2016 cash, cash equivalents and marketable securities of $50.2 million. This capital is expected to be sufficient to fund operations into 2018.

Revenue for the three and nine months ended September 30, 2016 was $0.6 million and $1.9 million as compared to $0.7 million and $2.4 million for the same periods in 2015. The decrease between the periods was primarily due to the extension of the amortization period of our deferred revenue.

Research and development expense was $5.3 million and $18.1 million for the three and nine months ended September 30, 2016 as compared to $5.3 million and $16.1 million for the same periods in 2015. The increase of $2.0 million between the comparable nine month periods was primarily due to an increase in professional services, clinical trials and medical affairs expenses.

General and administrative expense was $3.9 million and $12.2 million for the three and nine months ended September 30, 2016 as compared to $4.0 million and $14.3 million for the same periods in 2015. The decrease of $0.1 million between the comparable three month periods was primarily due to a decrease in personnel expenses. The decrease of $2.1 million between the comparable nine month periods was primarily due to decrease in outside service costs.

Interest expense was $0.5 million and $1.2 million for the three and nine months ended September 30, 2016 as compared to $0.2 million and $0.7 million for the same periods in 2015. The increases in the 2016 periods were primarily due to the increase in the notes payable.

Net other income was nil and $0.1 million for the three and nine months ended September 30, 2016 as compared to net other income of $1.8 million and $3.6 million for the same period in 2015. The decrease in net other income is related to the quarterly re-valuation of warrant liabilities.

Cash used in operating activities was $29.0 million for the nine months ended September 30, 2016, as compared to $29.5 million for the same period in 2015. Net cash used in the 2016 period resulted primarily from the net loss of $29.5 million and changes in operating assets and liabilities of $3.6 million, including the payment of a final fee of $1.2 million under the Oxford Loan Agreement, partially offset by net adjustments for non-cash items of $4.1 million. Net cash used in the 2015 period resulted primarily from the net loss of $25.1 million and changes in operating assets and liabilities of $5.6 million, partially offset by net adjustments for non-cash items of $1.2 million.

Sunesis reported loss from operations of $8.5 million and $28.4 million for the three and nine months ended September 30, 2016 as compared to $8.6 million and $28.0 million for the same periods in 2015. Net loss was $9.0 million and $29.5 million for the three and nine months ended September 30, 2016, as compared to $7.0 million and $25.1 million for the same periods in 2015.

On November 3, 2016 Epizyme, Inc. (NASDAQ:EPZM), a clinical-stage biopharmaceutical company creating novel epigenetic therapies, reported recent progress of the Company’s clinical-stage programs and reported financial results for the third quarter of 2016 (Press release, Epizyme, NOV 3, 2016, View Source [SID1234516187]).

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"Throughout 2016, we have made substantial progress toward achieving our vision, which includes advancing the clinical development of tazemetostat and expanding its therapeutic benefit into new indications and treatment settings," said Robert Bazemore, President and Chief Executive Officer, Epizyme. "We are executing on a broad clinical program for tazemetostat based on its early clinical activity and safety profile, and guided by strong scientific rationale. We expect 2017 to be an important year for Epizyme, led by data from the Phase 2 studies in non-Hodgkin lymphoma and genetically defined solid tumors in the first half of the year, and determination of our potential registration pathways beginning mid-year."

Execution of Clinical Programs

Enrollment in Phase 2 Programs in NHL and Solid Tumors Progressing: The Company’s Phase 2 studies of tazemetostat in non-Hodgkin lymphoma (NHL) and genetically defined solid tumors are progressing and continue to enroll patients. Epizyme plans to report efficacy, safety and biomarker data from both studies in the first half of 2017. The Company is also preparing for intended regulatory engagement, beginning first with the United States Food and Drug Administration (FDA) in mid-2017 to determine potential registration paths for its genetically defined solid tumor program in adult patients. In addition, Epizyme is preparing for FDA engagement on its NHL program, also in 2017, to determine potential registration paths in various subtypes of NHL.
Immuno-oncology Combination Study Initiated: The Phase 1b study is evaluating tazemetostat in combination with Tecentriq (atezolizumab), in patients with relapsed or refractory diffuse large B-cell lymphoma (DLBCL). Tecentriq is the first and only anti-PD-L1 cancer immunotherapy approved by FDA. This study is being conducted by Genentech, a member of the Roche Group, under Epizyme’s collaboration agreement with Roche.
Front-line Combination Study Initiated: The first study of tazemetostat in the front-line treatment setting has been initiated. The Phase 1b/2 study is evaluating tazemetostat in combination with R-CHOP, a chemotherapy regimen, as a first-line treatment for newly diagnosed elderly, high-risk patients with DLBCL. This study is being conducted under the Company’s collaboration with the Lymphoma Study Association.
Mesothelioma Study Initiated: Patient enrollment is underway in Epizyme’s global Phase 2 study evaluating tazemetostat for the treatment of adults with mesothelioma characterized by BAP1 loss-of-function. This study marks the expansion of tazemetostat development as a monotherapy into a new cancer indication.
CRADAs Established with NCI on Tazemetostat and Pinometostat: Epizyme recently entered into separate Cooperative Research and Development Agreements (CRADAs) with the National Cancer Institute (NCI) to evaluate tazemetostat in clinical trials in multiple cancer indications and to evaluate Epizyme’s novel DOT1L inhibitor, pinometostat, in multiple combination regimens. These CRADAs further expand the clinical evaluation of tazemetostat in both adults and children, while also exploring the potential for pinometostat as a combination therapy for certain kinds of acute leukemia.
Collaboration Established with Foundation Medicine: Epizyme entered into a collaboration agreement with Foundation Medicine, Inc. to support patient identification and enrollment for Epizyme’s ongoing Phase 2 clinical trial of tazemetostat in patients with NHL. Foundation Medicine’s SmartTrials Precision Enrollment Program and FoundationOne Heme panel will assist in identifying a population of individuals with NHL who harbor EZH2 mutations, which constitute specific cohorts in the Epizyme trial.
Strengthening of Epizyme Team

The Company made two, recent key hires to prepare for the intended regulatory engagement and determination of potential registration pathways in 2017. Pamela Strode was appointed to the position of Vice President of Regulatory Affairs and Quality Assurance, and Ray Mankoski, M.D., Ph.D. was appointed as Vice President of Medical Affairs.
Third Quarter 2016 Financial Results and Guidance

Cash Position: Cash, cash equivalents and marketable securities were $263.3 million as of September 30, 2016, as compared to $208.3 million as of December 31, 2015.
Revenue: Collaboration revenue was $6.6 million and $7.5 million for the three and nine months ended September 30, 2016, respectively, compared to $0.4 million and $2.0 million for the three and nine months ended September 30, 2015, respectively. The increase was driven predominantly by the recognition of the $6.0 million milestone earned upon GlaxoSmithKline’s (GSK) initiation of patient dosing in a Phase 1 clinical trial of GSK3326595, a PRMT5 inhibitor invented by Epizyme and licensed to GSK. GSK holds worldwide rights to the compound, and Epizyme may receive significant additional payments from GSK if future milestones are met for the program, plus up to double digit royalties on worldwide net sales should this product candidate progress through the clinic to commercialization.
R&D Expenses: Research and development (R&D) expenses were $23.9 million and $63.1 million for the three and nine months ended September 30, 2016, respectively, compared to $16.8 million and $94.4 million for the three and nine months ended September 30, 2015, respectively. The increase in R&D expenses for the three months ended September 30, 2016, is primarily due to the expansion of the tazemetostat clinical development program, increased spending on tazemetostat preclinical activities, and increased discovery and spending on high-priority, earlier-stage programs. The period-over-period decrease from the nine months ended September 30, 2015 was driven by the inclusion of the $40.0 million payment to Eisai for the reacquisition of the tazemetostat worldwide rights, excluding Japan, in R&D expenses in the first quarter of 2015. The Company expects that research and development expenses will continue to increase in the fourth quarter of 2016.
G&A Expenses: General and administrative (G&A) expenses were $7.5 million and $20.8 million for the three and nine months ended September 30, 2016, respectively, as compared to $6.7 million and $17.9 million for the three and nine months ended September 30, 2015, respectively. The increase is primarily due to the staffing of key leadership roles in the first half of 2016. G&A expenses were flat compared to the second quarter of 2016, and we expect G&A expenses to remain relatively constant through the fourth quarter of 2016.
Net Loss: Net loss was $24.3 million and $75.2 million for the three and nine months ended September 30, 2016, respectively, compared to a net loss of $23.1 million and $110.2 million for the three and nine months ended September 30, 2015, respectively.
Financial Guidance: Epizyme reiterates its belief that its cash, cash equivalents and marketable securities of $263.3 million as of September 30, 2016 will be sufficient to fund the Company’s planned operations into at least the second quarter of 2018.

On November 3, 2016 Genocea Biosciences, Inc. (NASDAQ:GNCA), a company developing T cell-directed vaccines and immunotherapies, reported corporate highlights and financial results for the third quarter ended September 30, 2016 (Press release, Genocea Biosciences, NOV 3, 2016, View Source [SID1234516216]). Genocea’s lead clinical candidate, GEN-003, is a T cell-directed immunotherapy for the treatment of genital herpes infections, designed to elicit both a T cell and B cell (antibody) immune response that, if approved, the Company believes would be the first-ever therapeutic vaccine for an infectious disease.

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"We achieved an important GEN-003 milestone in the third quarter with the selection of our Phase 3 dose, demonstrating a significant reduction in viral shedding for the third consecutive clinical trial, this time with an improved, Phase 3-ready formulation," said Chip Clark, president and chief executive officer of Genocea. "We also continue to advance our immuno-oncology program and are now focusing all of our early stage research and pre-clinical resources to these efforts. We believe ATLAS enables better cancer vaccine antigen selection than existing methods and that our demonstrated vaccine development expertise can be a further competitive advantage in this exciting space."

Mr. Clark continued: "We expect to maintain our strong momentum this quarter and throughout 2017. In December, we will be hosting our first R&D day as we set the stage for the expected start of the GEN-003 Phase 3 clinical trials in the second half of 2017, including the important Phase 2b six month placebo-controlled clinical efficacy data expected in January 2017. We will also set out in detail our maturing immuno-oncology strategy and neoantigen cancer vaccine development plans."

Recent Business Highlights

GEN-003 – Immunotherapy for treatment of genital herpes expected to enter Phase 3 development in 2H 2017.

September 2016 – data confirm optimal dose for Phase 3 trials; dose response consistent with T cell therapies and with previous GEN-003 clinical trials
October 2016 – IDWeek presentation: GEN-003 induced durable polyfunctional T cells, IgG and neutralizing antibody titers
In September 2016, Genocea announced positive viral shedding data from its ongoing Phase 2b study. The study achieved its primary endpoint, with GEN-003 demonstrating a statistically significant (versus placebo and baseline) 40 percent reduction in the viral shedding rate immediately after dosing in the 60 µg per protein / 50 µg of adjuvant dose group, using a new Phase 3-ready formulation. This result was consistent with a statistically significant (versus placebo and baseline) viral shedding rate reduction of 41 percent at this same dose and time point in the prior Phase 2 trial. Subsequent data from that prior Phase 2 trial demonstrated virologic and clinical efficacy durable through at least one year after dosing.

The 60 µg per protein / 75 µg of adjuvant dose group in the Phase 2b trial reduced the viral shedding rate by 27 percent, a smaller reduction than that observed in the prior trial, and also showed a less acceptable reactogenicity profile than the prior trial. Research has shown that overstimulation of the T cell immune system, as is suggested by this increase in reactogenicity, leads to a loss in efficacy for T cell therapies. We believe the likely driver of this effect is a more potent adjuvant formulation following customary manufacturing process changes to prepare for Phase 3 trials and commercialization.

In October 2016, the Company presented immunogenicity data from its previous Phase 2 trial at IDWeek 2016, the premier annual meeting for healthcare professionals focusing on infectious diseases. These data show that GEN-003 induced antigen-specific polyfunctional T cell responses in immunized subjects, a hallmark of potent T cell immunity. These data also demonstrated that GEN-003 elicited increases in IgG and neutralizing antibody levels above baseline that persisted for one year after the last dose, consistent with viral shedding and clinical symptom reduction seen at 12 months.

Anticipated Milestones and Events

GEN-003

Phase 2b 6-month placebo-controlled clinical efficacy data expected in January 2017
End-of-Phase 2 meeting with the U.S. Food and Drug Administration (FDA) expected in 1Q 2017
Antiviral combination study now planned as part of GEN-003 Phase 3 program
Immuno-oncology collaborations and cancer vaccine strategy

Data showing ATLAS’s differentiated neoantigen selection capabilities from the ongoing partnership with Memorial Sloan Kettering Cancer Center to be presented at the Society for Immunotherapy of Cancer (SITC) (Free SITC Whitepaper)’s (SITC) (Free SITC Whitepaper) 31st Annual Meeting & Associated Programs in National Harbor, Maryland. The poster, #374, entitled Genome-scale neoantigen screening using ATLAS prioritizes candidates for immunotherapy in a non-small cell lung cancer patient will be presented on Saturday November 12, between 11:45 am and 1:00 pm and 6:45 pm and 8 pm ET
Immuno-oncology strategy and neoantigen cancer vaccine development plan update expected at R&D Day in December
Upcoming Events & Presentations

Neoantigen Summit 2016, Boston, November 15
Stifel 2016 Healthcare Conference, New York City, November 16
Piper Jaffray 28th Annual Health Care Conference, New York City, November 30
Virtual R&D Day, week of December 12
Updated Financial Guidance:

Genocea now expects that its existing cash, cash equivalents and marketable securities are sufficient to support its operating expenses and capital expenditure requirements into the first quarter of 2018, without assuming any receipt of proceeds from potential business development partnerships, equity financings or debt drawdowns. This guidance is made on the basis of Genocea’s current operating plans, which include focusing its research activities on immuno-oncology, conducting the antiviral combination study as part of the GEN-003 Phase 3 program and initiating Phase 3 trials for GEN-003 in the second half of 2017.

Third Quarter 2016 Financial Results

Cash Position: Cash, cash equivalents and investments as of September 30, 2016 were $75.5 million compared to $86.0 million as of June 30, 2016.

Research and Development (R&D) Expenses: R&D expenses for the quarter ended September 30, 2016 increased $2.8 million, to $8.8 million, from the same period in 2015. The increase was driven by increases in headcount and related expenses to support the GEN-003 program and higher clinical costs for the ongoing and anticipated GEN-003 trials. Higher personnel and lab-related costs to advance Genocea’s pre-clinical product candidates and develop the ATLAS platform for immuno-oncology also contributed to the increase. These higher R&D costs were partially offset by lower GEN-004 costs due to the Phase 2a trial which was ongoing in the third quarter of 2015 and has since been completed.

General and Administrative (G&A) Expenses: G&A expenses for the quarter ended September 30, 2016 were unchanged at approximately $3.6 million from the same three-month period in 2015.

Net Loss: Net loss was $12.8 million for the third quarter ended September 30, 2016, compared to a net loss of $9.8 million for the same period in 2015.

On November 3, 2016 Corvus Pharmaceuticals, Inc. (NASDAQ:CRVS), a clinical-stage biopharmaceutical company focused on the development and commercialization of novel immuno-oncology therapies, reported financial results for the third quarter and nine months ended September 30, 2016 and provided a business update (Press release, Corvus Pharmaceuticals, NOV 3, 2016, View Source;p=RssLanding&cat=news&id=2219512 [SID1234516268]).

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"We continue to make good progress on the development of our lead product candidate, CPI-444," said Richard A. Miller, M.D., co-founder, president and chief executive officer of Corvus. "Enrollment in the dose-selection stage of our Phase 1/1b trial with CPI-444 is complete and we are now enrolling patients in the expansion cohort stage of the trial, which is open in 35 sites in the U.S., Canada and Australia. In addition, we reported data on CPI-444 at two recent scientific meetings."

RECENT BUSINESS PROGRESS
CPI-444 Program

Completed enrollment of 48 patients in four cohorts in the dose-selection part of the Phase 1/1b trial for the Company’s lead oral checkpoint inhibitor, CPI-444, as a single agent and in combination with Genentech’s TECENTRIQ (atezolizumab), an anti-PD-L1 antibody.
Selected an oral dose of 100 mg twice daily for 28 days for both the single agent and combination arms of the disease-specific expansion cohort stage of the trial, which is now enrolling.
Presented preclinical and preliminary biomarker data at the Second CRI-CIMT-EATI-AACR International Cancer Immunotherapy Conference (CIMT) (Free CIMT Whitepaper) in September, which showed that CPI-444 is well tolerated and that single agent treatment is associated with activation of T-cells detected in the blood. Corvus believes this is the first demonstration of immune modulation in cancer patients receiving an adenosine antagonist.
Presented additional biomarker data from the Phase 1/1b study showing continued evidence of treatment-related immune activation at the European Society for Medical Oncology (ESMO) (Free ESMO Whitepaper) Congress in October. CPI-444 continued to be generally well tolerated, with one patient experiencing a possibly drug related serious adverse event.
Other Product Candidates

Demonstrated in preclinical studies that Corvus’ anti-CD73 antibody directly inhibited catalytic activity of CD73 and was differentiated from other competitive CD73 antibodies. Large scale manufacturing of anti-CD73 is in progress and IND enabling studies have been initiated.
Selected a lead compound for Corvus’ interleukin-2 (IL-2)-inducible T-cell kinase (ITK) inhibitor program and initiated IND enabling studies.
UPCOMING MILESTONE

The Company expects to present preliminary efficacy data from the dose-selection part of the Phase 1/1b trial for CPI-444 in the fourth quarter of 2016.
THIRD QUARTER 2016 FINANCIAL RESULTS
At September 30, 2016, Corvus had cash, cash equivalents and marketable securities totaling $145.1 million. This compared to cash, cash equivalents and marketable securities of $94.4 million at December 31, 2015.

Research and development expenses for the three months ended September 30, 2016 totaled $7.7 million, an increase of $5.2 million from $2.5 million in the prior year period, primarily due to an increase of $1.2 million in personnel and related costs associated with higher headcount, an increase of $2.2 million in outside costs for the Phase 1/1b clinical trial for CPI-444, and an increase of $1.4 million in outside costs associated with other clinical development programs.

General and administrative expenses for the three months ended September 30, 2016 totaled $2.8 million, an increase of $2.2 million from $0.6 million in the prior year period, primarily due to an increase of $1.0 million in personnel and associated costs, an increase of $0.7 million in patent and related costs and $0.2 million in costs associated with operating as a public company.

The net loss for the three months ended September 30, 2016 was $10.3 million, compared with a net loss of $3.2 million, for same period in 2015. Total stock compensation expense for the three months ended September 30, 2016 was $1.3 million, compared to $0.1 million in the prior year period.