On August 1, 2016 MorphoSys AG (FSE: MOR; Prime Standard Segment; TecDAX, OTC: MPSYY) reported its half-year report, outlining the key events of the first six months ending June 30, 2016 (Press release, MorphoSys, JUL 31, 2016, View Source [SID:1234514151]).

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Financial results for the first half of 2016

Group revenue in the first half of 2016 totaled EUR 24.3 million and EBIT amounted to
EUR -19.2 million. The previous year’s figures (revenue H1/2015: EUR 82.6 million; EBIT H1/2015: EUR 46.1 million) each included extraordinary effects in the amount of approximately EUR 59 million.
The Group’s liquidity position on June 30, 2016 equaled EUR 279.7 million (December 31, 2015: EUR 298.4 million).
The Company confirms its 2016 guidance for revenue in the range of EUR 47 million to EUR 52 million and EBIT between EUR -58 million and EUR -68 million.
Operating highlights of the second quarter of 2016

In early June 2016, MorphoSys presented updated clinical data from an ongoing phase 1/2a dose escalation study of MOR202 in multiple myeloma (MM) at the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) Annual Meeting. MOR202 in combination with immunomodulatory drugs showed a good response in heavily pretreated patients. Two complete responses were shown at a dose of 8 mg/kg in combination with pomalidomide. In the meantime, response rates further deepened under ongoing treatment. The next higher and final treatment cohort with a dose of 16 mg/kg plus pomalidomide has been started meanwhile.
MorphoSys also presented updated clinical data on the safety and efficacy of MOR208 in non-Hodgkin’s lymphoma (NHL) at the 2016 ASCO (Free ASCO Whitepaper) Annual Meeting. Patients with diffuse large B cell lymphoma (DLBCL) and indolent NHL showed long-lasting responses to the therapy up to 26 months.
In early April 2016, MorphoSys announced the initiation of a phase 2 clinical combination trial of MOR208 with the cancer drug lenalidomide (Revlimid) in patients suffering from DLBCL.
In mid-April, MorphoSys announced its partner GSK had initiated a phase 2 clinical study with GSK3196165 (formerly known as MOR103) in patients with inflammatory hand osteoarthritis.
Also in April 2016, MorphoSys announced the initiation of a phase 1 trial of MOR106, which is being co-developed with Galapagos against inflammatory diseases.
In May 2016, MorphoSys and the University of Texas MD Anderson Cancer Center announced a strategic alliance for the discovery and development of therapeutic antibodies against cancer.
On April 21, 2016, MorphoSys announced that its partner Novartis had confirmed that a phase 2b/3 study examining bimagrumab (BYM338) in sporadic Inclusion Body Myositis (sIBM) did not meet its primary endpoint. Clinical development will continue in sarcopenia and muscular atrophy after hip operations.
On April 4, 2016, MorphoSys announced it had filed a lawsuit with the United States (U.S.) District Court of Delaware against Janssen Biotech and Genmab for patent infringement. MorphoSys is seeking redress for the infringing manufacture, use and sale of Janssen’s and Genmab’s daratumumab, an antibody targeting CD38.
In early July, MorphoSys announced the receipt of a milestone payment from Novartis recorded in the second quarter of 2016. The payment was triggered by the initiation of a phase 1 clinical study of a novel HuCAL antibody for the prevention of thrombosis.
At the end of the second quarter of 2016, MorphoSys’s product pipeline comprised a total of 104 therapeutic antibodies, 27 of which are in clinical development.
In EURO million* 6-Months 2016 6-Months 2015


Group Revenues 24.3 82.6
Total Operating Expenses 43.5 40.9
Other Income/Expenses 0.1 4.4
Earnings Before Interest and Taxes – EBIT (19.2) 46.1
Consolidated Net Profit / (Loss) (18.8) 36.5
Total EPS, diluted, in EURO (0.72) 1.39

* Differences due to rounding

"The development of our most advanced proprietary programs MOR208 and MOR202 is progressing well. In the ongoing MOR202 trial, we have started the highest dosage cohorts of MOR202 alone and in combination with lenalidomide and pomalidomide, and we are very encouraged as we see response rates deepening over time," commented Dr. Simon Moroney, Chief Executive Officer of MorphoSys AG. "Meanwhile, Novartis has taken the twelfth antibody to emerge from our partnership into clinical trials, and we are looking forward to additional data from our broad development pipeline, including read-outs from Janssen’s phase 3 trials with guselkumab in psoriasis."

"With the results shown for the first half of 2016 we are on track to meet our targets for the full year," stated Jens Holstein, Chief Financial Officer of MorphoSys AG. "We are convinced that our solid financial position is perfectly used in investing in promising development candidates. We will pursue our strategy and remain focused on the expansion of our pipeline."

Financial Review of the First Six Months of 2016 (IFRS)

In comparison to the previous year, Group revenues declined to EUR 24.3 million (H1/2015: EUR 82.6 million). Revenues in the comparable period of 2016 contained a non-recurring effect in the amount of about EUR 59 million from the termination of the partnership with Celgene to co-develop and co-promote MOR202. Success-based payments amounted to 8%, or EUR 2.0 million (H1/2015: 2%, or EUR 2.0 million), of total revenue. The Proprietary Development segment recorded revenues of EUR 0.3 million (H1/2015: EUR 59.6 million). Revenues in the Partnered Discovery segment comprised EUR 23.9 million (H1/2015: EUR 23.0 million).

Total operating expenses for the first six months of 2016 amounted to EUR 43.5 million (H1/2015: EUR 40.9 million). Total research and development expenses were EUR 36.7 million (H1/2015: EUR 33.9 million). R&D expenses mainly consisted of costs for external laboratory services and personnel costs. General and administrative expenses decreased slightly to EUR 6.9 million (H1/2015: EUR 7.0 million). Earnings before interest and taxes (EBIT) amounted to EUR -19.2 million (H1/2015: EUR 46.1 million).

The Proprietary Development segment reported a segment EBIT of EUR -27.8 million (H1/2015: EUR 40.2 million), while Partnered Discovery showed a segment EBIT of EUR 15.1 million (H1/2015: EUR 12.5 million). Proprietary R&D expenses including technology development amounted to EUR 28.3 million (H1/2015: EUR 25.3 million).

On June 30, 2016, the Group’s liquidity position amounted to EUR 279.7 million compared to EUR 298.4 million on December 31, 2015. The Company’s liquidity is reflected in the balance sheet items "cash and cash equivalents", "available-for-sale financial assets", "bonds, available-for-sale" and current and non-current "financial assets classified as loans and receivables". The decline in liquidity was mainly the result of the use of cash for operations in the first six months of 2016 and the repurchase of shares for the Group’s long-term incentive programs.

Financial guidance for 2016

MorphoSys re-confirmed its guidance for 2016. MorphoSys anticipates total Group revenues in the range of EUR 47 million to EUR 52 million and expects EBIT to be in the range of EUR -58 million to EUR -68 million. Proprietary R&D expenses are expected to rise to EUR 76 million to EUR 83 million. This guidance does not include any potential in-licensing or co-development of additional development candidates.

On July 29, 2016 Sunesis Pharmaceuticals, Inc. (Nasdaq:SNSS) reported financial results for the second quarter ended June 30, 2016. Loss from operations for the three months ended June 30, 2016 was $10.0 million (Press release, Sunesis, JUL 29, 2016, View Source;p=RssLanding&cat=news&id=2190010 [SID:1234514133]). As of June 30, 2016, cash, cash equivalents and marketable securities totaled $33.1 million.

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"During the second quarter, we strengthened the foundation of our oncology pipeline through the advancement of our vosaroxin program and lead proprietary BTK kinase inhibitor, SNS-062. Achievement of upcoming milestones from both these programs we believe will unlock significant value for the company," said Daniel Swisher, Chief Executive Officer of Sunesis

"We are progressing our regulatory efforts to bring vosaroxin to market in Europe as a treatment for relapsed/refractory AML, and in parallel are maintaining an active dialogue with potential European collaborators toward the goal of supporting a market launch in 2017." Mr. Swisher continued: "As for SNS-062, our differentiated, non-covalent BTK-inhibitor, we look forward to presenting results from our Phase 1A dose escalation study in healthy volunteers at the upcoming International Conference on New Concepts in B-Cell Malignancies in September. We are actively finalizing our protocol with investigator input to begin a Phase 1B/2 study in patients with B-cell malignancies around year-end."

Second Quarter 2016 and Recent Highlights

Presentation of Updated Results from MD Anderson Sponsored Trial in AML and high-risk MDS at EHA (Free EHA Whitepaper) Annual Meeting. In June 2016, results from an ongoing Phase 1B/2 University of Texas MD Anderson Cancer Center-sponsored trial of vosaroxin in combination with decitabine in older patients with previously untreated acute myeloid leukemia (AML) and high-risk myelodyplastic syndrome (MDS) were presented at the 21st Congress of the European Hematology Association (EHA) (Free EHA Whitepaper) in Copenhagen, Denmark. At the optimized induction dose of 70 mg/m2 of vosaroxin (n=41), the combination of vosaroxin and decitabine demonstrated a compelling CR/CRp/CRi rate of 76% and a median overall survival of 16.1 months. The oral presentation, titled "Phase I/ll study of vosaroxin and decitabine in newly diagnosed older patients with acute myeloid leukemia and high-risk myelodysplastic syndrome," is available on the Sunesis website at www.sunesis.com.

Presentation of Results Evaluating the Value of Complete Remission Prior to HCT in Patients with AML at ASCO (Free ASCO Whitepaper) Annual Meeting. In June 2016, Sunesis presented results from a study conducted by the Center for International Blood and Marrow Transplant Research (CIBMTR) at the Medical College of Wisconsin demonstrating the significant value of achieving complete remission prior to allogeneic hematopoietic cell transplantation (HCT) in patients with acute myeloid leukemia (AML) at the 2016 American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper). The study was funded jointly by Sunesis and CIBMTR. The poster presentation, titled "Allogeneic transplantation for advanced myelogenous leukemia: The value of complete remission," is available on the Sunesis website at www.sunesis.com.

Strengthened Executive Management Team and Board of Directors. In June 2016, Sunesis announced the appointment of Linda Neuman, M.D., as Vice President, Clinical Development. In March 2016, Sunesis announced the appointment of Geoffrey Parker to the Sunesis Board of Directors.

Supported First-Ever AML Awareness Month. In May 2016, Sunesis announced its support for the first-ever AML Awareness Month, which was held in June with AML spokesperson and sportscaster Craig Sager. The company provided an educational grant to support the sponsor of the campaign, CancerCare.

First Subject Dosed in Phase 1A Healthy Volunteer Study Evaluating Oral Non-Covalent BTK-inhibitor SNS-062. In March 2016, the first patient was dosed in a Phase 1A, randomized, double-blind, placebo-controlled dose-ranging study to investigate the safety, pharmacokinetics and pharmacodynamics of its oral, next-generation, non-covalently binding BTK-inhibitor, SNS-062, in healthy subjects.
Financial Highlights

Cash, cash equivalents and marketable securities totaled $33.1 million as of June 30, 2016, as compared to $46.4 million as of December 31, 2015. The decrease of $13.3 million was primarily due to $20.1 million of net cash used in operating activities and $8.0 million of principal and final payments against notes payable, partially offset by $14.8 million raised from debt financing. This capital is expected to be sufficient to fund operations to the middle of 2017.

Revenue for the three and six months ended June 30, 2016 was $0.6 million and $1.2 million as compared to $0.9 million and $1.7 million for the same periods in 2015. The decrease between the periods was primarily due to the increase in estimated performance period through which the remaining balance of deferred revenue will be amortized.

Research and development expense was $6.6 million and $12.8 million for the three and six months ended June 30, 2016 as compared to $6.3 million and $10.8 million for the same periods in 2015. The increase of $0.3 million and $2.0 million between the comparable three- and six-month periods, respectively, was primarily related to medical scientific affairs activities.

General and administrative expense was $4.0 million and $8.3 million for the three and six months ended June 30, 2016 as compared to $5.2 million and $10.3 million for the same periods in 2015. The decrease of $1.2 million and $2.0 million between the comparable three- and six-month periods, respectively, was primarily due to decrease in outside services costs.

Interest expense was $0.5 million and $0.8 million for the three and six months ended June 30, 2016 as compared to $0.2 million and $0.5 million for the same periods in 2015.

Net other income was nil and $0.1 million for the three and six months ended June 30, 2016 as compared to net other income of $1.9 million and $1.8 million for the same period in 2015. The increases in 2015 periods were primarily comprised of non-cash credits or charges for the revaluation of warrants issued in the October 2010 underwritten offering.

Cash used in operating activities was $20.1 million for the six months ended June 30, 2016, as compared to $19.8 million for the same period in 2015. Net cash used in the 2016 period resulted primarily from the net loss of $20.5 million and changes in operating assets and liabilities of $2.5 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 $2.9 million. Net cash used in the 2015 period resulted primarily from the net loss of $18.1 million and changes in operating assets and liabilities of $3.4 million, partially offset by net adjustments for non-cash items of $1.7 million.

Sunesis reported loss from operations of $10.0 million and $19.9 million for the three and six months ended June 30, 2016 as compared to $10.6 million and $19.4 million for the same periods in 2015. Net loss was $10.4 million and $20.5 million for the three and six months ended June 30, 2016, as compared to $8.9 million and $18.0 million for the same periods in 2015.
Conference Call Information

Sunesis will host an update conference call today, July 29th at 11:00 a.m. Eastern Time. The call can be accessed by dialing (877) 771-6242 (U.S. and Canada) or (440) 996-5676 (international) and entering passcode 48017419. To access the live audio webcast, or the subsequent archived recording, visit the "Investors and Media – Calendar of Events" section of the Sunesis website at www.sunesis.com. The webcast will be recorded and available for replay on the company’s website for two weeks.

About QINPREZO (vosaroxin)

QINPREZO (vosaroxin) is an anti-cancer quinolone derivative (AQD), a class of compounds that has not been used previously for the treatment of cancer. Preclinical data demonstrate that vosaroxin both intercalates DNA and inhibits topoisomerase II, resulting in replication-dependent, site-selective DNA damage, G2 arrest and apoptosis. Both the U.S. Food and Drug Administration (FDA) and European Commission have granted orphan drug designation to vosaroxin for the treatment of AML. Additionally, vosaroxin has been granted fast track designation by the FDA for the potential treatment of relapsed or refractory AML in combination with cytarabine. Vosaroxin is an investigational drug that has not been approved for use in any jurisdiction.

Vosaroxin’s Marketing Authorization Application for relapsed refractory AML is currently under review by the European Medicines Agency, and a regulatory decision regarding approval is expected in 2017.

The trademark name QINPREZO is conditionally accepted by the FDA and the EMA as the proprietary name for the vosaroxin drug product candidate.

About SNS-062

SNS-062 is a novel, second-generation BTK inhibitor, a class of kinase inhibitors that selectively inhibits the enzyme Bruton’s tyrosine kinase (BTK). This target mediates signaling through the B-cell receptor, which is critical for adhesion, migration, proliferation and survival of normal and malignant B-lineage lymphoid cells. Unlike other drugs in its class, SNS-062 has a distinct kinase selectivity profile and binds non-covalently to the BTK enzyme, potentially providing an opportunity to address the leading resistance mechanism, a mutation in the enzyme’s binding site required for covalent binding. In preclinical studies, SNS-062 demonstrated potent activity against Cys-481S mutated B-cell malignancies, and is currently being studied in healthy subjects in a Phase 1A, randomized, double-blind, placebo-controlled dose-ranging study to investigate the drug’s safety, pharmacokinetics, and pharmacodynamics. With a successful study outcome, SNS-062 is expected to proceed to a Phase 1B/2 study in patients with B-cell malignancies around year end 2016.

(Presentation, Shanghai Fosun Pharma, JUL 29, 2016, View Source(long%20form)%20-%2031.07.2016%20_%20E_%2017.50%20(Final).pdf [SID:1234514152])

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On July 29, 2016 Astellas Pharma Inc. (TSE:4503, President and CEO: Yoshihiko Hatanaka, "Astellas") reported financial results for the first quarter of fiscal year 2016 ending March 31, 2017 ("FY2016") (Press release, Astellas, JUL 29, 2016, View Source [SID:1234514121]).

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"We are pleased with our solid performance and ability to achieve sustainable growth through increasing sales of XTANDI and overall OAB treatments, new product introductions and focused investment in innovation and strengthening our base," said Yoshihiko Hatanaka, President and CEO, Astellas. "We remain confident in our ability to deliver value for patients and for our stakeholders as we continue to advance our strategic plan of maximizing the product value, creating innovation and pursuing operational excellence."

Consolidated Financial Results (April 1, 2016 – June 30, 2016) (core basis)
(Millions of yen)
Q1 FY2015
Q1 FY2016
Change (%)

Sales 343,659
337,752
-5,907 (-1.7%)

Core operating profit
67,820
93,951
+26,131 (+38.5%)

Core profit for the period
45,031
67,148
+22,117 (+49.1%)

Basic core earnings per share (yen)
20.57
31.60
+11.03 (+53.6%)

Impact of Foreign Exchange Rate on Financial Results

The foreign exchange rates for the yen in the first three months of FY2016 are shown in the table below. The resulting impacts were a 25.6 billion yen decrease in sales and a 0.4 billion yen increase in core operating profit compared with if the exchange rates of the three months of FY2015 were applied.

Average rate
Q1 FY2015
Q1 FY2016
Change

USD/yen
121
108
13 yen (Strengthening of yen)

Euro/yen
134
122
12 yen (Strengthening of yen)

Change from beginning to end of period
As of June 30, 2015
As of June 30, 2016

USD/yen
2 yen (Weakening of yen)
10 yen (Strengthening of yen)

Euro/yen
7 yen (Weakening of yen)
13 yen (Strengthening of yen)

Quarterly Revenue Highlights

Sales in the first three months of FY2016 decreased by 1.7% compared to those in the corresponding period of the previous fiscal year ("year-on-year") to 337.8 billion yen.

Sales decreased due to the impacts such as the NHI drug price revision in Japan enforced in April 2016 as well as the impact of foreign exchange. On a constant currency basis, however, sales increased by approximately 6 % year-on-year.

In terms of global products, sales of XTANDI and overall OAB treatments Vesicare (solifenacin succinate) and Betanis / Myrbetriq / BETMIGA (mirabegron) grew, while sales of Prograf (tacrolimus) decreased due to foreign exchange while sales of Prograf increased on a constant currency exchange rate basis.

< Sales by Region1 >
Sales in Japan decreased by 1.1% year-on-year to 124.2 billion yen mainly due to the NHI drug price revision. This reflected underlying growth in sales of products including overall OAB treatments (Vesicare andBetanis), Celecox (celecoxib) and Symbicort (budesonide and formoterol fumarate dihydrate). Sales of XTANDI decreased due to the NHI drug price revision. Sales of vaccines declined mainly due to the continued impact of the restrain of shipment by the manufacturer in FY2015 (shipments of some of products have already been recommenced). Revenues were impacted by the decline in sales of products including Lipitor (atorvastatin calcium) and Gaster (famotidine) mainly due to the impact of generics.

Sales in the Americas decreased by 6.3% year-on-year to 107.6 billion yen; however sales on a USD basis increased by 5.2% year-on-year to 995 million USD. This was driven by an increase in sales of XTANDI and CRESEMBA (isavuconazonium sulfate). Sales of products including overall OAB treatments (VESIcare and Myrbetriq), Prograf and Lexiscan (regadenosan) decreased due to the impact of foreign exchange. The sales of each product on a USD basis increased.

EMEA2 saw a 4.4% increase in sales year-on-year to 85.3 billion yen, with growth from XTANDI. Sales of overall OAB treatments (Vesicare and BETMIGA) and Prograf declined due to foreign exchange. Sales on a Euro basis increased by 14.8% year-on-year to 699 million Euros.

In Asia and Oceania, sales decreased by 3.8% year-on-year to 20.7 billion yen. XTANDI, overall OAB treatments (Vesicare and BETMIGA) and Harnal (tamsulosin hydrochloride) contributed to the revenue growth. Sales of Prograf declined mainly due to the foreign exchange impact. Sales on a constant currency exchange rate basis increased by 14.7% year-on-year.

Expense and Other Financial Highlights
Gross profit increased by 5.0% year-on-year to 266.3 billion yen, because a decrease in cost of sales exceeded a decrease in sales. The cost-to-sales ratio fell 5.1 percentage points year-on-year to 21.2%, owing to changes in the product mix and the foreign exchange rate impact from the elimination of unrealized gains in intra-group transactions.

Selling, general and administrative expenses decreased by 5.7% year-on-year to 111.9 billion yen mainly due to the foreign exchange rate impact.

Research and development ("R&D") expenses decreased by 8.9% year-on-year to 51.0 billion yen partly due to the impact of foreign exchange, although steady progress of development was shown. The R&D cost-to-sales ratio was down 1.2 percentage points year-on-year to 15.1%.
Amortization of intangible assets was 9.0 billion yen, down 17.5% year-on-year.

As a result of the above, core operating profit increased by 38.5% year-on-year to 94.0 billion yen. Meanwhile, core profit for the period increased by 49.1% year-on-year to 67.1 billion yen and basic core earnings per share increased by 53.6% year-on-year to 31.60 yen.

Resulting from the transfer of the global dermatology business in April 2016, the sales and the expenses of the transferred products were not included in the first three month of FY2016. On the other hand, consideration of the business transfer was recognized as revenue over certain periods. As a result, there were certain positive impacts on sales and profit for the first three months of FY2016.

FY2016 Guidance
The company has chosen to leave its business forecasts unchanged from the consolidated full-year business forecasts announced in May 2016 as it does not expect large deviations from the forecasts.

Strategic Quarterly Highlights
Astellas continues to create a solid and resilient continuity of growth over the mid – to long-term through the pursuit of three main strategies – "Maximizing the Product Value," "Creating Innovation" and "Pursuing Operational Excellence."

Maximizing the Product Value
Received a marketing authorization from the European Medicines Agency (EMA) to include data from the TERRAIN trial in the XTANDI label

XTANDI and Myrbetriq / BETMIGA newly launched across multiple countries; Repatha (evolocumab) launched in Japan

Creating Innovation
Progressed the pipeline with several products entering Phase III including enzalutamide (MDV3100) for triple-negative breast cancer for the US/EU/Japan/Asia; ipragliflozin (ASP1941) for Type 1 diabetes in Japan; and linaclotide (ASP0456) for chronic constipation in Japan

Entered into several strategic collaborations including:
– As one of the activation plans for Ocata Therpeutics, Inc. acquired in previous fiscal year, the company name was changed to Astellas Institute for Regenerative Medicine
– Biomarker database on healthy adults with Takeda Pharmaceutical Company Limited and Daiichi-Sankyo Company, Limited
– Developing a rice-based oral vaccine with the Institute of Medicine Science, the University of Tokyo

Pursuing Operational Excellence
Compliance was structurally divided from legal and introduced as a new function "Ethics & Compliance" which globally integrates and manages the regional Ethics & Compliance functions across regions
Transferred the global dermatology business to LEO Pharma S/A (headquarter: Denmark)
Enhanced our organizational structure by establishing a subsidiary in Colombia

NOTE: For further information on the results and their drivers, please refer to the reference documents: Financial Results, Supplementary Documents, Overview of R&D Pipeline and Presentation Material for Information Meeting available on the Astellas website.

On July 29, 2016 NewLink Genetics Corporation (NASDAQ:NLNK), a biopharmaceutical company focused on bringing novel immuno-oncology medicines to patients, reported consolidated financial results for the second quarter of 2016 and provided updates on its clinical development programs and operational restructuring (Press release, NewLink Genetics, JUL 29, 2016, View Source [SID:1234514123]).

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"We have streamlined our operations and focused development efforts on the clinical validation of indoximod, our proprietary IDO pathway inhibitor program, which is being studied in multiple cancers," said Charles J. Link, Jr., M.D., Chairman, Chief Executive Officer and Chief Scientific Officer. "Additionally, we continue the clinical advancement of GDC-0919, with our partner Genentech, and look forward to progress in this program."

"We have the financial resources to realize the potential of our product development pipeline as well as opportunities for the development of other potentially synergistic therapies that could provide benefit to patients with cancer," commented Nicholas N. Vahanian, M.D., President and Chief Medical Officer.

Program Updates

Indoleamine 2,3-Dioxgenase (IDO) Checkpoint Inhibitor Programs

The IDO pathway regulates immune response by suppressing T cell function and enabling local tumor immune escape. NewLink Genetics is developing two distinct IDO pathway inhibitors, indoximod and GDC-0919, which are small-molecule product candidates having the potential to disrupt mechanisms by which tumors evade the immune system. Indoximod and GDC-0919 have different mechanisms of action within the IDO pathway and are in Phase 1 or 2 clinical trials for a range of cancers, including breast cancer, melanoma, pancreatic cancer, and other malignancies.

Indoximod

NewLink Genetics reported on two clinical studies in two posters highlighting the combination therapeutic potential of indoximod at the 2016 American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) Annual Meeting in June. Data reported included:

Updates on Phase 1b/2 trial of the IDO pathway inhibitor, indoximod, plus checkpoint inhibitors for the treatment of unresectable stage 3 or 4 melanoma. The trial design allows for the combination of indoximod with either ipilimumab or one of the PD-1 checkpoint inhibitors, pembrolizumab or nivolumab. The combination of indoximod with other checkpoint inhibitors has been well tolerated thus far with no increase in toxicity noted in this Phase 1b/2 study. Overall, 40 patients had been enrolled in the combined Phase 1b/2 study long enough to have response data available at the time of data cut off. The poster data presented at ASCO (Free ASCO Whitepaper) were based on data via site reported RECIST criteria available from 28 subjects, the objective response rate, comprised of complete response plus partial response, for these patients is 36 percent (10 of 28) with three complete responses. Interestingly, the subset of 15 patients who received indoximod in combination with pembrolizumab had an objective response rate of 53 percent (8 of 15) with two complete responses (13 percent). The trial continues to enroll, with 55 patients currently enrolled in Phase 2.

Interim analysis on a Phase 2 trial of the IDO pathway inhibitor, indoximod, plus gemcitabine/nab-paclitaxel for the treatment of metastatic pancreatic cancer. The combination of indoximod and gemcitabine/nab-paclitaxel continues to be well tolerated by patients with metastatic pancreatic cancer. These data come from the Phase 1/2 trial in which treatment-naïve patients with metastatic pancreatic cancer were treated with the combination therapy in continuous four week cycles. As of the data cut off for the analysis, a total of 45 patients (Phase 1 and 2) were enrolled in the trial long enough to potentially have cycle 4 imaging available by the ASCO (Free ASCO Whitepaper) presentation. Data via site reported RECIST criteria were available on 31 patients. At the time of this analysis, objective response rate was 45 percent (14 of 31) and multiple durable responses ≥6 months were observed. Two patients achieved a complete response (6 percent), both at Cycle 8, showing delayed kinetics that may indicate an immune based mechanism. The trial continues to enroll patients and a biopsy cohort expansion is underway.
"These promising data continue to demonstrate the potential of combination therapies with other checkpoint inhibitors and with chemotherapies for different cancers," added Dr. Vahanian. "We believe that these data further support the IDO pathway as one of the key immune checkpoint targets."

Restructuring

The company also announced that it has implemented a significant restructuring program following the May results of the IMPRESS Phase 3 study of algenpantucel-L. The objective of the restructuring is to focus the company’s financial resources on the following priorities:

Progress and accelerate the development of indoximod;
Continue the alliances with Genentech (GDC-0919) and Merck (Ebola vaccine candidate);
Advancing other drug discovery programs, including both PTEN and Zika virus; and
Evaluate external opportunities to expand our pipeline.
The restructuring includes the following initiatives:

Winding down HyperAcute Cellular Immunotherapy clinical trials that do not include a checkpoint inhibitor combination;
Winding down commercial manufacturing capacity for algenpantucel-L;
Consolidating the Company’s facilities footprint from 133,000 square feet to approximately 66,000 square feet;
Reducing headcount from approximately 230 to approximately 130; and
Focusing capital spending to primarily support drug discovery and development.
We recorded $12.3 million in restructuring expenses in Q2, including severance expense, the impairment of fixed assets, and the costs of terminating certain contracts. In Q3, the Company expects to record small additional charges relating to the closing or reduction of leased facilities.

Financial Results for the Three-Month Period Ended June 30, 2016

Cash Position: NewLink Genetics ended the quarter on June 30, 2016, with cash and cash equivalents totaling $160.5 million compared to $197.8 million for the year ending December 31, 2015.

R&D Expenses: Research and development expenses in the second quarter of 2016 were $27.4 million compared to $16.1 million during the comparable period in 2015. The increase was primarily due to the R&D expenses related to the restructuring initiatives of $11.8 million.

G&A Expenses: General and administrative expenses in the second quarter of 2016 were $9.1 million compared to $7.3 million during the comparable period in 2015. The increase was primarily due to an increase in medical affairs and marketing expenses along with G&A expenses incurred due to the restructuring initiatives of $0.5 million.

Net Loss: NewLink Genetics reported a net loss of $32.4 million or ($1.12 ) per diluted share for the second quarter of 2016 compared to a net loss of $14.1 million or ($0.49) per diluted share for the comparable period in 2015.

NewLink Genetics ended the quarter with 28,962,296 shares outstanding.

Financial Guidance and Upcoming Investor Meetings

NewLink Genetics’ goal and expectation remains to finish 2016 with two years of cash on hand and the capacity to make incremental investments.

We expect to present at the Baird Healthcare Conference on September 7 and we look forward to hosting our Analyst Day on Tuesday, October 25 in New York.