Vericel Reports First-Quarter 2016 Financial Results

On May 10, 2016 Vericel Corporation (NASDAQ:VCEL), a leading developer of patient-specific expanded cellular therapies for the treatment of severe diseases and conditions, reported financial results for the first quarter ended March 31, 2016 (Press release, Vericel, MAY 10, 2016, View Source [SID:1234512238]).

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Total net revenues for the quarter ended March 31, 2016 were approximately $14.1 million and included approximately $8.8 million of Carticel net revenues and approximately $5.3 million of Epicel net revenues. Total Carticel and Epicel net revenues increased 31% over the first quarter of 2015, with Carticel revenues increasing 24% and Epicel revenues increasing 46%, respectively, compared to the same period in 2015.

Gross profit for the quarter ended March 31, 2016 was $7.5 million, or 54% of net revenues, compared to $5.3 million, or 49% of net product revenues, for the first quarter of 2015.

Research and development expenses for the quarter ended March 31, 2016 were $3.5 million, compared to $4.4 million in the first quarter of 2015. The decrease in research and development expenses in the first quarter is primarily due to a reduction in clinical trial expenses.

Selling, general and administrative expenses for the quarter ended March 31, 2016 were $6.0 million compared to $5.5 million for the same period in 2015. The increase in SG&A expenses is primarily due to an increase in shared facility fees.

Loss from operations for the quarter ended March 31, 2016 was $2.0 million, compared to $4.6 million for the first quarter of 2015. Material non-cash items impacting the operating loss for the quarter included $0.5 million of stock-based compensation expense and $0.4 million in depreciation and amortization expense.

Other expense for the quarter ended March 31, 2016 was $1.7 million compared to less than $0.3 million for the same period in 2015. The change in other expense for the quarter is primarily due to the change in the fair value of warrants in the first quarter of 2016 compared to the same period in 2015.

Vericel reported an adjusted net loss for the quarter ended March 31, 2016 of $2.0 million dollars, or $0.08 per share, compared to an adjusted net loss of $4.5 million, or $0.19 per share, for the same period in 2015. The adjusted net loss excludes the non-cash change in the fair value of warrants and the non-cash accumulated dividend on the Series B convertible preferred stock. The adjusted earnings per share includes common shares reserved as treasury shares received in exchange for the Series A non-voting convertible preferred stock. Vericel’s GAAP net loss for the quarter ended March 31, 2016 was $3.7 million, or $0.24 per share, compared to a net loss of $4.9 million, or $0.27 per share, for the same period in 2015.

As of March 31, 2016, the company had $13.5 million in cash and cash equivalents compared to $14.6 million in cash and cash equivalents at December 31, 2015.

Recent Business Highlights
During and since the first quarter of 2016, the company:

Achieved 31% growth in total Carticel and Epicel net revenues in the first quarter, including 24% and 46% growth in Carticel and Epicel net revenues, respectively, versus the same period in 2015;
Achieved gross margins of 54% of total net revenues in the first quarter versus 49% in the same period in 2015;
Received U.S. Food and Drug Administration (FDA) approval of the Epicel Humanitarian Device Exemption (HDE) supplement, which revised the Epicel label to include pediatric patients and specify the probable benefit, mainly related to survival, for adult and pediatric patients, and allows the company to sell Epicel for profit on up to 360,400 grafts per year;
Submitted a Biologics License Application for MACI for the treatment of cartilage defects of the knee, which was accepted for review by the FDA with a PDUFA goal date of January 3, 2017;
Announced results from the company’s Phase 2b ixCELL-DCM clinical study of ixmyelocel-T in patients with advanced heart failure due to ischemic dilated cardiomyopathy, which were presented at the American College of Cardiology’s (ACC) 65th Annual Scientific Session and published in The Lancet;
Entered into a $10 million credit facility and $5 million term loan agreement with Silicon Valley Bank to access low-cost, non-dilutive capital for the company; and
Executed a service agreement with Dohmen Life Science Services, LLC for clinical- and patient-support services for Carticel and MACI, if approved.
"We had a very strong first quarter and made tremendous progress across all facets of our business," said Nick Colangelo, president and CEO of Vericel. "Our strong revenue growth and margin expansion reflect the success of our commercial team’s sales and marketing initiatives, and our clinical and regulatory team made substantial progress on our key clinical and regulatory priorities. We believe that these results position the company for strong growth moving forward."

Takeda Reports Results for Fiscal Year 2015 (April 2015 -March 2016) and Forecast for Fiscal Year 2016

On May 10, 2016 Takeda reported results for Fiscal Year 2015 (April 2015 -March 2016) and Forecast for Fiscal Year 2016 (Press release, Takeda, MAY 10, 2016, View Source [SID:1234512192]).

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FY2015: A year of turnaround to sustained growth; achieved full year management guidance
Underlying revenue up +3.4% (reported revenue growing +1.7% to 1,807.4 billion yen), led by strong performances in Takeda’s growth drivers (GI, Oncology, CNS and Emerging Markets)
Underlying Core Earnings up +8.1% (reported operating profit recorded 130.8 billion yen), aided by cost discipline
Underlying Core EPS up +21.7% (reported EPS was 102 yen), growing 2.5x faster than underlying core earnings
Growth Drivers continued to be robust
Consolidated underlying revenue growth of Gastroenterology (GI), Oncology, Central Nervous System (CNS) and Emerging Markets – Takeda’s Growth Drivers – was +9.5% year-to-year
Underlying revenue of GI +23.6%, Oncology +1.0%* and CNS +37.3% year-to-year
Emerging Markets underlying revenue +4.8% year-to-year with continued growth in the key markets of China, Russia and Brazil
*Underlying growth of Oncology excluding VELCADE royalties was +4.4%

Broad portfolio of growing products offsets loss of exclusivity decline
ENTYVIO is on track to exceed $2 billion MAT* sales within FY2018
Encouraging uptake of NINLARO and TAKECAB
BRINTELLIX and ADCETRIS showed continued growth
AZILVA and LOTRIGA are contributing to the Japan business
*Moving Annual Total @ constant currency

Efficiency gains continue
Project Summit well exceeded full-year target resulting in 30 billion yen additional cost savings
Strong cash flow performance with Operating Free Cash Flow, excluding Actos settlement payment, reaching 230 billion JPY
FY2016 management guidance: A year of strategic focus to sustain growth
Underlying Revenue: Mid-single digit growth (%)
Underlying Core Earnings: Low- to mid-teen growth (%)
Underlying Core EPS: Low- to mid-teen growth (%)
Christophe Weber, President and Chief Executive Officer of Takeda, commented:
"FY2015 was a turnaround year. We achieved our management guidance for the second consecutive year, led by our growth drivers, and aided by the global launches of new products such as ENTYVIO and NINLARO. Takeda will continue to deliver innovative new medicines to patients, especially in our focused R&D therapeutic areas. Takeda aims to relentlessly execute our strategic roadmap to deliver our long-term aspiration, and will serve the needs of the patients, with the best in class agility and innovation."

Key figures for the full year of FY2015 (April 2015 –March 2016)

FY 2014
FY 2015
Growth
billion yen

Underlying2
Revenue
1,777.8
1,807.4
+1.7%
+3.4%
Operating Profit
-129.3
130.8


Core Earnings1
288.3
292.4
+1.4%
+8.1%
Net Profit3
-145.8
80.2


EPS
-185 yen
102 yen


Core EPS
225 yen
258 yen
+14.8%
+21.7%
1 Core Earnings is calculated from operating profit by excluding the impact of exceptional items, such as purchase accounting, amortization and impairment loss of intangible assets, restructuring costs and major litigation costs.
2 Underlying performance aims at understanding the real performance of the business. Underlying Revenue, Underlying Core Earnings, and Underlying Core EPS exclude the same as above and adjusted for acquisitions/divestments and foreign exchange.
3 Attributable to the owners of the company

Underlying revenue growth was mainly driven by Takeda’s Growth Drivers: Gastroenterology(GI), Oncology, and Central Nervous System (CNS) in addition to Emerging Markets. The Growth Drivers account for 52% of Takeda’s revenue. GI revenue grew by +23.6% year-to-year, driven by ENTYVIO. Oncology revenue increased by +1.0%, contributed by VELCADE, ADCETRIS and NINLARO, which has shown an encouraging start in the U.S. since it was launched in December,. Oncology revenue excluding VELCADE royalties grew +4.4%. CNS revenue, including BRINTELLIX, increased by +37.3%. Emerging Markets revenue grew by +4.8% year-to-year, led by Value Brands (branded generics and Over-The-Counter medicines), with steady growth in China (+11.1%), Russia (+6.2%) and Brazil (+5.7%). However, our future aspiration for growth in Emerging Markets remains strong, in high single digits. Performance in the U.S. (+12.4% year-to-year underlying revenue growth) also contributed to total revenue growth. In Japan, which remains under increasing generic pressure, underlying revenue declined -3.3% year-to-year, but AZILVA and LOTRIGA showed significant sales growth of +30.1% and +69.0%, respectively, year-to-year. In addition to these growing products, TAKECAB and ZAFATEK are expected to be key sales drivers in Japan after the lifting of the 2-week limit on the prescription period.

Consolidated operating profit was 130.8 billion yen, an increase of 260.1 billion yen compared to the previous year, which exceeded the raised forecast of 120 billion yen announced in February at the FY2015 3rd quarter earnings announcement. Selling, general and administrative expenses increased by 38.2 billion yen (+6.2%) compared to the previous year, mainly due to the increase in sales expenses related to new products in the U.S., but R&D expenses decreased by 36.2 billion yen (-9.5%). Amortization and impairment losses on intangible assets associated with products decreased by 51.3 billion yen (-29.1%), mainly due to 30.5 billion yen of COLCRYS impairment loss being recognized in 2014 compared to an 8.6 billion yen impairment reversal in fiscal 2015. Other operating income decreased by 82.1 billion yen (-76.6%), mainly due to 53.8 billion yen of revaluation of COLCRYS contingent consideration liability and 32.8 billion yen of the gains on sales of real estate being recognized in the previous year. Other operating expenses decreased by 277.8 billion yen (-86.2%), mainly due to 274.1 billion yen of loss on Actos litigation in the U.S. being recognized in the previous year.

Project Summit – a company-wide strategic initiative to increase efficiency – continued to produce results, with 30 billion yen of additional savings in FY2015, exceeding the full year target as a result of higher Procurement savings.

As part of its ongoing effort to improve R&D productivity, Takeda is focusing on its core therapeutic areas of Oncology, GI and CNS. Takeda will further strengthen its initiatives and commitment to lead innovation in medicines and provide innovative new drugs to patients around the world including in emerging markets.

FY2015 was positioned for Takeda as a year of turnaround to sustained growth, and Takeda sets the following management guidance for FY2016 as a year of strategic focus to sustain growth.

Management Guidance for FY2016

Underlying Growth (%)
Underlying Revenue
Mid-single digit
Underlying Core Earnings
Low- to mid-teen
Underlying Core EPS
Low- to mid-teen
Dividend per Share
180 yen
Reported Forecast for FY2016 (change vs. FY2015 results)

billion yen
FY 2016 1
Change
Revenue
1,720.0
-4.8%
R&D expenses
325.0
-6.0%
Operating Profit
135.0
+3.2%
Net Profit 2
88.0
+9.8%
EPS
112 yen
+9.8%
1 The exchange rate assumptions for FY2016 are 1US$=110 yen and 1 euro=125 yen
2 Attributable to the owners of the company

For more details on Takeda’s FY2015 full year results and other financial information, please visit View Source

About Takeda Pharmaceutical Company Limited

ZIOPHARM Reports First-Quarter 2016 Financial Results and Provides Update on Recent Activities

On May 10, 2016 ZIOPHARM Oncology, Inc. (Nasdaq:ZIOP) reported financial results for the first quarter ended March 31, 2016, and provided an update on the Company’s recent activities (Press release, Ziopharm, MAY 10, 2016, View Source [SID:1234512239]).

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"We have solid momentum in each of our cell and gene therapy programs, with the potential to move our lead gene therapy, Ad-RTS-IL-12 + veledimex, into a pivotal study next year," said Laurence Cooper, M.D., Ph.D., Chief Executive Officer of ZIOPHARM. "Ad-RTS-IL-12 + veledimex continues to yield encouraging results as we recruit additional patients into an ongoing dose-escalation study in recurrent glioblastoma, and we look forward to presenting this data to the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) at its annual meeting in June of this year. Given the dire outcomes in this patient population, a potential therapeutic benefit may be quickly assessed and, if these results remain durable, our goal would be to move into a registration study, following discussions with regulators."

Dr. Cooper added: "As this promising program moves forward, we continue to test the potential of our cell therapy platform and technologies in collaboration with leading partners in industry and academia. This includes clinical-stage platforms unique to ZIOPHARM, such as the non-viral Sleeping Beauty (SB) system, that are fundamental to making immune cell therapy a cost-effective, widely-available treatment modality. These technologies are particularly important in leveraging T-cell receptors (TCRs) to target neoantigens in solid tumors which requires individualizing this immunotherapy, an approach that is possible with our customizable, easy-to-manufacture non-viral gene transfer system. We expect to initiate or continue prosecuting up to six clinical trials across multiple platforms in 2016 and look forward to sharing data and outcomes from these trials throughout the year."

The SB transposon-transposase is a unique non-viral system for introducing genes encoding CARs and TCRs into lymphocytes and is exclusively licensed by Intrexon Corporation (NYSE:XON) through MD Anderson and accessed as part of ZIOPHARM’s collaboration with Intrexon. This non-viral approach has several potential advantages over viral-based delivery systems, including a lower cost of generating genetically modified T cells as well as the ability to generate T cells with minimal ex vivo processing and can serve as a conduit to targeting solid tumor neoantigens using TCRs.

Program Updates

Gene Therapies

Ad-RTS-hIL-12 + veledimex is a gene therapy candidate for the controlled expression of interleukin 12 (IL-12), a critical protein for stimulating an anti-cancer immune response, using the RheoSwitch Therapeutic System (RTS) gene switch. ZIOPHARM is currently enrolling patients in two studies of Ad-RTS-hIL-12 + veledimex: a multi-center Phase 1 study in patients with recurrent or progressive glioblastoma multiforme (GBM), an aggressive form of brain cancer, and a Phase 1b/2 study for the treatment of patients with locally advanced or metastatic breast cancer following standard chemotherapy.

Preclinical studies combining Ad-RTS-IL-12 + veledimex and checkpoint inhibitors in brain tumor models presented at ASGCT (Free ASGCT Whitepaper). In an oral presentation, ZIOPHARM presented data from preclinical studies of Ad-RTS-IL-12 + veledimex combined with immune checkpoint inhibitors (iCPI) in GBM mouse models at the 2016 Meeting of the American Society of Gene and Cell Therapy (ASGCT) (Free ASGCT Whitepaper) in Washington D.C. held last week. Results demonstrated that survival of mice treated with Ad-RTS-IL-12 + veledimex and anti-PD-1 therapy was superior to either treatment alone, with a combination showing 100% survival. Because Ad-RTS-IL-12 and anti-PD-1 are clinically available, these data provide impetus for evaluating this combination immunotherapy in humans. ZIOPHARM plans to initiate a combination study in 2016 and is currently in discussion with partners to provide anti-PD-1 therapy.

Encouraging data from Phase 1 brain tumor study to be presented at ASCO (Free ASCO Whitepaper). ZIOPHARM expects to present data from a multicenter, Phase 1 gene therapy study of Ad-RTS-IL-12 in patients with recurrent or progressive GBM or Grade III malignant glioma at the 2016 ASCO (Free ASCO Whitepaper) Annual Meeting in June. Following reporting of encouraging data from the first cohort of the study at the initial dosing of Ad-RTS-IL-12 + veledimex, the Company announced last March that the first patient had been enrolled in the study’s second dose cohort. The Company continues to enroll patients in the study and remains encouraged by the survival results observed to date.
Adoptive Cell Therapies

ZIOPHARM is developing various immuno-oncology programs, including chimeric antigen receptor T-cell (CAR-T), TCR, and natural killer (NK) adoptive cell-based therapies. These programs are being advanced in collaboration with Intrexon, MD Anderson Cancer Center, and the biopharmaceutical business of Merck KGaA, Darmstadt, Germany (CAR-T only).

Preclinical study showing evolution of the Sleeping Beauty (SB) non-viral transposon-transposase system in a mouse model of leukemia presented at ASGCT (Free ASGCT Whitepaper). In an oral presentation, MD Anderson researchers in collaboration with ZIOPHARM presented data from preclinical studies demonstrating the ability to address the challenges of streamlining the manufacture of cell based therapy by leveraging the non-viral SB system to reduce cell culture time. The results were presented at the 2016 Meeting of the ASGCT (Free ASGCT Whitepaper) in Washington D.C. held last week. These data also demonstrated an improvement in the anti-tumor activity of the CD19-specific CAR by modifying the "stalk" of the CAR.

Molecular Therapy Publication Highlights the Potential of Sleeping Beauty to Personalize TCR Gene Therapy. In March, the Company announced the publication of an article describing the use of SB non-viral gene transfer technology to genetically modify T cells to target neoantigens present within solid tumors. This approach unlocks the potential for rapid and individualized TCR gene therapy aimed at unique mutations within each patient’s cancer cells. The article, titled "Stable, non-viral expression of mutated tumor neoantigen-specific T-cell receptors using the Sleeping Beauty transposon/transposase system," was published in the journal Molecular Therapy (5 March 2016, doi:10.1038/mt.2016.51), and is available online.

First patient enrolled in Phase 1 study of second generation non-viral CD19-specific CAR T-cell therapy for advanced lymphoid malignancies. In February 2016, ZIOPHARM announced that the first patient was enrolled in a new Phase 1 clinical study of its second generation non-viral CD19-specific CAR modified T-cell therapy in patients with advanced lymphoid malignancies (ClinicalTrials.gov Identifier: NCT02529813). T cells were modified using the SB system to stably express a CAR targeting CD19. This second-generation study at MD Anderson employs a CAR construct with a stalk revised to improve persistence and anti-tumor response over the first generation therapy. This investigational treatment is independent of hematopoietic stem-cell transplantation and includes patients with advanced disease.

Sleeping Beauty non-viral gene transfer technology featured in Nature Medicine. In January 2016, the SB non-viral gene transfer technology was featured in a perspectives article in the journal Nature Medicine (Volume 22, Number 1, 26-36), titled "Prospects for gene-engineered T cell immunotherapy for solid cancers." The article describes how adoptive transfer of TCR-engineered T cells for solid tumors may come from the "arduous task of targeting the unique set of mutations that cause each patient’s cancer." Because of the challenges of achieving this goal, the authors note that non-viral integration systems will likely be considerably cheaper to manufacture and easier to implement for single-use applications compared with viral vectors and that, among non-viral platforms, SB has advanced furthest in clinical development.
Milestones

ZIOPHARM expects the following milestones to occur in 2016:

Intra-tumoral IL-12 RheoSwitch programs:
Clinical update at ASCO (Free ASCO Whitepaper) 2016 for Phase 1 study of GBM
Update at ASCO (Free ASCO Whitepaper) 2016 for Phase 1/2 study in breast cancer with standard of care
CAR-T programs:
Continuation of CD19 CAR+ T-cell clinical study
Initiate a CAR+ T-cell clinical study for myeloid malignancies
Initiate CAR+ T-cell preclinical studies for other hematological malignancies and solid tumors
Initiate preclinical studies of allogeneic, off-the-shelf (OTS) T-cell studies in 2016
TCR-T programs
Initiate TCR-modified T-cell preclinical studies
NK cell programs
Initiate a Phase 1 study of OTS NK cells for AML
GvHD programs
Initiate preclinical studies
The Company is also evaluating additional potential preclinical candidates and continuing discovery efforts aimed at identifying other potential product candidates under its Exclusive Channel Agreement with Intrexon. In addition, the Company may seek to enhance its pipeline in immuno-oncology through focused strategic transactions, which may include acquisitions, partnerships and in-licensing activities.

First-Quarter 2016 Financial Results

Net loss for the first quarter of 2016 was $12.0 million, or $(0.09) per share, compared to a net loss of $78.2 million, or $(0.69) per share, for the first quarter of 2015. During the first quarter ended 2015, the company incurred a one-time non-cash charge of $67.3 million, or $(0.59) per share, related to a license agreement with The University of Texas M.D. Anderson Cancer Center.

Research and development expenses were $10.2 million for the first quarter of 2016 compared to $74.2 million for the first quarter of 2015. The decrease in research and development expenses in the current year primarily relates to a one-time charge of $67.3 million related to the M.D. Anderson license agreement in 2015.

General and administrative expenses were $3.8 million for the first quarter of 2016 compared to $4.3 million for the first quarter of 2015. The decrease was primarily due to a reduction in contracted outside service costs in 2016.

The Company ended the quarter with cash and cash equivalents of approximately $124.8 million, which the Company believes will be sufficient to fund its currently planned activities into the fourth quarter of 2017.

Tokai Pharmaceuticals Reports First Quarter 2016 Financial Results

On May 10, 2016 Tokai Pharmaceuticals, Inc. (NASDAQ: TKAI), a biopharmaceutical company focused on developing and commercializing innovative therapies for prostate cancer and other hormonally driven diseases, reported company highlights and financial results for the quarter ended March 31, 2016 (Press release, Tokai Pharmaceuticals, MAY 10, 2016, View Source;p=RssLanding&cat=news&id=2166824 [SID:1234512193]).

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"Over the past quarter we have made significant progress in our clinical development program for galeterone, as we continued to accelerate screening and enrollment in our ARMOR3-SV trial and expanded our Phase 2 trial to include additional mCRPC patients who have acquired resistance to enzalutamide," said Jodie Morrison, President and Chief Executive Officer of Tokai. "We have also strengthened our development team to sharpen focus on execution of our clinical trials, and we look forward to continued progress in the months ahead as we work with great urgency to meet the needs of patients who currently have limited therapeutic options."

Recent business highlights include:

Progress in ARMOR3-SV, a Phase 3 registration trial of galeterone in AR-V7+ mCRPC. Patient enrollment is ongoing in ARMOR3-SV, Tokai’s pivotal Phase 3 clinical trial evaluating whether administration of galeterone results in a statistically significant and clinically meaningful improvement in radiographic progression-free survival as compared to Xtandi (enzalutamide) in treatment-naïve metastatic castration-resistant prostate cancer (mCRPC) patients whose prostate tumor cells express the AR-V7 splice variant. AR-V7 is a truncated form of the androgen receptor that has been associated with poor response to commonly-used oral therapies for mCRPC. Over 100 clinical sites in eight countries are actively screening patients for potential eligibility to participate in ARMOR3-SV. Enrollment in ARMOR3-SV is expected to be completed by the end of 2016, and top-line data from the trial are anticipated by mid-2017.
Expansion of galeterone clinical development program. In March, patient dosing began in an expansion of the ongoing Phase 2 clinical trial of galeterone (ARMOR2) in mCRPC patients who have developed acquired resistance to enzalutamide. This expansion follows results observed in a patient who, following an initial response to enzalutamide, experienced a PSA drop of over 90 percent when treated with galeterone. This patient’s PSA response has remained at less than 0.1µg/L for over a year.
Strengthening of development team. Tokai enhanced its development capabilities with the addition of Kelly A. Lindert, M.D., as Executive Vice President and Head of Development responsible for the company’s clinical development, medical affairs, pharmacovigilance, regulatory affairs and quality assurance activities.
Financial Results

Cash and investments at March 31, 2016 were $54.3 million, as compared to $64.0 million at December 31, 2015.
Research and development expense for the quarter ended March 31, 2016 was $7.9 million, as compared to $10.6 million for the quarter ended March 31, 2015. Research and development expense in the first quarter of 2015 included a one-time fee paid to Qiagen Manchester Limited to access rights to its proprietary circulating tumor cell technology for use in the AR-V7 clinical trial assay. The decrease in research and development expense was also attributable to decreased manufacturing costs during the first quarter of 2016, partially offset by an increase in clinical trial costs associated with ARMOR3-SV.
General and administrative expense for the quarter ended March 31, 2016 was $3.5 million, as compared to $2.7 million for the quarter ended March 31, 2015. The increase in general and administrative expense was primarily attributable to increased headcount associated with operating as a public company, including related stock-based compensation expense.
Net loss was $11.4 million for the quarter ended March 31, 2016, or $0.51 per share, as compared to $13.3 million for the quarter ended March 31, 2015, or $0.59 per share.

Verastem Reports First Quarter 2016 Financial Results

On May 9, 2016 Verastem, Inc. (NASDAQ:VSTM), focused on discovering and developing drugs to treat cancer, reported financial results for the first quarter ended March 31, 2016, and also provided an overview of certain corporate developments (Press release, Verastem, MAY 9, 2016, View Source;p=RssLanding&cat=news&id=2166539 [SID:1234512196]).

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"To date in 2016, Verastem has announced two new clinical collaborations with world-class organizations, including Merck KGaA and Pfizer, and Washington University in St. Louis and Merck & Co., to further elucidate the potential of FAK inhibition to enhance the efficacy of PD-(L)1 inhibitors in patients with pancreatic and ovarian cancer," said Robert Forrester, President and Chief Executive Officer of Verastem. "The data generated from these trials will continue to inform the ongoing development of our anti-cancer therapeutics which reduce cancer stem cells and modulate the local tumor microenvironment to allow both cancer treatments and the immune system to do their job more efficiently. We’ve had a strong start to 2016 with the announcement of these clinical collaborations in addition to attracting key strategic hires on the development team, including Dr. Greg Berk as Chief Medical Officer and Dr. Toyin Shonukan as Vice President of Clinical Development, to oversee and execute on our ongoing and future studies. We are well financed with approximately $100 million in available capital and we look forward to keeping you updated in the coming quarters on our progress."

First Quarter 2016 and Recent Highlights:
Focal Adhesion Kinase Inhibition Program
Clinical Collaboration with Pfizer and Merck KGaA to Evaluate Combination of VS-6063 and Avelumab in Ovarian Cancer – In March 2016, the companies announced a clinical trial collaboration agreement to evaluate the combination of Verastem’s focal adhesion kinase (FAK) inhibitor VS-6063 and Pfizer and Merck KGaA’s anti-PD-L1 immunotherapy avelumab. Verastem has previously reported initial signs of clinical activity in patients with ovarian cancer when VS-6063 is used in combination with paclitaxel. Under the terms of the agreement, the parties will conduct a planned Phase 1/1b clinical trial evaluating escalating doses of the combination of VS-6063 and avelumab as a potential treatment option for patients with advanced ovarian cancer.

Washington University in St. Louis Initiated a Clinical Study of VS-6063 in Combination with Merck & Co.’s Pembrolizumab and Gemcitabine in Pancreatic Cancer – In January 2016, Verastem announced the initiation of a Phase 1 dose-escalation study at Washington University to evaluate its FAK inhibitor VS-6063 in combination with Merck & Co.’s anti-PD-1 immunotherapy pembrolizumab and gemcitabine in patients with pancreatic cancer. The trial builds upon preclinical research conducted by Dr. David Denardo, presented at several conferences in late 2015 and early 2016, demonstrating the ability of FAK inhibition to increase the efficacy of checkpoint inhibition in the reduction of tumor volume and overall survival in models of pancreatic cancer. This Phase 1 clinical trial is currently enrolling and is anticipated to enroll approximately 50 patients with advanced pancreatic cancer.

Presented Scientific Data Supporting FAK Inhibition in Combination with Immunotherapy at Key Medical Meetings – During the first quarter of 2016, Verastem presented data in support of its new development programs focused on advancing its FAK inhibitors in combination with immune-oncology agents and other current and emerging standard of care cancer treatments. Data were presented at several medical and scientific meetings, including the 2016 American Academy of Cancer Research (AACR) (Free AACR Whitepaper), the Society for Gynecologic Oncology’s 2016 Annual Meeting on Women’s Cancer, the Keystone Symposium on Cancer Pathology, the Keystone Symposium on Stem Cells and Cancer, and Immunotherapy World 2016.

Presented Clinical Data from the Window of Opportunity Study at iMig 2016 – In May 2016, the Company announced results from the ongoing open-label, single-center, neoadjuvant Window of Opportunity study evaluating tolerability, along with biomarker and tumor volume response to VS-6063 (400mg BID) following either 12 days (Cohort 1) or 35 days (Cohort 2) of treatment in surgically-eligible patients with malignant pleural mesothelioma. Data analysis from Cohort 1 and Cohort 2 showed that VS-6063 was generally well tolerated with early signs of tumor reduction observed, with six of the twenty patients demonstrating an encouraging tumor reduction after brief treatment with VS-6063.

Development of VS-4718 Continues in Solid Tumors – Dosing continues in a Phase 1 dose escalation trial evaluating single-agent VS-4718 and a Phase 1 clinical trial evaluating VS-4718 in combination with gemcitabine and Abraxane is currently ongoing. Following results from the dose escalation trial, an expansion cohort of VS-4718 + Gemcitabine/Abraxane vs Gemcitabine/Abraxane alone in patients with pancreatic cancer is planned.

Dual PI3K/mTORC1/2 Inhibition Program
Confirmatory Recommended Phase 2 Dose and Expansion Cohorts – The maximum tolerated dose of single-agent VS-5584 has been reached in a Phase 1 study, and the recommended Phase 2 dose (RP2D) is being confirmed. Reductions in pharmacodynamic markers of PI3K and mTOR activity and clinical activity has been observed in some tumor types.

Corporate
Gregory I. Berk, MD Named Chief Medical Officer – In April 2016, the Company announced the appointment of Gregory I. Berk, MD as Chief Medical Officer. Dr. Berk, a highly accomplished physician and a well-regarded oncology veteran with more than 25 years of both industry and academic experience, will be responsible for leading the Company’s global clinical development strategy and clinical operations.

Announced Key Executive Management Appointments and Changes – In April 2016, the Company strengthened its management team through the appointment and promotion of several key individuals. Jonathan Pachter, PhD was promoted to Chief Scientific Officer, David Weaver, PhD was appointed Vice President, Translational Medicine, Joe Chiapponi, Vice President, Finance, was named Treasurer, Principal Accounting and Financial Officer and Oluwatoyin (Toyin) Shonukan, MD, has been appointed Vice President, Clinical Development. Dr. Shonukan most recently served as Senior Medical Director, Oncology Clinical Development at Vertex Pharmaceuticals and has held previous senior appointments at Millennium: The Takeda Oncology Company, Novartis Oncology and Eli Lilly.

First Quarter 2016 Financial Results
Net loss for the first quarter ended March 31, 2016 (2016 Quarter) was $8.3 million, or $0.22 per share, as compared to a net loss of $15.2 million, or $0.46 per share, for the first quarter ended March 31, 2015 (2015 Quarter). Net loss for the 2016 Quarter and 2015 Quarter, excluding non-cash stock-based compensation expense of $1.7 million and $2.9 million, was $6.6 million and $12.3 million, respectively.

Research and development expense for the 2016 Quarter was $4.2 million compared to $10.5 million for the 2015 Quarter. The $6.3 million decrease from the 2015 Quarter to the 2016 Quarter was primarily related to a decrease of $4.2 million in contract research organization expense for outsourced biology, chemistry, development and clinical services, which includes our clinical trial costs, a decrease in personnel related costs of $1.4 million, a decrease of approximately $550,000 in stock-based compensation, and a decrease of approximately $441,000 in travel, facilities and other research and development costs. These decreases were partially offset by an increase of approximately $276,000 in consulting fees.

General and administrative expense for the 2016 Quarter was $4.3 million compared to $4.7 million for the 2015 Quarter. The decrease of approximately $400,000 from the 2015 Quarter to the 2016 Quarter primarily resulted from approximate decreases in stock-based compensation expense of $734,000 and $148,000 in personnel related costs. These decreases were offset by an increase of approximately $411,000 in consulting and professional fees.

As of March 31, 2016, Verastem had cash, cash equivalents and investments of $99.5 million compared to $110.3 million as of December 31, 2015. Verastem used $10.8 million for operating activities during the 2016 Quarter settling one-time compensation payments, severance payments and paying down accounts payable and accruals.
The number of outstanding common shares as of March 31, 2016, was 36,992,418.

Financial Guidance
Based on current operating plans, we expect to have sufficient cash, cash equivalents and short-term investments to fund our research and development programs and operations into 2018.

About Focal Adhesion Kinase
Focal Adhesion Kinase (FAK) is a non-receptor tyrosine kinase encoded by the PTK-2 gene that is involved in cellular adhesion and, in cancer, metastatic capability. VS-6063 (defactinib) and VS-4718 are orally available compounds that are potent inhibitors of FAK. VS-6063 and VS-4718 utilize a multi-faceted approach to treat cancer by reducing cancer stem cells, enhancing anti-tumor immunity, and modulating the local tumor microenvironment. VS-6063 and VS-4718 are currently being studied in multiple clinical trials for their ability to improve patient survival.

About VS-5584
VS-5584 is an orally available compound that has demonstrated potent and highly selective activity against class 1 PI3K enzymes and dual inhibitory actions against mTORC1 and mTORC2. In preclinical studies, VS-5584 has been shown to reduce the percentage of cancer stem cells and induce tumor regression in chemotherapy-resistant models. Verastem is currently conducting a dose escalation trial of VS-5584 in patients with advanced solid tumors.