On November 9, 2016 ZIOPHARM Oncology, Inc. (Nasdaq:ZIOP), a biopharmaceutical company focused on new immunotherapies, reported financial results for the third quarter ended September 30, 2016, and provided an update on the Company’s recent activities (Press release, Ziopharm, NOV 9, 2016, View Source [SID1234516793]).

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"ZIOPHARM continues to advance a broad portfolio of immuno-oncology programs, including our gene therapy platform, and our chimeric antigen receptor, T-cell receptor, and natural killer adoptive cell-based therapies," said Laurence Cooper, M.D., Ph.D., Chief Executive Officer of ZIOPHARM Oncology. "These programs ensure that ZIOPHARM participates across the spectrum of cell-based therapies, with technologies spanning non-viral and viral T-cell gene transfer, cytokines, and controlled expression of biologics after infusion. What is particularly exciting about our progress is that most of these technologies will be in clinical testing in 2017, moving us toward realization of these transformative ideas including individualized therapies targeting neoantigens and continued shortening of cell manufacturing to infuse T cells after gene transfer. These ideas will allow us to leapfrog current technologies and address some of the most important challenges in cancer treatment today."

Francois Lebel, M.D., Chief Medical Officer of ZIOPHARM Oncology added: "In the near-term, we look forward to presenting updated results at the Society for Neuro-Oncology Annual Meeting next week from our Phase 1, multi-center study of Ad-RTS-hIL-12 + veledimex in patients with brain cancer. To date, intracranial administration of Ad-RTS-hIL-12 + veledimex has demonstrated a favorable safety profile, with a survival benefit compared to historical control that provides a strong rational for moving to a phase 2/3 trial."

Corporate and 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.

Updated Clinical Data from Phase 1 Study of Ad-RTS-hIL-12 + Veledimex in High-Grade Gliomas to be presented at Society of Neuro-Oncology (SNO) Annual Meeting. ZIOPHARM will present updated data from its Phase 1, multi-center study of Ad-RTS-hIL-12 + veledimex in patients with recurrent high-grade gliomas at the upcoming 21st Annual SNO Scientific Meeting being held November 17-20, 2016 in Scottsdale, Arizona. Subjects with relapsed high-grade gliomas undergoing re-resection were intra-tumorally injected once with Ad-RTS-hIL-12 followed by oral doses of veledimex to activate production (transcription) of IL-12. The Company previously showed that the measurement of veledimex in serum and in the brain tumor correlates with production of IL-12 and activation of IFN-gamma, demonstrating not only that this oral drug can be used to start and stop cytokine production, but the generation of IL-12 is proportional to the dosing of veledimex. These data will be updated for recipients taking veledimex at 20 mg/day, 30 mg/day and 40 mg/day. The Company previously reported 6-month overall survival in the study at 100%. Twelve month survival data will be reported at SNO.

The presentation, entitled "Phase 1 study of intra-tumoral viral delivery of Ad-RTS-hIL-12 + oral veledimex is well tolerated and suggests survival benefit in recurrent high grade glioma" will be presented on Friday, November 18, 2016. The Company will host a conference call to discuss these data on Thursday, November 17, 2016 at 8:00 am ET.

Upcoming Pre-Clinical Data of Ad-RTS-mIL-12 + Veledimex as Therapy for Pediatric Glioma to be presented at Society of Neuro-Oncology Annual Meeting. ZIOPHARM will present data on the ability of the RTS gene switch to control mouse IL-12 production to treat glioma in the pontine region. These data are based on a single injection of Ad-RTS-mIL-12 and oral administration of veledimex and serve as a basis to advance our viral therapy in 2017 for the investigational treatment of pediatric brain tumors, including diffuse intrinsic pontine glioma.

Presented Data Demonstrating Activation of Anti-Tumor Immune Response Using Ad-RTS-hIL-12 in Patients with Advanced Breast Cancer. In October, ZIOPHARM announced the presentation of preliminary data from the Company’s Phase 1b/2 study of Ad-RTS-hIL-12 + veledimex following standard chemotherapy for the treatment of patients with locally advanced or metastatic breast cancer at the European Society for Medical Oncology (ESMO) (Free ESMO Whitepaper) 2016 Congress in Copenhagen, Denmark. Results show that Ad-RTS-hIL-12 + seven days of veledimex consistently elicited production of IL-12 which in turn produced IFN-gamma. It was notable that the intra-tumoral influx of CD8+ T cells and IFN-gamma were present six weeks after completion of veledimex consistent with the ability of Ad-RTS-hIL-12 to favorably impact the tumor environment over the long term. In two patients, Ad-RTS-hIL-12 + veledimex provided a meaningful chemotherapy holiday, with durable responses for 18 and 35 weeks.
Adoptive Cell Therapies

ZIOPHARM is developing various immuno-oncology programs, including chimeric antigen receptor T cell (CAR-T), T-cell receptor (TCR), T cell (TCR-T), and natural killer (NK) adoptive cell-based therapies. These programs are being advanced in collaboration with Intrexon Corporation (NYSE: XON), MD Anderson Cancer Center, and Merck Serono (CAR-T only).

Results from Four Studies of Adoptive Cell-based Therapeutic Programs to be Presented at the 2016 American Society of Hematology (ASH) (Free ASH Whitepaper) Annual Meeting. In November, ZIOPHARM announced that four abstracts highlighting data from the Company’s adoptive cell-based therapeutic programs have been accepted for presentation at the 58th American Society of Hematology (ASH) (Free ASH Whitepaper) Annual Meeting and Exposition. The meeting will be held December 3-6, 2016 in San Diego. The research, conducted at the MD Anderson Cancer Center and Intrexon, demonstrates, among other results, that T cells can be quickly produced with the Sleeping Beauty system and that this non-viral approach to gene therapy can be harnessed to generate CAR and TCR expressing effector cells.

Announced Plans for Phase I Clinical Trial with CD33 CAR-T Cell Therapy; Supporting Preclinical Results to be Presented at ASH (Free ASH Whitepaper) 58th Annual Meeting & Exposition. In July, following a review by the Recombinant DNA Advisory Committee, ZIOPHARM announced plans for a Phase I adoptive cellular therapy clinical trial utilizing autologous T cells transduced with lentivirus to express a CD33-specific CAR in patients with relapsed or refractory acute myeloid leukemia (AML). Preclinical studies, including in vitro data, demonstrated that lentiviral-transduced CAR-T cells targeting CD33 exhibited specific killing activity for CD33+ AML cells and a proof-of-concept study utilizing an in vivo mouse model for AML, showed that these CAR-T cells were able to eliminate disease and significantly enhance survival as compared to control groups. These positive preclinical results indicate biological activity and are suggestive of potential therapeutic effect for the treatment of AML. The Company recently announced that associated data will be presented at the 58th ASH (Free ASH Whitepaper) Annual Meeting.

Announced Publication of Data from First-In-Human Trials using Non-Viral Sleeping Beauty System to Express CD19-Specific CAR in T cells in Journal of Clinical Investigation. In August, ZIOPHARM announced the publication of data highlighting the benefits of using the non-viral Sleeping Beauty (SB) system to genetically modify T cells to express a CAR for use against CD19-expressing leukemias and lymphomas. The article, titled "Phase I trials using Sleeping Beauty to generate CD19-specific CAR T cells," was published in the Journal of Clinical Investigation (doi:10.1172/JCI86721), and is available online here.

The paper describes results for 26 patients with multiply relapsed B-lineage acute lymphoblastic leukemia (ALL, n=17) or B-cell non-Hodgkin lymphoma, (NHL, n=9) who were enrolled in two investigator-initiated clinical trials at the University of Texas MD Anderson Cancer Center infused with Sleeping Beauty-modified T cells after autologous (n=7) or allogeneic (n=19) hematopoietic stem-cell transplantation (HSCT). Although the primary objective of these trials was not to establish efficacy, the recipients’ outcomes are encouraging, with apparent doubling of survivals compared to historical controls which is attributed to the persistence of the infused T cells. Additionally, by infusing a CD19-specific CAR-T to target minimal residual disease after autologous and allogeneic HSCT, the approach may improve tolerability by avoiding cytokine release syndrome.
Milestones

Intra-tumoral IL-12 RheoSwitch programs:
Clinical data from Phase 1 of Ad-RTS-hIL-12 + veledimex for GBM to be presented at SNO 2016
Initiate Phase 2/3 clinical trial for GBM in 2017
Clinical update presented at the 2016 American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) Annual Meeting for Phase 1 study of GBM
Pre-clinical data presented at the American Society of Gene and Cell Therapy (ASGCT) (Free ASGCT Whitepaper) 2016 for combining with immune checkpoint inhibitor
Initiate combination study of Ad-RTS-hIL-12 + veledimex with checkpoint inhibitor therapy (PD-1) during the first half of 2017
Pre-clinical data for Ad-RTS-mIL-12 + veledimex to support pediatric brain tumors to be presented at SNO 2016
Initiate Phase 1 study in the treatment of brain tumors in children during the first half of 2017
Update on Phase 1/2 study in Breast Cancer with standard of care presented at the 2016 ASCO (Free ASCO Whitepaper) meeting
Clinical update presented at the 2016 ESMO (Free ESMO Whitepaper) meeting for Phase 1/2 Breast Cancer study
CAR-T programs:
Continuation of CD19 CAR+ T clinical study in 2016
Initiate a CD33 specific CAR+ T clinical study for relapsed or refractory AML in the first half of 2017
Preclinical data on CD33 to be presented at ASH (Free ASH Whitepaper) 2016
Preclinical data presented at ASGCT (Free ASGCT Whitepaper) 2016 and ASH (Free ASH Whitepaper) 2016 for shortening the time of ex vivo manufacture of SB-modified T cells
Initiate CAR+ T-cell preclinical studies for other hematological malignancies and solid tumors in 2016
TCR-T programs
Initiate TCR-modified T-cell preclinical studies in 2016
Preclinical data to be presented at ASH (Free ASH Whitepaper) 2016
NK cell programs
Initiate a Phase 1 study of off-the-shelf NK cells for AML in 2017
GvHD programs
Initiate preclinical studies in 2016
SNO 21st Annual Scientific Meeting Conference Call and Slide Webcast

ZIOPHARM will host a conference call and webcast slide presentation Thursday, November 17, 2016, at 8:00 am ET to discuss updated data from the Company’s Phase 1 study of Ad-RTS-hIL-12 + veledimex in high-grade glioma. The call can be accessed by dialing (844) 309-0618 (U.S. and Canada) or (661) 378-9465 (international). The passcode for the conference call is 11110235. To access the slides and live audio webcast, or the subsequent archived recording, visit the "Investors & Media" section of the ZIOPHARM website at www.ziopharm.com. The webcast will be recorded and available for replay on the Company’s website for two (2) weeks.

Third-Quarter 2016 Financial Results

Net loss applicable to common shareholders for the third quarter of 2016 was $14.5 million, or $(0.11) per share, compared to a net loss of $18.2 million, or $(0.14) per share, for the third quarter of 2015. The decrease in net loss for the three months ended September 30, 2016 is primarily due to a one-time charge of $10.0 million for in process research and development with Intrexon for GvHD programs incurred in September 2015. This decrease was offset by a $2.0 million increase in expenses related to the gene therapy and cell therapy programs, decreased revenue of $0.3 million, increased general and administrative costs of $0.4 million and income attributable to preferred stockholders of $3.6 million.

Research and development expenses were $9.0 million for the third quarter of 2016 compared to $17.0 million for the third quarter of 2015. The decrease in research and development expenses for the three months ended September 30, 2016 is primarily due to a one-time charge of $10.0 million for in process research and development with Intrexon for GvHD programs incurred in September 2015. This decrease was offset by a $2.0 million increase in expenses related to the gene therapy and cell therapy programs.

General and administrative expenses were $3.5 million for the third quarter of 2016 compared to $3.1 million for the third quarter of 2015. The increase for the three months ended September 30, 2016 was primarily due to increased employee related costs.
The Company ended the quarter with cash and cash equivalents of approximately $94.7 million, which the Company believes will be sufficient to fund its currently planned activities into the fourth quarter of 2017.

On November 8, 2016 Aeterna Zentaris Inc. (NASDAQ: AEZS) (TSX: AEZ) (the "Company"), a specialty biopharmaceutical company engaged in developing and commercializing novel treatments in oncology and endocrinology, reported financial and operating results for the third quarter ended September 30, 2016 (Filing, Q3, AEterna Zentaris, 2016, NOV 8, 2016, View Source [SID1234516618]).

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Commenting on recent key developments, David A. Dodd, President and Chief Executive Officer of the Company, stated, "On September 30, 2016, we had unrestricted cash and cash equivalents of approximately $21.1 million. After the end of Q3, we concluded a financing transaction that secured our financial condition on the eve of our completion of two pivotal Phase 3 trials. We raised $7.56 million of gross proceeds from the sale of Common Shares, Pre-funded Warrants and Warrants in a registered direct offering on November 1, 2016. Also between September 14, 2016 and October 14, 2016, we raised approximately $2.3 million of gross proceeds from the sale of 580,912 Common Shares pursuant to our ATM program. Since October 14, 2016, our ATM program has not been utilized. Therefore, we believe we have the funds necessary to complete our two pivotal clinical trials, to report top-line results on both and to file a New Drug Application for Macrilen in the first half of 2017, if the results of the trial warrant doing so. While we will need to raise additional funds before we are able to bring a product to market, we expect that reporting favorable top-line results from one or both of our clinical trials will permit us to do so on favorable terms."

Regarding developments with respect to Zoptrex (zoptarelin doxorubicin), the Company’s lead oncology compound, Mr. Dodd stated, "After quarter-end, we concluded the fourth out-license of Zoptrex, our investigational compound that links a synthetic peptide carrier to doxorubicin as a New Chemical Entity (NCE). Specialised Therapeutics Asia Pty Ltd, a leading specialty pharmaceutical company based in Australia, licensed the product for commercialization in Australia and New Zealand. We received an up-front payment for the rights to Zoptrex and we will receive additional milestone payments and royalties if commercialization of the potential product proceeds. Furthermore, we obtained further validation of the market’s interest in Zoptrex. We expect to release top-line results for our pivotal Phase 3 trial of Zoptrex in Q1 of 2017 and if the results of the trial warrant doing so, to file a new drug application for Zoptrex in 2017."

Mr. Dodd continued his commentary with an update on the development of Macrilen (macimorelin), "We are pleased to announce that we recently completed recruitment in our confirmatory Phase 3 study of Macrilen for the evaluation of adult growth hormone deficiency. As a result, we are very confident that the study of Macrilen will be concluded and that we will report top-line results in early 2017. If our expectations for completion of the confirmatory Phase 3 study are realized and if the top-line results indicate that the product attained the primary endpoint of the Phase 3 study, we expect to file an NDA for Macrilen in the first half of 2017. Since the regulatory review period for the Macrilen confirmatory study is six months, we could begin commercializing the product late in 2017."

Third Quarter 2016 Financial Highlights
R&D costs were $4.5 million and $11.9 million for the three and nine months ended September 30, 2016, respectively, compared to $4.1 million and $13.0 million for the same periods in 2015. The increase in R&D costs for the three months ended September 30, 2016, as compared to the same periods in 2015, is mainly attributable to higher comparative third-party costs. During 2015, we initiated the new confirmatory Phase 3 clinical trial of Macrilen. The first patient recruitment was achieved in the fourth quarter of 2015 and we completed the patient recruitment in the fourth quarter of 2016. The decrease in R&D costs for the nine months ended September 30, 2016, as compared to the same periods in 2015, is mainly attributable to lower comparative third-party costs. Third-party costs attributable to Zoptrex decreased considerably during the nine months ended September 30, 2016, as compared to the same period in 2015, mainly due to the fact that dosing of patients in the ZoptEC trial was completed in February 2016. This is consistent with our expectations as we are approaching the end of the clinical trials. The overall decrease for the nine-month period is also explained by lower employee compensation and benefits costs as well as lower other costs. A substantial portion of this decrease is due to the realization of cost savings in connection with our ongoing efforts to streamline our R&D activities and to increase our commercial operations and flexibility by reducing our R&D staff, which was started in 2014.

General and administrative ("G&A") expenses were $1.6 million and $5.4 million for the three and nine months ended September 30, 2016, respectively, as compared to $1.9 million and $7.4 million for the same periods in 2015. The decrease in our G&A costs for the three months ended September 30, 2016, as compared to the same period in 2015, is mainly due to the realization of cost savings in connection with our corporate restructuring, which was announced in the fourth quarter of 2015. The comparative decrease for the nine-month period is also partially explained by the realization of costs saving in connection with our corporate restructuring although mainly attributable to the recording, in the prior year period, of certain transaction costs allocated to warrants in connection with the completion of an offering in March 2015.

Selling expenses were $1.8 million and $5.2 million for the three and nine months ended September 30, 2016, respectively, as compared to $1.7 million and $5.1 million for the same periods in 2015. The selling expenses for the three and nine months ended September 30, 2016 and 2015 represent mainly the costs of our contracted sales force related to the co-promotion activities as well as our internal sales management team.

Net loss for the three and nine months ended September 30, 2016 was $6.1 million and $16.7 million, or $0.61 and $1.68 per basic and diluted share, as compared to a net loss of $15.3 million and $40.1 million, or $6.66 and $29.12 per basic and diluted share, for the same periods in 2015. The decrease in net loss for the three months ended September 30, 2016, as compared to the same period in 2015, is due largely to higher comparative net finance income. The decrease in net loss for the nine months ended September 30, 2016, as compared to the same period in 2015, is due largely to lower operating expenses and higher comparative net finance income. The movements in net finance income (costs) primarily relate to the change in fair value of warrant liability.

Cash and cash equivalents were approximately $21.1 million as at September 30, 2016, compared to approximately $26.2 million as at June 30, 2016.

On November 8, 2016 Neuralstem, Inc. (Nasdaq:CUR), a biopharmaceutical company focused on the development of central nervous system therapies based on its neural stem cell technology, reported its financial results and provided business and clinical updates for the three and nine month periods ended September 30, 2016 (Filing, Q3, Neuralstem, 2016, NOV 8, 2016, View Source [SID1234516658]).

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"This is an exciting time for Neuralstem, as we successfully continue to execute the new operational and clinical development strategy that was implemented in the beginning of the year," commented Rich Daly, Chief Executive Officer. "The recent announcement of the $20 million strategic investment from Tianjin Pharmaceutical Holdings Co., Ltd. provides credibility for our technology and a healthy financial runway through 2017. Furthermore, we reached 50% enrollment for our NSI-189 Phase 2 study in major depressive disorder ahead of schedule, maintaining expected data results in the second half of 2017."

Recent Business and Clinical Highlights

In May 2016, we enrolled the first subject in our NSI-189 Phase 2 clinical trial for the treatment of major depressive disorder (MDD).

In June 2016, we announced new NSI-189 preclinical data showing enhancement of mouse long term potentiation (LTP), an in vitro biomarker of memory by NSI-189 in a concentration-dependent and time-dependent manner. We believe that this study not only suggests the cognition enhancing potential of NSI-189, but also contributes toward the understanding of its mechanism of action.

In September 2016, we entered into a definitive agreement with Tianjin Pharmaceutical Holdings Co., Ltd. for a private placement of common stock and convertible preferred stock for gross proceeds of $20 million. This agreement is expected to close in the fourth quarter of 2016.

In September 2016, we achieved 50% enrollment in our Phase 2 clinical trial evaluating NSI-189 for the treatment of major depressive disorder (MDD).

In September 2016, we presented preclinical data which showed that NSI-189 was effective in the prevention and reversal of diabetic neuropathies in Type 1 and Type 2 diabetic mouse models.

In October 2016, we presented preclinical data which showed NSI-189’s ability to ameliorate radiation-induced cognitive impairment and to protect hippocampal neurogenesis in a mouse model of brain injury due to radiation therapy of brain cancers.
Results of Operations for the Third Quarter 2016

Research and Development expenses increased approximately $198,000 or 6% for the three months ended September 30, 2016 compared to the comparable period of 2015. This was primarily attributable to increased spending on clinical trials associated with our on-going Phase 2 MDD study, partially offset by salary and benefits saving associated with our reduction-in-force in May and reduced manufacturing expenses.

General and Administrative expenses decreased approximately $478,000 or 26% for the three months ended September 30, 2016 compared to the comparable period of 2015. This was primarily due to a reduction in salaries, benefits and consulting expenses as a result of our May 2016 reduction-in-force.

Other expenses, net totaled approximately $303,000 and $440,000 for the three months ended September 30, 2016 and 2015, respectively. Other expense, net in 2016 consisted of approximately $538,000 of losses related to the fair value adjustment of our derivative instruments and $240,000 of interest expense primarily related to our long-term debt, partially offset by a gain of approximately $459,000 related to our entering into a reimbursement agreement with a former executive officer.

Other expenses, net in 2015 consisted primarily of approximately $464,000 of interest expense principally related to our long-term debt partially offset by approximately $24,000 in interest income.

Results of Operations for the Nine Months Ended September 30, 2016

Research and Development expenses decreased approximately $758,000 or 8% for the nine months ended September 30, 2016 compared to the comparable period of 2015. This was primarily attributable to a decrease in manufacturing costs associated with producing clinical supplies of NSI-189 partially offset by an increase in pre-clinical and clinical trial expenses related to the initiation of our Phase 2 MDD study.

General and Administrative expenses increased approximately $937,000 or 19% for the nine months ended September 30, 2016 compared to the comparable period of 2015. This was primarily due to a severance accrual and increased non-cash stock based compensation resulting from the accelerated vesting of options, both related to the resignation of our former Chief Executive Officer coupled with non-cash stock based compensation expense resulting from grants to our new Chief Executive Officer which were partially offset by a decrease in our employee bonus expense.

Other expenses, net totaled approximately $694,000 and $1,334,000 for the nine months ended September 30, 2016 and 2015, respectively. Other expense, net in 2016 consisted of approximately $949,000 of interest expense primarily related to our long-term debt and $464,000 of fees related to the issuance of our derivative instruments, partially offset by a gain of approximately $459,000 related to our entering into a reimbursement agreement with a former executive officer of the Company and $219,000 of gain related to the change in the fair value adjustment of our derivative instruments.

Other expenses, net in the nine months ended September 30, 2015 consisted primarily of approximately $1,377,000 of interest expense principally related to our long-term debt partially offset by approximately $54,000 in interest income.

Neuralstem, Inc.

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss

Three Months Ended September 30, Nine Months Ended September 30,
2016 2015 2016 2015

Revenues $ 2,500 $ 2,500 $ 7,500 $ 7,917

Operating expenses:
Research and development expenses 3,589,793 3,392,086 9,130,012 9,887,750
General and administrative expenses 1,329,712 1,807,934 5,862,374 4,925,389
Total operating expenses 4,919,505 5,200,020 14,992,386 14,813,139
Operating loss (4,917,005 ) (5,197,520 ) (14,984,886 ) (14,805,222 )

Other income (expense):
Interest income 17,293 24,149 41,862 53,802
Interest expense (240,462 ) (464,197 ) (949,375 ) (1,377,004 )
Change in fair value of derivative instruments (538,261 ) – 219,014 –
Gain on related party settlement 458,608 – 458,608 –
Fees related to issuance of derivative instrument and other expenses (456 ) – (463,798 ) (10,326 )
Total other income (expense) (303,278 ) (440,048 ) (693,689 ) (1,333,528 )

Net loss $ (5,220,283 ) $ (5,637,568 ) $ (15,678,575 ) $ (16,138,750 )

Net loss per share – basic and diluted $ (0.05 ) $ (0.06 ) $ (0.15 ) $ (0.18 )

Weighted average common shares outstanding – basic and diluted 114,855,581 91,569,826 104,248,993 90,532,073

Comprehensive loss:
Net loss $ (5,220,283 ) $ (5,637,568 ) $ (15,678,575 ) $ (16,138,750 )
Foreign currency translation adjustment 21 (2,275 ) 1,516 (2,280 )
Comprehensive loss $ (5,220,262 ) $ (5,639,843 ) $ (15,677,059 ) $ (16,141,030 )

Neuralstem, Inc.

Unaudited Condensed Consolidated Balance Sheets

September 30,
2016 December 31,
2015

ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 5,676,129 $ 4,716,533
Short-term investments – 7,517,453
Trade and other receivables 12,685 37,316
Current portion of related party receivable, net of discount 51,733 –
Prepaid expenses 946,943 1,159,782
Total current assets 6,687,490 13,431,084

Property and equipment, net 315,543 343,200
Patents, net 984,125 1,103,467
Related party receivable, net of discount and current portion 413,466 –
Other assets 49,984 71,797
Total assets $ 8,450,608 $ 14,949,548

LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 2,484,335 $ 1,455,826
Accrued bonuses – 161,362
Current portion of long-term debt, net of fees and discount 4,829,428 4,545,180
Other current liabilities 538,350 263,104
Total current liabilities 7,852,113 6,425,472

Long-term debt, net of fees, discount and current portion – 3,382,654
Derivative instruments 4,363,156 –
Other long-term liabilities 20,290 174,144
Total liabilities 12,235,559 9,982,270

STOCKHOLDERS’ (DEFICIT) EQUITY
Preferred stock, 7,000,000 shares authorized, zero shares issued and outstanding – –
Common stock, $0.01 par value; 300 million shares authorized, 114,823,460 and 92,005,705 shares outstanding in 2016 and 2015, respectively 1,148,235 920,057
Additional paid-in capital 182,699,484 176,002,832
Accumulated other comprehensive income 4,587 3,071
Accumulated deficit (187,637,257 ) (171,958,682 )
Total stockholders’ (deficit) equity (3,784,951 ) 4,967,278
Total liabilities and stockholders’ (deficit) equity $ 8,450,608 $ 14,949,548

On November 8, 2016 Endo International plc (NASDAQ: ENDP) (TSX: ENL) reported third quarter 2016 financial results, including:
Revenues of $884 million including the addition of sales from its 2015 acquisition of Par Pharmaceutical, a 19 percent increase compared to third quarter 2015 revenues of $746 million(Press release, Endo, NOV 8, 2016, View Source;p=RssLanding&cat=news&id=2220454 [SID1234516401]).

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Reported net loss from continuing operations of $191 million compared to third quarter 2015 reported net loss from continuing operations of $804 million.

Reported diluted loss per share from continuing operations of $0.86 compared to third quarter 2015 reported diluted loss per share from continuing operations of $3.84.

Adjusted net income from continuing operations of $226 million, a 5 percent increase compared to third quarter 2015 adjusted net income from continuing operations of $214 million.1

Adjusted diluted EPS from continuing operations of $1.01 compared to third quarter 2015 adjusted diluted EPS from continuing operations of $1.02.1

"During the third quarter 2016, Endo further sharpened its focus on operational execution. We have continued to deliver results across all of our businesses that are on-track or ahead of Company expectations for the quarter. Today we are reaffirming our full year 2016 revenue and adjusted diluted EPS financial guidance," said Paul Campanelli, President and CEO of Endo. "This is an important time for Endo. The leadership team is working closely and collaboratively to build on our strengths and develop a go-forward strategy that best positions the Company to improve the lives of the patients and customers we serve."
FINANCIAL PERFORMANCE

(in thousands, except per share amounts)

Three Months Ended
September 30,

Nine Months Ended
September 30,

2016

2015

Change

2016

2015

Change
Total Revenues
$
884,335

$
745,727

19
%

$
2,768,761

$
2,195,021

26
%
Reported Income (Loss) from
Continuing Operations
$
(191,496)

$
(803,706)

(76)
%

$
109,553

$
(744,108)

NM
Reported Diluted Weighted Average
Shares
222,767

209,274

6
%

223,060

188,085

19
%
Reported Diluted Income (Loss) per
Share from Continuing Operations
$
(0.86)

$
(3.84)

(78)
%

$
0.49

$
(3.96)

NM
Adjusted Income from Continuing
Operations
$
225,519

$
214,110
1

5
%

$
658,591

$
625,805
1

5
%
Adjusted Diluted Weighted Average
Shares
223,139

210,787

6
%

223,060

192,144

16
%
Adjusted Diluted EPS from
Continuing Operations
$
1.01

$
1.02
1

(1)
%

$
2.95

$
3.26
1

(10)
%

(1) Refer to footnote 12 and 14 in the Reconciliation of GAAP and Non-GAAP Financial Measures tables for three and nine months ended September 30, 2015, respectively, for further discussion.
CONSOLIDATED RESULTS
Total revenues increased by 19 percent to $884 million in third quarter 2016 compared to the same period in 2015, primarily attributable to revenues related to the September 2015 Par acquisition. GAAP net loss from continuing operations in third quarter 2016 decreased to $191 million compared to a GAAP net loss from continuing operations of $804 million during the same period in 2015, primarily attributable to the amount of goodwill and intangible asset impairment charges recorded during the third quarter 2015. GAAP net loss per share from continuing operations for the three months ended September 30, 2016 was $0.86, compared to a GAAP net loss from continuing operations of $3.84 in third quarter 2015.
Adjusted net income from continuing operations for third quarter 2016 increased by 5 percent to $226 million compared to third quarter 2015, driven primarily by the contribution of Par, offset partially by an increase in interest expense. Adjusted net income per share from continuing operations for the three months ended September 30, 2016 decreased 1 percent to $1.01 compared to third quarter 2015.
U.S. BRANDED PHARMACEUTICALS
During third quarter 2016, the U.S. Branded Pharmaceuticals business unit continued to focus on supporting demand growth for XIAFLEX in both the Dupuytren’s contracture and Peyronie’s disease indications and the BELBUCA launch continues to progress.
Third quarter 2016 U.S. Branded Pharmaceuticals results include:
Revenues of $280 million, an 8 percent decrease compared to third quarter 2015; this decrease was primarily attributable to a generic entrant for Voltaren Gel in March 2016 and volume contraction across our established pain products.
Net sales of XIAFLEX increased 19 percent compared to third quarter 2015; this increase reflects high single-digit demand growth for the product and expected inventory build in the quarter.
U.S. GENERIC PHARMACEUTICALS
During third quarter 2016, the U.S. Generic Pharmaceuticals business unit continued to execute on its sales and marketing, research and development (R&D), and manufacturing plans for the year.
Third quarter and recent 2016 U.S. Generic Pharmaceuticals results include:
Revenues of $534 million, a 45 percent increase compared to third quarter 2015; this increase was primarily attributable to growth from the addition of sales by Par.
Generics Base business revenues declined approximately 20 percent sequentially compared to the second quarter 2016, due to deepening consortium pricing pressures and additional competitive entrants and product discontinuations as well as discrete factors, including destocking and shifts in purchase timing due to market conditions. The sequential decline would have been approximately 15 percent without these discrete factors and this deeper decline may continue into 2017.
On November 1, 2016, the Company launched the generic form of SEROQUEL XR, for which it has first-to-file status and 180 days of marketing exclusivity.
INTERNATIONAL PHARMACEUTICALS
During third quarter 2016, the International Pharmaceuticals business unit continued to focus on expanding adjusted margins for its emerging markets businesses, while in-licensing new products and managing the expected loss of exclusivity for certain products at Paladin.
Third quarter 2016 International Pharmaceuticals results include:
Revenues of $71 million, a 3 percent decrease compared to third quarter 2015.
Paladin revenues of $28 million, a 10 percent increase compared to third quarter 2015, due primarily to solid performance across the base business, the Canadian launch of Nucynta and the continuing management of the expected loss of exclusivity for two products.
Emerging market revenues from Litha and Somar of $38 million, a 4 percent decrease compared to third quarter 2015, driven primarily by a decrease in Litha revenues as it manages its recent divestiture of non-core assets and integrates its new portfolio of products and pipeline programs acquired from Aspen.
2016 Financial Guidance
For the full twelve months ended December 31, 2016, at current exchange rates, Endo is reaffirming its full year revenue and adjusted diluted EPS financial guidance. The Company estimates:
Total revenues to be between $3.87 billion and $4.03 billion;
Diluted GAAP EPS from continuing operations is now expected to be between $0.98 and $1.28; and
Adjusted diluted EPS from continuing operations to be between $4.50 and $4.80.
The Company’s 2016 financial guidance is based on the following assumptions:
Adjusted gross margin of approximately 60 percent;
Adjusted operating expenses as a percentage of revenues to be approximately 22.5 percent;
Adjusted interest expense of approximately $450 million;
Adjusted effective tax rate of approximately zero to 2 percent; and
Adjusted diluted EPS from continuing operations assumes full year adjusted diluted shares outstanding of approximately 223 million shares.
Balance Sheet, Liquidity and Other Updates
As of September 30, 2016, the Company had $561.6 million in unrestricted cash; net debt of approximately $7.7 billion and a net debt to adjusted EBITDA ratio of 4.9.
Third quarter 2016 cash used in operating activities was $111.3 million, primarily attributable to the funding of mesh payments, offset partially by improved cash collections.
During third quarter 2016, the Company recorded impairment charges of $93.5 million primarily related to unfavorable formulary changes and market conditions impacting its Sumavel DosePro product.

On November 8, 2016 OncoSec Medical Incorporated ("OncoSec") (NASDAQ: ONCS), a company developing DNA-based intratumoral cancer immunotherapies, reported that new clinical data are being presented from a Phase II Investigator Sponsored Trial led by the University of California, San Francisco (UCSF) (Press release, OncoSec Medical, NOV 8, 2016, View Source [SID1234516470]). This single-arm, open-label trial assessed the combination of OncoSec’s investigational intratumoral therapy, ImmunoPulse IL-12, and Merck’s KEYTRUDA (pembrolizumab) in patients with unresectable metastatic melanoma. A predictive biomarker was used to enroll patients that have a low likelihood of response to an anti-PD1 agent alone, and the purpose of the trial is to assess whether the addition of ImmunoPulse IL-12 can increase response rates in these patients. The data will be presented at an oral poster presentation (#466) by Dr. Alain Algazi at the Society for Immunotherapy of Cancer (SITC) (Free SITC Whitepaper) ("SITC") Annual Meeting in National Harbor, MD on November 11, 2016 at 12:50 PM EST.

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In August 2016, OncoSec announced the publication of a research assay in the Journal of Clinical Investigation that might be used as a predicative biomarker in melanoma patients. The assay shows that patients with a low frequency of a certain phenotype of CD8 T cells, pre-disposes them to low response rates to PD-1 inhibitor therapy alone. The Company is using this biomarker assay to select patients considered to be PD-1 non responders for this ongoing combination study. The key endpoints of the study include: best overall response rate by the Response Evaluation Criteria in Solid Tumors (RECIST) v1.1 and immune-related Response Criteria; safety and tolerability; duration of response; 24-week landmark progression-free survival; median progression-free survival; and overall survival.

Results
Interim efficacy and safety data are available on 15 patients. In patients considered unable to respond to PD-1 we measured an overall response rate of 40% (6 /15), consisting of 4 complete responses and 2 partial responses by RECISTv1.1 criteria. Additionally, the therapy has an acceptable safety profile and was well tolerated. Analysis of tumor biopsies and blood correlated with patients’ responsiveness and demonstrated correlative immunological changes including an increased number of CD8+ tumor-infiltrating lymphocytes, tumoral RNA signatures and concordant immune phenotypes in the periphery. Investigators concluded that the combination of ImmunoPulse IL-12 with pembrolizumab in patients with an anti-PD-1 non-responsive phenotype enables an effective anti-PD-1 response.

Punit Dhillon, CEO of OncoSec, stated: "These results validate our therapeutic hypothesis for the ability of ImmunoPulse IL-12 to improve response rates in advanced melanoma. We wish to thank the investigators and patients for their continued participation in this study. We are working diligently to advance this agent towards registration-enabling studies, and we look forward to providing additional details regarding the Company’s operations and strategy at our upcoming Investor and Analyst Day on November 17, 2016."

Alain Algazi, M.D., Principal Investigator from UCSF, stated: "Although this open-label study is still ongoing and data are maturing, I am encouraged by the meaningful interim response rates that the combination of ImmunoPulse IL-12 and pembrolizumab has been able to achieve in a patient population otherwise expected to respond poorly to pembrolizumab alone. While checkpoint inhibition has conferred meaningful clinical benefit for advanced melanoma patients, there remains an urgent need to increase these agents’ efficacy through the rational combination with other immunotherapies. I look forward to the continued maturation of this data and to further reporting on the trial’s progress."

For more information about this trial, please visit: View Source;rank=3