On May 24, 2016 Transgenomic, Inc. (NASDAQ: TBIO) reported financial results for the first quarter ended March 31, 2016, and provided a business update (Press release, Transgenomic, MAY 24, 2016, View Source [SID:1234512757]).

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Business Update

During the first quarter of 2016 Transgenomic (TBIO) continued to work to realign its core activities around the commercialization of ICE COLD-PCR (ICP), an innovative technology that enables the use of DNA liquid biopsies for better, safer and less costly diagnosis and treatment of many diseases. Broader commercialization of ICP is expected to provide a foundation for expansion of the Company’s licensing and partnering strategy in order to maximize the value of this broadly enabling technology.

As part of its strategic focus on broadly commercializing ICP, TBIO is exiting lower growth legacy businesses, a process that is now largely complete. TBIO conducted a strategic review of the Patient Testing Business Unit in the first quarter of 2016 resulting in a decision to suspend testing at its CLIA laboratory in New Haven, Connecticut, and consolidate all remaining CLIA activities in the Company’s laboratory in Omaha, Nebraska. Divestiture options for these legacy Patient Testing assets are being pursued. Suspension of these Patient Testing activities and closure of the New Haven lab have significantly reduced expenses, resulting in savings of over $1 million a month.

The drive to exit legacy businesses has had major effects on the Company’s operations and financial results. The Genetic Assays and Platforms and Patient Testing businesses have been classified as discontinued operations. Information presented for current and prior quarter periods in the financial statements has been modified to reflect them as discontinued operations.

Paul Kinnon, Transgenomic President and Chief Executive Officer, commented, "We are now nearing completion of our plan to exit our low growth, unprofitable legacy businesses, thereby releasing management to focus solely on commercialization and adoption of our ICP technology. As stated in our conference call last month, we are optimistic that the foundation being developed for ICP will begin to bear fruit over the remainder of 2016. The recent release of additional compelling concordance data is an essential element in providing potential partners and customers with the validation they need to demonstrate that ICP can deliver on its promise to enable and simplify the detection of genetic alterations, which is central to implementation of personalized and precision medicine. We believe that the ICP platform has the potential to make TBIO a leader in the rapidly emerging liquid biopsy market, and we have now turned our full attention to further development of our ICE COLD-PCR technology. Having alternatives to tissue-based biopsies is expected to fundamentally change how we diagnose and treat cancer and other disorders. The terrific results from our concordance study have re-affirmed our excitement about the near and long-term potential for this broadly-enabling technology, and we look forward to continued progress in the months ahead."

First Quarter Financial Results from Continuing Operations

Net sales for the first quarter of 2016 were $0.2 million as compared with $0.7 million for the same period in 2015. The $0.5 million decrease reflects phasing of contracts in the first quarter due to client sample availability issues, a situation the Company expects to be transitory.

Gross profit was a negative $0.3 million, compared with gross profit of $0.3 million for the same period in 2015. The negative gross profit in the first quarter of 2016 is due to the lower revenues noted above coupled with a substantial one-time milestone expense associated with product commercialization. A significant portion of Cost of Goods Sold is fixed costs associated with the operation of Transgenomic’s laboratory. The Company anticipates that gross profit percentages will increase as revenues from ICP-based products and services rise.

Operating expenses were $2.0 million during the first quarter of 2016 as compared to $2.3 million in the first quarter of 2015. The $0.3 million decrease in operating expenses was due to lower professional fees in the first quarter of 2016 as compared to the same period in 2015.

The net loss from continuing operations for the first quarter of 2016 was $2.1 million or $0.10 per share, compared with a net loss of $2.3 million or $0.28 per share for the first quarter of 2015. Modified EBITDA, which is a non-GAAP measure that Transgenomic views as an appropriate and sound measure of the Company’s results, was a loss of $2.1 million for the first quarter of 2016, compared to a loss of $1.8 million for the same period in 2015. A reconciliation of Net Loss to Modified EBITDA is presented below.

Cash and cash equivalents were $0.2 million at March 31, 2016, compared with $0.4 million at December 31, 2015. As previously announced, during the first quarter of 2016, the Company completed a financing that raised approximately $2.0 million in net proceeds.

Recent Highlights

Released New Study Showing 100% Concordance between ICE COLD-PCR (ICP) Liquid Biopsies and Conventional Tissue Biopsy Results; ICP Also Identified More Tumor Mutations than Conventional Methods
The concordance study confirmed that ICP-enriched testing identified all mutations detected by standard tissue biopsy PCR. Notably, ICP also identified additional mutations missed by conventional tissue biopsy. The study confirmed that ICP’s ultra-high sensitivity enables use of plasma-based liquid biopsies for cancer mutation detection, replacing costly and invasive tissue biopsies and enabling ongoing patient monitoring.
Launched First Rapid Turnaround Breast Cancer Analysis Panel at 2016 AACR (Free AACR Whitepaper) Annual Meeting
The liquid biopsy test uses Multiplexed ICE COLD-PCR to detect actionable tumor mutations in genes relevant to treatment decisions with high sensitivity. Notably, results are available in 7-10 days, in contrast to turnaround times of up to four weeks for other testing methods.
Announced Data Presentation Confirming Utility of ICP Liquid Biopsy Technology at AACR (Free AACR Whitepaper)
Includes first systematic data confirming concordance of ICP liquid and tissue biopsy results
Launched 1st Commercially Available Assay for Ultra Low Level Detection of EGFR C797S Mutations for Lung Cancer, New MX-ICP Liquid Biopsy Tests for Detection of Colorectal and Melanoma Tumor Mutations, and New MX-ICP Panels for Liquid Biopsy Detection of RAS and PIK3CA Tumor Mutations
Launched multiple important new ICE COLD-PCR liquid biopsy cancer tests.

On May 23, 2016 Baxalta Incorporated (NYSE:BXLT) reported the preliminary results of the elections made by its stockholders as to the form of stock consideration to be received in Baxalta’s merger with Shire plc (LSE: SHP, NASDAQ: SHPG) (Press release, Baxalta, MAY 23, 2016, View Source [SID:1234512711]).

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As previously announced, upon the consummation of the merger, each outstanding Baxalta share will be converted into the right to receive:

(i) $18.00 in cash, and
(ii) either 0.1482 of a Shire American Depositary Share (a "Shire ADS"), with each Shire ADS representing three ordinary shares of Shire, or if a Baxalta stockholder elects, 0.4446 of an ordinary share of Shire.
Based on available information, the exchange agent for the election process has advised that, as of the election deadline of 5:00 p.m. Eastern Time on May 20, 2016, holders of approximately 41,803,203 Baxalta shares, or approximately 6.10% of the outstanding Baxalta shares, elected to receive ordinary shares of Shire rather than Shire ADSs.

Baxalta stockholders who made an ordinary share election will be unable to sell or otherwise transfer their shares unless the ordinary share election was properly revoked prior to the election deadline or unless the merger agreement is terminated. Baxalta stockholders who did not make an ordinary share election or who properly revoked any such election prior to the election deadline will, by default, receive Shire ADSs in the merger.

On May 23, 2016 Varian Medical Systems (NYSE: VAR) reported that The University of Texas MD Anderson Cancer Center signed an agreement to acquire six TrueBeam linear accelerators (Press release, InfiMed, MAY 23, 2016, View Source [SID:1234512712]). Scheduled for delivery over the next 24 months, the six TrueBeam systems will be added to the 24 Varian linear accelerators already treating patients at the cancer center.

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"We have been able to deliver critical cancer treatments to thousands of cancer patients as well as collaborate on strong translational research programs and clinical trial support through Varian’s technology," said Steve Hahn, chair, Division of Radiation Oncology at MD Anderson Cancer Center. "The additional TrueBeam systems will enable us to make advanced cancer care accessible to even more patients."

Varian’s TrueBeam system is an advanced medical linear accelerator capable of fast and precise image-guided radiotherapy and radiosurgery. The system is equipped with a high dose delivery rate that enables most treatments to be completed faster than was possible with earlier generations of radiotherapy technology. It incorporates numerous technical innovations that dynamically synchronize imaging, patient positioning, motion management, and dose delivery during a treatment procedure. TrueBeam has been designed to advance the treatment of lung, breast, intracranial, prostate, head and neck, and other types of cancer.

"Varian is proud of its years of working with MD Anderson," said Kolleen Kennedy, president of Varian’s Oncology Systems business. "We have worked together to improve the quality and effectiveness of cancer care for patients who come from all over the world for treatment. TrueBeam opens the door to some exciting cutting-edge treatment capabilities that will be made available to patients in coming years."

The order for the systems was booked in March during the second quarter of the company’s fiscal year 2016.

On May 23, 2016 Novocure (NASDAQ: NVCR) reported that the last patient has been enrolled in the PANOVA trial, a phase 2 pilot trial testing Tumor Treating Fields (TTFields) plus chemotherapy in 40 patients with advanced pancreatic cancer (Press release, NovoCure, MAY 23, 2016, View Source [SID:1234512714]). The final data collection date will be six months after the last patient in.

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"The first cohort of the PANOVA trial demonstrated the safety and feasibility of combining TTFields with gemcitabine in pancreatic cancer," said Dr. Marc Kueng, Senior Internist and Medical Oncologist at the Cantonal Hospital of Fribourg in Switzerland. "The combination with nab-paclitaxel has a strong scientific rationale and is compliant with the current standard of care. We are looking forward to opening a randomized-controlled study testing the efficacy of TTFields in this difficult disease."

The prospective, single-arm study includes two cohorts of 20 patients with advanced pancreatic cancer whose tumors could not be removed surgically and who had not received prior chemotherapy or radiation therapy. Novocure presented data from the first cohort of the trial at the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) 2016 Gastrointestinal Cancers Symposium in January 2016.

Data from the first cohort demonstrated the safety of the combined treatment, and also suggest improved survival and response rate among patients who received TTFields therapy with gemcitabine compared to a historical control of patients who received gemcitabine alone. PANOVA patients who received TTFields therapy plus first-line gemcitabine experienced a median progression free survival of 8.3 months compared to 3.7 months for a historical control of gemcitabine alone, and a median overall survival of 14.9 months compared to 6.7 months for a historical control. Median one-year survival was 55 percent compared to 22 percent for a historical control. Of the 19 of 20 evaluable tumors, 30 percent had partial responses compared to 7 percent with gemcitabine alone and another 30 percent had stable disease. Novocure accelerated planning for a phase 3 clinical trial in pancreatic cancer after obtaining results for the first cohort of PANOVA.

The PANOVA trial was expanded in January 2015 to include a second cohort of 20 patients testing TTFields plus gemcitabine and nab-paclitaxel. Preclinical models have demonstrated increased cancer cell sensitivity when TTFields therapy is combined with taxane-based chemotherapies, such as nab-paclitaxel.

"Our preclinical research of TTFields therapy combined with taxane-based chemotherapies demonstrated a synergistic effect," said Dr. Eilon Kirson, Chief Science Officer and Head of Research and Development at Novocure. "Given that synergy, we are optimistic about what the second cohort will show when nab-paclitaxel is added to the treatment regimen and look forward to sharing the results."

About Pancreatic Cancer

Pancreatic cancer is the fourth leading cause of cancer death in the U.S. The National Cancer Institute estimated that about 48,960 people would be diagnosed with pancreatic cancer and about 40,560 people would die from the disease in 2015. Five-year survival among pancreatic cancer patients is less than 6 percent. Tumor Treating Fields (TTFields) therapy is not approved for the treatment of pancreatic cancer by the U.S. Food and Drug Administration. The safety and effectiveness of TTFields therapy for pancreatic cancer has not been established.

On May 23, 2016 The Merck Foundation reported the launch of a new initiative, the Alliance to Advance Patient-Centered Cancer Care (the Alliance), to support programs aimed at improving timely access to patient-centered care and reduce disparities in cancer care, especially for vulnerable and underserved populations in the United States (Press release, Merck & Co, MAY 23, 2016, View Source [SID:1234512694]). Non-profit organizations in the United States are invited to apply for an Alliance grant to support the implementation of multi-faceted cancer care programs to strengthen patient-provider communications, including patient engagement and patient-centered treatment planning; enhance care coordination and integration; improve patient outcomes, and build sustainable partnerships that advance patient-centered cancer care and help reduce disparities in access to high-quality care for underserved communities.

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"Despite advances in diagnosis and treatment, access to high-quality cancer care continues to be challenging for some patients in the United States, especially those in vulnerable and underserved communities," said Dr. Julie Gerberding, executive vice president, strategic communications, global public policy and population health, Merck and chief executive officer, Merck Foundation. "We are optimistic that the learnings from the Alliance’s activities will bring forward new approaches in the delivery of cancer care that can be implemented throughout the health care system."

As part of the new initiative, the Merck Foundation and its partners will also work with the awardees, which may include public/private institutions, cancer centers, oncology medical homes and other community-based and non-governmental agencies, to evaluate the grant-supported programs and identify best practices in patient-centered care.

Interested organizations can learn more about the application process, eligibility requirements, guidance for proposed interventions, and deadlines from the Merck Foundation’s Call for Proposals on our website. Invited proposals will be evaluated by an external advisory committee based on specific criteria. Proposed programs must implement cross-cutting interventions that address multiple cancer types; integrate intervention components at different levels of the healthcare ecosystem: patient, provider/health care team, and health care system; incorporate scientific evidence-based or promising practices, and build meaningful collaborations with community partners to promote sustainable improvements in cancer care delivery and quality. The Alliance will be supported by the Merck Foundation for up to $15 million over five years. Awardees will be announced in early 2017.