On August 10, 2016 Argos Therapeutics, Inc. (Nasdaq:ARGS), an immuno-oncology company focused on the development and commercialization of individualized immunotherapies for the treatment of cancer based on the Arcelis technology platform, reported financial results for the second quarter ended June 30, 2016 and provided an update on the Company’s corporate and operational highlights (Press release, Argos Therapeutics, AUG 10, 2016, View Source [SID:1234514461]).

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"The second quarter saw us continue to build on the accomplishments and momentum from the first quarter," said Jeff Abbey, president and chief executive officer. "In June, our Independent Data Monitoring Committee recommended the continuation of our ADAPT Phase 3 trial of our lead product candidate, AGS-003, in metastatic renal cell carcinoma. As a result of this positive decision, we were able to close on the $29.8 million second tranche of the financing we announced in March of this year. In addition, we were pleased to successfully complete a $50.0 million follow-on offering in early August. Together, these financings have provided the capital to advance key activities as we continue on the path toward our goal of becoming a fully-integrated commercial biotechnology company."

Mr. Abbey continued, "Specifically, we are advancing our plans for the build-out and equipping of a commercial manufacturing facility and expect to finalize our arrangements for the facility during the third quarter of 2016. We will then promptly begin the build out and equipping of the facility so that we will be in a position to submit a biologic license application (BLA) as expeditiously as possible following the availability of overall survival data from the ADAPT trial, provided that the data are supportive. We also intend to expand our clinical development activities in a measured manner as we explore additional oncology indications, including the ongoing trials of AGS-003 as neodjuvant therapy in renal cell carcinoma and in non-small cell lung cancer."

"In addition to our clinical development efforts with respect to AGS-003, during July the first patient was dosed in stage 2 of our adult eradication trial of AGS-004 in the treatment of HIV, which is the first clinical trial evaluating the ‘kick and kill’ approach employing a validated HIV latency-reversing drug combined with an individualized immunotherapy. We look forward to the results of this trial, as it represents another exciting opportunity for the application of our platform technology," added Mr. Abbey. "During the quarter, we were also pleased to announce our new research agreement with Adaptive Biotechnologies, which we believe will help to more precisely analyze target-specific immune activation enabled by Arcelis administration."

"Finally, we were pleased to announce the recent appointment of Dr. Richard D. Katz as chief financial officer," continued Mr. Abbey. "As a seasoned biotechnology finance executive, Rich brings a wealth of experience that will be extremely valuable as we continue to build the company and advance towards commercialization."

Second Quarter 2016 and Recent Operational Highlights:

In June 2016, the Independent Data Monitoring Committee (IDMC) recommended the continuation of the ADAPT Phase 3 study of AGS-003 in metastatic renal cell carcinoma
In June 2016, the company closed on the $29.8 million second tranche of March 2016 Financing
In June 2016, the company was added to the Russell 2000 Index
In June 2016, the company entered into a strategic research agreement with Adaptive Biotechnologies
In July 2016, announced the first patient had been dosed in the stage 2 of the adult eradication trial of AGS-004 in the treatment of HIV
In August 2016, the company completed a $50.0 million equity financing
Selected Second Quarter 2016 Financial Results

Net loss for the three months ended June 30, 2016 was $12.6 million, or $0.48 per share, compared to a net loss of $19.6 million, or $0.95 per share, for the same period in 2015. Net loss for the six months ended June 30, 2016 was $25.4 million, or $1.04 per share, compared to a net loss of $37.2 million, or $1.84 per share, for the same period in 2015.

Revenue for the three months ended June 30, 2016 totaled $0.5 million compared to $0.1 million for the same period in 2015. Revenue for the six months ended June 30, 2016 totaled $0.6 million compared to $0.3 million for the same period in 2015.

Research and development expense for the three months ended June 30, 2016 totaled $9.2 million compared to $16.1 million for the same period in 2015. Research and development expense for the six months ended June 30, 2016 totaled $18.7 million compared to $30.9 million for the same period in 2015.

General and administrative expense for the three months ended June 30, 2016 totaled $3.4 million compared to $2.9 million for the same period in 2015. General and administrative expense for the six months ended June 30, 2016 totaled $6.4 million compared to $5.3 million for the same period in 2015.

As of June 30, 2016, Argos’ cash, cash equivalents and short-term investments totaled $34.8 million compared to $7.2 million as of December 31, 2015.

Conference Call and Webcast Details

Argos executive management will host a conference call beginning at 4:30 p.m. Eastern Time today to discuss these results and to answer questions.

To participate by telephone, please dial (855) 433-0930 (Domestic) or (484) 756-4271 (International). The conference ID number is 60556076. A live and archived audio webcast can be accessed through the Investors section of the Company’s website at www.argostherapeutics.com. The archived webcast will remain available on the Company’s website for twelve (12) months following the call.

About the Arcelis Technology Platform
Arcelis is a precision immunotherapy technology that captures both mutated and variant antigens that are specific to each patient’s individual disease. It is designed to overcome immunosuppression by producing a specifically targeted, durable memory T-cell response without adjuvants that may be associated with toxicity. The technology is potentially applicable to the treatment of a wide range of different cancers and infectious diseases, and is designed to overcome many of the manufacturing and commercialization challenges that have impeded other personalized immunotherapies. The Arcelis process uses only a small disease sample or biopsy as the source of disease-specific antigens, and the patient’s own dendritic cells, which are optimized from cells collected by a single leukapheresis procedure. The proprietary process uses RNA isolated from the patient’s disease sample to program dendritic cells to target disease-specific antigens. These activated, antigen-loaded dendritic cells are then formulated with the patient’s plasma, and administered via intradermal injection as an individualized immunotherapy.

On August 9, 2016 Ohr Pharmaceutical, Inc. (Nasdaq:OHRP), an ophthalmology research and development company, reported results for its third quarter ended June 30, 2016 (Press release, Ohr Pharmaceutical, AUG 9, 2016, View Source [SID:1234514559]).

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"The start of the Phase 3 registration program for Squalamine during the quarter marked a significant milestone in our overall development program for our lead drug candidate," said Jason Slakter, MD, Chief Executive Officer of Ohr. "There remains a significant need for new treatment options that can enhance visual acuity gains in wet AMD and provide a non-invasive treatment option. We believe that Squalamine, when administered as part of a combination therapy, meets these needs and has the potential to set a new standard of care. We look forward to an exciting second half of calendar 2016."

Third Quarter Highlights

Commenced enrollment in the Phase 3 clinical development program to investigate Squalamine lactate ophthalmic solution, 0.2% ("Squalamine", also known as OHR-102) as a treatment to improve visual acuity for patients with wet AMD.
The Phase 3 program includes two clinical trials designed as double-masked, placebo-controlled, multicenter, international studies of Squalamine administered topically twice a day in patients with newly diagnosed wet AMD, in combination with Lucentis injections.
The primary endpoint in both studies is a measurement of visual acuity gain at nine months, which is the most clinically meaningful endpoint for wet AMD patients. Subjects will be followed to two years for safety.
Appointed David M. Brown, MD to serve as the chair of the Steering Committee for the Phase 3 clinical program of Squalamine in wet-AMD.
Dr. Brown is Clinical Professor of Ophthalmology at Baylor College of Medicine, vice-chair for research at the Blanton Eye Institute, Houston Methodist Hospital, and partner at Retina Consultants of Houston.
Completed an in vivo study demonstrating sustained pharmacological anti-angiogenic activity of OHR3031, an angiogenesis inhibitor
Single intravitreal injection of microparticles containing OHR3031 produced clinically meaningful and statistically significant efficacy six weeks after dose administration in a rabbit model of laser-induced CNV.
Dose response was observed in the reduction of average CNV lesion areas with OHR3031 compared to vehicle treatment, with the highest dose exhibiting a statistically significant effect at Week 6.
Magnitude of difference in average CNV lesion size for the high dose of OHR-3031 compared to vehicle treatment at 6 weeks was comparable to that seen at 2 weeks with a currently approved anti-VEGF agent conducted in a previous study.
OHR3031 was developed using SKS sustained release technology
Presented two posters on the Squalamine Phase 2 IMPACT study and OHR3031 in vivo studies at the Association for Research in Vision and Ophthalmology (ARVO) Conference in May.
Financial Results for Third Quarter ended June 30, 2016

For the third quarter ended June 30, 2016, the Company reported a net loss of approximately $7.7 million, or ($0.24) per share, compared to a net loss of approximately $3.3 million, or ($0.11) per share in the same period of 2015.
For the third quarter ended June 30, 2016, total operating expenses were approximately $7.6 million, consisting of approximately $1.7 million in general and administrative expenses, $5.6 million in research and development expenses, and $0.3 million in depreciation and amortization. This compares to total operating expenses in the same period of 2015 of approximately $3.3 million, consisting of $1.6 million in general and administrative expenses, $1.5 million in research and development expenses, and $0.3 million in depreciation and amortization.
At June 30, 2016, the Company had cash and cash equivalents of approximately $17.6 million. This compares to cash and equivalents of approximately $28.7 million at September 30, 2015.
Financial Results for the Nine-Months ended March 31, 2016

For the nine months ended June 30, 2016, the Company reported a net loss of approximately $19.1 million, or ($0.61) per share, compared to a net loss of approximately $11.3 million, or ($0.41) per share in the same period of 2015.
For the nine months ended June 30, 2016, total operating expenses were approximately $17.8 million, consisting of $5.8 million in general and administrative expenses, $11.8 million of research and development expenses, and $0.9 million in depreciation and amortization. This compares to total operating expenses of $14.3 million in the same period of 2015, comprised of approximately $5.7 million in general and administrative expenses, $7.4 million in research and development expenses, and $0.9 million in depreciation and amortization.

On August 9, 2016 Aptose Biosciences Inc. (NASDAQ:APTO) (TSX:APS), a clinical-stage company developing new therapeutics and molecular diagnostics that target the underlying mechanisms of cancer, reported unaudited financial results for the three months ended June 30, 2016 and reported on corporate developments. Unless specified otherwise, all amounts are in Canadian dollars (Press release, Aptose Biosciences, AUG 9, 2016, View Source;p=RssLanding&cat=news&id=2194360 [SID:1234514415]).

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Net loss for the three months ended June 30, 2016 was $5.6 million ($0.46 per share) compared with $3.4 million ($0.28 per share) during the three months ended June 30, 2015. Total cash and cash equivalents at June 30, 2016 were $12.6 million.
"During the second quarter, we continued our disciplined approach to developing a stable formulation of APTO-253 and evaluating multiple formulations in order to select the best method for delivery of the product to patients," said William G. Rice, Ph.D., Chairman, President and Chief Executive Officer. "We have selected a methodology to create a stable formulation of APTO-253 and are performing numerous mock infusion studies and extensive analyses on that formulation. In parallel we continue to research alternate formulations to ensure we leave no stone unturned. We look forward to reporting back to you regarding the mock infusion studies, discussions with the FDA, and potential re-initiation of our Phase 1B clinical trial of APTO-253."

Corporate Highlights
During the quarter, Aptose worked with a formulation contract manufacturing organization (CMO) to select a new methodology to manufacture APTO-253 drug product with greatly improved solubility and stability characteristics, including an ability to remain stable and soluble at room temperature. Aptose performed mock infusion studies at multiple dose levels, and no filter clogging events were observed. Multiple contract research organizations are now performing the mock infusion studies and conducting extensive analyses on the optimized formulation of APTO-253.

Aptose’s clinical team has prepared additional clinical sites for the potential re-initiation of the Phase 1b trial of APTO-253, expanding the number of sites, at major cancer research and treatment centers in the U.S., to as many as 15.

Aptose has modified the clinical trial design for the Phase 1b study, pending approval from the FDA. Under the proposed modification, Arm B of the dose-escalation phase of the study, initially designed to enroll approximately fifteen (15) patients with multiple myeloma and lymphoma, will be discontinued. Arm A of the study, focused on patients with acute leukemias and myelodysplastic syndromes (MDS) remains unchanged. The rationale underlying this modification is to focus all resources on the patient population most likely to benefit from APTO-253.

In June, Aptose and CrystalGenomics, Inc. announced an exclusive global option and license agreement focused on the development of CG‘806, a highly potent, non-covalent small molecule anti-cancer agent. This multi-kinase inhibitor exhibits a picomolar IC50 toward the FMS-like tyrosine kinase 3 with the Internal Tandem Duplication (FLT3-ITD) and potency against a host of mutant forms of FLT3, as well as single-digit nanomolar IC50’s against Bruton’s tyrosine kinase and its C481S mutant.

Aptose and its collaborators have submitted three abstracts for presentation at the American Society of Hematology (ASH) (Free ASH Whitepaper) Meeting, planned for December 3-6, 2016 in San Diego, CA.
Financial Results
Net loss for the three months ended June 30, 2016 was $5.6 million ($0.46 per share) compared with $3.4 million ($0.28 per share) in the same period in the prior year. Net loss for the six months ended June 30, 2016 was $10.7 million ($0.88 per share) compared with $6.9 million ($0.59 per share) during the six months ended June 30, 2015.
Aptose utilized cash of $4.6 million in operating activities in the three-month period ended June 30, 2016 compared with $4.3 million during the three months ended June 30, 2015. For the six months ended June 30, 2016, Aptose utilized cash of $9.2 million compared with $6.5 million in the six months ended June 30, 2015. The cash utilized in the three month period ended June 30, 2016 is only slightly higher than the three months ended June 30, 2015 despite a higher net loss due to cash used to reduce accounts payable and accrual balances in the prior year period. The cash utilized in the six months ended June 30, 2016 increased compared to the prior year comparable period due to an increased net loss offset by cash used to reduce accounts payable and accrual balances in the prior year period.
Research and Development
Research and development expenses totaled $3.3 million in the three months ended June 30, 2016 compared to $1.3 million during the three months ended June 30, 2015 and totaled $5.6 million for the six month period ended June 30, 2016 compared with $2.2 million in the same period in the prior year. Research and development costs consist of the following:
Components of research and development expenses:
Three months ended Six months ended
June 30, June 30, June 30, June 30,
(in thousands) 2016 2015 2016 2015

Program costs $ 1,879 $ 1,257 $ 4,126 $ 2,117
CrystalGenomics Option Fee 1,294 − 1,294 −
Stock-based compensation 109 46 165 65
Depreciation of equipment 11 5 23 10
$ 3,293 $ 1,308 $ 5,608 $ 2,192

The increase in research and development costs in the three and six months ended June 30, 2016 compared with the three and six months ended June 30, 2015 is due to the following reasons:
Costs associated with the LALS/Moffitt collaboration developing epigenetic single molecule inhibitors of multiple targets, including the BET proteins, and other kinases for which no comparable expenses existed in the prior year;
Increased research and clinical operations headcount;
Formulation and manufacturing costs associated with APTO-253 and the root cause analysis of the filter clogging identified in November 2015; and
Increased Contract Research Organization costs related to consultants and advisors as we work towards returning APTO-253 to the clinic.
During the three months ended June 30, 2016 Aptose paid US$1.0 million ($1.3 million) to CG for an option fee related to the CG’806 technology. Should the results of the planned pre-clinical studies be positive, we would choose to pay an additional US$2.0 million in cash or common shares to exercise the option and receive the commercial license prior to initiating any clinical studies. No comparable expense existed in the same period in the prior year.
Stock-based compensation costs allocated to research and development increased in the three and six months ended June 30, 2016 to reflect option grants to new employees.
General and Administrative
General and administrative expenses totaled $2.3 million in the three-month period ended June 30, 2016 compared to $2.5 million in the three months ended June 30, 2015. For the six month period ended June 30, 2016, general and administrative expenses totaled $5.0 million compared with $5.2 million in the same period in the prior year. General and administrative expenses consist of the following:
Components of general and administrative expenses:
Three months ended Six months ended
June 30, June 30, June 30, June 30,
(in thousands) 2016 2015 2016 2015

General and administrative excluding salaries $ 822 $ 1,149 $ 1,955 $ 2,178
Salaries 823 757 1,798 1,510
Stock-based compensation 677 579 1,156 1,519
Depreciation of equipment 21 19 42 26
$ 2,343 $ 2,504 $ 4,951 $ 5,233

General and administrative expenses excluding salaries, decreased in the three months ended June 30, 2016 compared with the three months ended June 30, 2015. The decrease is primarily attributable to lower legal and patent costs as well as lower regulatory and filing fees related to transactions completed in the same period in the prior year.
General and administrative expenses excluding salaries, decreased in the six months ended June 30, 2016 compared with the six months ended June 30, 2015. The decrease is the result of lower legal costs related to transactions completed in the prior year as well as costs due to the clean-up and move associated with the Toronto office and lab relocation completed in the six months ended June 30, 2015 for which comparable expenses do not exist in the current year.
Salary charges in the three and six months ended June 30, 2016 increased in comparison with the three and six months ended June 30, 2015 due to additional headcount as well as a higher average CA/US exchange rate which increased the cost of our US denominated salaries.
Stock-based compensation costs increased in the three months ended June 30, 2016 compared with the three months ended June 30, 2015 due to annual option grants at the end of March 2016 compared with June 2015 which resulted in higher amortization earlier in the year.
Stock-based compensation decreased in the six months ended June 30, 2016 compared with the six months ended June 30, 2015 due to large option grants in April, June and July 2014 which vested 50% during the first year and therefore contribute to higher stock-based compensation expense during the first twelve month period captured in the prior year period.
Finance Expense
Finance expense for the three months ended June 30, 2016 totaled $9 thousand compared with $15 thousand for the three months ended June 30, 2015. For the six months ended June 30, 2016, finance expense totaled $205 thousand compared with $35 thousand for the same period in the prior year. Finance expense includes the following items:
Three months ended Six months ended
June 30, June 30, June 30, June 30,
(in thousands) 2016 2015 2016 2015
Interest expense $ − $ 15 $ − $ 35
Foreign exchange loss 9 − 205 −
$ 9 $ 15 $ 205 $ 35

Interest expense for the three and six months ended June 30, 2015 relates to interest accrued at a rate of 10% on the remaining balance of convertible promissory notes issued in September 2013 as well as accretion expense related to the conversion feature of the notes. As the promissory notes were converted before September 2015, no interest expense was incurred in 2016.
Foreign exchange loss is the result of the fluctuation of exchange rates between US and Canadian dollars and the impact on our US dollar denominated cash balances.
Finance Income
Finance income totaled $33 thousand in the three months ended June 30, 2016 compared to $462 thousand in the three months ended June 30, 2015. For the six months ended June 30, 2016, finance income totaled $80 thousand compared with $526 thousand in the same period in the prior year. Finance income includes the following items:
Three months ended Six months ended
June 30, June 30, June 30, June 30,
(in thousands) 2016 2015 2016 2015
Interest income $ 33 $ 72 $ 80 $ 176
Foreign exchange gain − 390 − 350
$ 33 $ 462 $ 80 $ 526
Interest income represents interest earned on our cash and cash equivalent and investment balances. The foreign exchange gain incurred in the three and six months ended June 30, 2015 was the result of an increase in the value of US dollar denominated cash and cash equivalents balances during such periods due to a depreciation of the Canadian dollar compared to the US dollar.
Aptose Biosciences Inc.
Condensed Consolidated Interim Statements of Loss and
Comprehensive Loss

(unaudited)

(amounts in 000’s of Canadian Dollars except for per common share data)

Three months
ended
June 30, 2016 Three months
ended
June 30, 2015 Six months
ended
June 30, 2016 Six months
ended
June 30, 2015
REVENUE $ - $ - $ - $ -
EXPENSES
Research and development 3,293 1,308 5,608 2,192
General and administrative 2,343 2,504 4,951 5,233
Operating expenses 5,636 3,812 10,559 7,425
Finance expense 9 15 205 35
Finance income (33 ) (462 ) (80 ) (526 )
Net financing (income) expense (24 ) (447 ) 125 (491 )
Net loss and comprehensive loss for the period 5,612 3,365 10,684 6,934
Basic and diluted loss per common share $ 0.46 $ 0.28 $ 0.88 $ 0.59
Weighted average number of common shares
outstanding used in the calculation of
basic and diluted loss per common share (000’s) 12,231 11,909 12,140 11,852

On August 9, 2016 OncoMed Pharmaceuticals, Inc. (Nasdaq:OMED), a clinical-stage company developing novel anti-cancer stem cell and immuno-oncology therapeutics, reported second quarter financial results (Press release, OncoMed, AUG 9, 2016, View Source [SID:1234514562]). As of June 30, 2016, cash, cash equivalents and short-term investments totaled $171.5 million.

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"With seven OncoMed-discovered drugs in fourteen clinical trials, we enter the second half of this year following the presentation of encouraging data from across our pipeline at the AACR (Free AACR Whitepaper) and ASCO (Free ASCO Whitepaper) annual meetings," said Paul J. Hastings, Chairman and Chief Executive Officer. "In the next several months we expect to report additional Phase 1b data for vantictumab and ipafricept, our first-in-class Wnt inhibitors, as well as Phase 1 clinical data for our anti-DLL4/VEGF bispecific antibody and our first-in-class anti-RSPO3 antibody. As we approach the end of the year and enter into 2017, we look forward to significant milestones, including data from our PINNACLE and YOSEMITE randomized Phase 2 clinical trials, potential opt-ins totaling over $172 million in 2017 from our partnerships with GSK, Bayer and Celgene, and two IND filings for novel immuno-oncology agents."

Development Program Highlights

Presented data on four clinical-stage programs at the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) 2016 Annual Meeting in June
Initial Phase 1b safety and efficacy data for the company’s Wnt pathway inhibitors in combination with standard of care, vantictumab (anti-Fzd, OMP-18R5) in breast cancer and ipafricept (Fzd8-Fc, OMP-54F28) in ovarian cancer

Updated Phase 1b survival data for demcizumab (anti-DLL4, OMP-21M18) in non-small cell lung cancer (NSCLC) and for tarextumab (anti-Notch2/3, OMP-59R5) in small cell lung cancer

Completed enrollment of the dose escalation cohorts in the Phase 1b trial of demcizumab plus pembrolizumab (Keytruda)
Approximately ten patients each with second-line NSCLC, anti-PD1 refractory solid tumors or castrate-resistant prostate cancers are to be enrolled in the expansion cohorts

Presented data at the American Association for Cancer Research (AACR) (Free AACR Whitepaper) 2016 Annual Meeting in April for GITRL-Fc, anti-RSPO3 (OMP-131R10), vantictumab and demcizumab
Upcoming Milestones

Enrollment of the Phase 2 PINNACLE and YOSEMITE clinical trials expected to complete in the third quarter
Topline results from the PINNACLE study of tarextumab in small cell lung cancer expected by year-end 2016 or early 2017

Topline results from the YOSEMITE study of demcizumab in pancreatic cancer in the first-half of 2017

Presentations of Phase 1 data at upcoming medical conferences
Initial clinical data from the ongoing Phase 1b trials of vantictumab and ipafricept in combination with standard of care for the treatment of pancreatic cancer have been accepted for presentation at the European Society for Medical Oncology (ESMO) (Free ESMO Whitepaper) 2016 Congress being held October 7-11, 2016

Present first in-human data from ongoing Phase 1 clinical trials of anti-RSPO3 and the anti-DLL4/VEGF bispecific (OMP-305B83) this fall pending abstract acceptance

File an Investigational New Drug (IND) application with the U.S. Food and Drug Administration (FDA) before year-end for one of two immuno-oncology therapeutic candidates: IO#2, partnered with Celgene, or GITRL-Fc, a wholly owned asset
A second IND is expected to follow in the first half of 2017
Second Quarter 2016 Financial Results

Cash, cash equivalents and short-term investments totaled $171.5 million as of June 30, 2016, compared to $193.5 million as of March 31, 2016.

Revenues for the three months ended June 30, 2016 were $6.7 million, an increase of $2.0 million, compared to total revenue of $4.7 million for the three months ended June 30, 2015. This increase was primarily due to amortization of the $70.0 million safety milestone achieved in the fourth quarter of 2015.

Research and development (R&D) expenses were $29.7 million for the second quarter of 2016 compared with $22.0 million for the same period in 2015. Higher R&D expenditures during the second quarter 2016 were attributable to increased manufacturing and clinical costs for the Phase 2 demcizumab program, increased clinical costs for the Phase 1a/b anti-RSPO3 program, as well as IND-enabling manufacturing and toxicology costs for the IO#2 and GITRL-Fc programs.

General and administrative (G&A) expenses for the quarter ended June 30, 2016 were $4.8 million, compared to $4.3 million for the same period in 2015. Increased G&A costs during the second quarter 2016 were due to higher employee-related costs including stock-based compensation expenses.

Net loss for the second quarter 2016 was $27.7 million ($0.91 per share), compared to $21.6 million ($0.72 per share) for the same period of 2015. The change in net loss from the same quarter in 2015 was primarily due to an increase in research and development expenses.

On August 9, 2016 Athersys, Inc. (Nasdaq:ATHX) reported its financial results for the three months ended June 30, 2016 (Press release, Athersys, AUG 9, 2016, View Source [SID:1234514416]).

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Highlights of the second quarter of 2016 include:

Successful discussions with the Japanese Pharmaceuticals and Medical Devices Agency ("PMDA") on ischemic stroke study design and requirements, led by HEALIOS K.K. ("Healios") with Athersys support, laying the groundwork for study initiation later this year;
Productive discussions with U.S. Food and Drug Administration ("FDA") about the design of our planned international Phase 3 study of MultiStem treatment for ischemic stroke, and ongoing engagement with European regulators;
Inclusion of our common stock in the broad-market Russell 3000 Index as part of the Russell U.S. Indices annual reconstitution, which became effective in June 2016;
Recorded revenues of $0.6 million and net loss of $7.0 million for quarter ended June 30, 2016; and
Ended the quarter with $24.0 million in cash and cash equivalents and available-for-sale securities.
"Along with our partner, Healios, we are focused on completing the preparations and activities related to the initiation of the confirmatory clinical trial in Japan, and continue to make steady progress toward that goal. In addition, we are engaged in discussions with FDA and other regulators regarding our larger, Phase 3 international clinical trial for stroke," stated Dr. Gil Van Bokkelen, Chairman & CEO at Athersys. "We have had productive and successful engagement with the regulators, including completing an End of Phase 2 meeting with the FDA, and have advanced our operational preparations to support both studies. As we have described previously, the studies will be focused on ischemic stroke patients that have suffered meaningful disability and who can be treated within 36 hours of the event, which would represent a significant expansion of the treatment window for these patients, which is currently limited to several hours. This would overcome a key limitation of current standard of care, enable many more stroke victims to be treated, and could redefine stroke therapy as we know it. It also represents a substantial clinical and commercial opportunity.

"We believe that we could have a favorable path forward for the continued development of MultiStem for the treatment of ischemic stroke, which represents one of the greatest areas of unmet clinical need in medicine, and an urgent priority in many countries due to the growing impact of an expanding elderly population that is more susceptible to stroke," continued Dr. Van Bokkelen. "Based on discussions with the PMDA and recent precedents, we believe that a successful trial in Japan with positive results could make conditional, or even full, approval possible, utilizing Japan’s progressive regulations for the development and approval of regenerative medicine products. Moreover, our engagement so far with the FDA suggests that the data from this Japan study, together with data from our Phase 3 international study, could provide the basis for a Biologics License application ("BLA") for registration, meaning that we would have an accelerated path to commercialization in the United States, as well as potentially other regions.

"We continue to enroll our two grant-supported Phase 2 trials, in AMI and ARDS, although progress is slower than we would like," commented Dr. Van Bokkelen. "We have undertaken a number of actions to accelerate enrollment, including adding clinical sites. We believe that MultiStem cell therapy is well-suited to treat these acute conditions based on our preclinical and clinical experience to date.

"We continue to focus on other important areas, including actively exploring partnering opportunities. We also have a substantial manufacturing and process development efforts underway focused, first, on supplying our planned clinical studies, and second, on advancing our manufacturing platform and related capabilities to support eventual commercialization," concluded Dr. Van Bokkelen.

Second Quarter Results

For the three months ended June 30, 2016, total revenues were $0.6 million compared to $0.2 million in the same period in 2015, due to an increase of $0.1 million in contract revenues from royalties and a $0.3 million increase in grant revenue. Grant revenues relate to both clinical and preclinical studies.

Research and development expenses increased to $5.8 million in the 2016 second quarter from $5.3 million in the 2015 second quarter, primarily due to increased clinical and preclinical development. Our clinical and preclinical costs increased during the period as a result of our process development activities to support large-scale manufacturing, and clinical product manufacturing costs during the period, with such increases partially offset by a decrease in costs for our stroke B01-02 study that concluded this spring. General and administrative expenses were $2.0 million and $1.9 million for the three months ended June 30, 2016 and 2015, respectively.

We recognized net loss for the three months ended June 30, 2016 of $7.0 million compared to net loss of $1.0 million for the same period in 2015. The $6.0 million net variance is due primarily to a $5.7 million decrease in non-cash income from the change in the fair value of our warrant liabilities, combined with the net impact of the $0.4 million increase in revenues and the $0.7 million increase in operating expenses for the three-month period ended June 30, 2016. Cash used in operating activities was $6.5 million during the 2016 second quarter compared to $5.8 million in the 2015 second quarter. As of June 30, 2016, we had $24.0 million in cash and cash equivalents and available-for-sale securities, compared to $23.0 million at December 31, 2015.