(Filing, 10-Q, Seattle Genetics, JUL 30, 2015, View Source [SID:1234506783])

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On July 30, 2015 Navidea Biopharmaceuticals, Inc. (NYSE MKT: NAVB), reported financial results for the second quarter of 2015 (Press release, Navidea Biopharmaceuticals, JUL 30, 2015, View Source;p=RssLanding&cat=news&id=2072795 [SID:1234506761]). Navidea reported total revenue for the second quarter of 2015 of $2.9 million, including Lymphoseek (technetium Tc 99m tilmanocept) injection sales revenue of $2.0 million. The net loss from operations was $3.8 million and the net loss attributable to common stockholders was $9.7 million.

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"During the first half of this year we successfully undertook a strategy to transform the Company and we have been executing to that plan," commented Rick Gonzalez, Navidea’s President and CEO. "We deployed a new commercial strategy, overhauled the Lymphoseek brand plan reflective of the brand’s clinical value proposition, optimized operational efficiencies across the organization, strengthened our financial position and made progress in a cost-effective fashion to expand our development pipeline of both imaging and therapeutic programs. Today we are on a clear path, whereby our revenue growth is quickly converging with our reduced operating expenses, getting us closer to the goal of achieving cash flow breakeven in the first quarter of next year."

Specific events and milestones achieved since the beginning of the second quarter include the following:

Commercial

Achieved sequential quarter-on-quarter Lymphoseek revenue growth and continued improvement in key performance indicators;
Fully deployed a Lymphoseek-dedicated field force mid-second quarter;
Exercised pricing leverage, as per plan, resulting in a 39% Lymphoseek price increase beginning July 31st;
Reported positive Lymphoseek comparative results from an injection site pain study in breast cancer presented at the 2015 Society of Nuclear Medicine and Molecular Imaging annual meeting;

Lymphoseek Lifecycle Management

Awarded NIH grants to explore new applications of the Manocept platform for cardiovascular disease and rheumatoid arthritis (RA) totaling up to $2.0 million;

Received confirmation of continued development funding under part 2 of a previously awarded NIH grant for Lymphoseek in cervical cancer totaling $1.5 million;

Reported clinical imaging data demonstrating Tc 99m tilmanocept localizes in Kaposi’s sarcoma (KS) tumor lesions including brain lesions;

Verified Manocept CD206-targeting mechanism of action with publication in peer-reviewed Journal of Immunology providing clear clinical differentiation from other non-targeted agents and showing future potential for the delivery of therapeutics for cancer and other macrophage-dependent diseases;

Operational & Financial

Reduced cash burn by over 40% for the first half of 2015 compared to the first half of 2014;
Secured approximately $18 million in additional net capital;
Completed the divestiture of the Company’s investigational imaging agent for the detection of Parkinson’s disease;
Continued partnering/divestiture efforts for the Company’s investigational imaging agent, NAV4694, for the detection of amyloid plaques in Alzheimer’s disease;

Therapeutic & Diagnostic Development Pipeline

Reported data demonstrating that a Manocept-Doxorubicin (MT-1001) conjugate selectively targets tumor-associated macrophages and destroys the cells through an apoptotic mechanism;
Formed a research collaboration with BIND Therapeutics to engineer CD206 targeted nanoparticles using Manocept;
Reported positive Manocept proof-of-concept data demonstrating the potential for the Manocept platform as a diagnostic and therapeutic for rheumatologic conditions; and,
Received confirmation of continued NIH-grant funding for clinical trials of NAV4694 in Alzheimer’s Disease and Mild Cognitive Impairment totaling $1.7 million.

Financials

Total revenues for the quarter ended June 30, 2015 were $2.9 million compared to $1.1 million in the second quarter of last year. Second quarter 2015 product revenues recognized from the sale of Lymphoseek were $2.0 million, compared to $1.8 million in the first quarter of 2015 and $1.0 million in the second quarter of last year. During the second quarter of 2015, the Company also reported $904,000 in grant, licensing and other revenue. For the six months ended June 30, 2015, Navidea’s total revenue was $5.0 million compared to $1.8 million for the same period in 2014, an increase of 172%. The primary driver of this increase was revenues recognized from the sale and license of Lymphoseek which exceeded $4.1 million for the six months ended June 30, 2015 compared to $1.7 million for the same period last year.

Gross margins on Lymphoseek product sales grew to 83% for the second quarter of 2015 compared to 74% for the second quarter of 2014 due in part to our success in lowering our manufacturing costs coupled with our ability to sell certain previously reserved inventory.

Research and development (R&D) expenses for the second quarter of 2015 were $2.3 million, compared to $5.1 million in the second quarter of last year. R&D expenses were $6.3 million for the six months ended June 30, 2015 compared to $10.3 million in the same period of 2014. The net decreases in R&D expenses were primarily a result of decreased project costs related to the Company’s neuro assets coupled with decreased headcount costs. Selling, general and administrative (SG&A) expenses for the second quarter of 2015 were $4.0 million, compared to $4.9 million in the second quarter of last year. SG&A expenses were $9.5 million for the six months ended June 30, 2015, compared to $8.8 million for the same period in 2014 and included $765,000 and $1.4 million, respectively, in termination-related costs associated with reductions in force implemented in the impacted periods. The net increase in year-to-date SG&A expenses was due primarily to net increases in commercial headcount costs related to the addition of our internal sales force offset by decreased costs related to contracted medical science liaisons. Total operating expenses were $6.3 million for the second quarter of 2015, compared to $10.0 million in the second quarter of last year. Operating expenses were $15.8 million for the six months ended June 30, 2015, compared to $19.2 million for the same period in 2014.

Navidea’s net loss from operations for the quarter ended June 30, 2015 was $3.8 million compared to $9.2 million for the same period in 2014. For the six months ended June 30, 2015, Navidea’s net loss from operations was $11.6 million compared to a net loss from operations of $17.8 million for the same period in 2014. Navidea’s net loss attributable to common stockholders for the quarter ended June 30, 2015 was $9.7 million, or $0.06 per share, compared to $10.2 million, or $0.07 per share, for the same period in 2014. For the six months ended June 30, 2015, Navidea’s net loss attributable to common stockholders was $17.0 million, or $0.11 per share, compared to a net loss attributable to common stockholders of $22.0 million, or $0.15 per share, for the same period in 2014. Net losses attributable to common stockholders include the cash interest expense on our outstanding debt, as well as significant non-cash charges. For the six month periods ended June 30, 2015 and June 30, 2014, net loss attributable to common stockholders included $3.4 million and $2.7 million, respectively, in non-cash interest, losses on extinguishment of debt, and changes in the fair value of financial instruments.

Navidea ended the quarter with $15.8 million in cash. The Company reiterates its 2015 Lymphoseek product revenue estimate of $10 million to $12 million. The Company also expects, following completion of the partnering activities for NAV4694, that cash operating expenses on a quarterly basis will decrease to the point necessary for the Company to achieve its goals of cash flow breakeven from operations. This guidance excludes therapeutic-related research and development costs for the Manocept platform which are expected to be funded separately by Macrophage Therapeutics, Inc.

"With each passing quarter, we continue to take steps towards achieving our goal of cash flow breakeven," said Brent Larson, Navidea’s EVP and CFO. "We began this second quarter with a solid refinancing, positioning our balance sheet to support a pivotal second half of the year in which we expect to realize the impact of our new sales force on Lymphoseek’s revenue growth. This growth, coupled with continued emphasis on controlling our spending, should put us in a strong position to achieve our goals."

Commercialization

The new commercialization plan aligns our sales force to target the oncology treatment team focusing on the surgical oncologist. Initial commercial efforts are being concentrated in breast cancer, melanoma, and oral cavity head and neck cancers, where sentinel lymph node biopsies are already standard of care. The Lymphoseek clinical value proposition and its highly differentiated label provide compelling benefits to the oncology treatment team.

"We achieved our full field force deployment during the middle of the second quarter, positioning us to ramp up Lymphoseek sales according to plan in the second half of 2015," said Thomas Klima, SVP and Chief Commercial Officer. "We are on track with our key performance indicators including brand revenues, monthly procedure growth, brand awareness and message recall measurements. We are ahead of plan in the number of accounts purchasing for the first time and in our account product re-order rate. Based on the anticipated impact of the deployment of our sales force, our positive first half revenues, strong key performance indicators and a planned July 31st price increase, we remain confident in our ability to meet our 2015 sales projections."

Manocept Pipeline

Our future business will be dependent on development of the Manocept CD206 targeting platform for diagnostic and therapeutic applications. Recent Manocept presentations have reported proof-of-concept localization results in humans and early potential seen in Manocept-drug conjugate delivery resulting in apoptosis of tumor cells and associated macrophages in a KS pre-clinical study. At recent medical conferences, the company and its research collaborators reported the following data:

Results were presented in RA at EULAR 2015 European Congress of Rheumatology which highlighted the potential of CD206-targeting Manocept constructs to detect immune-mediated inflammation in RA which could be used diagnostically, to monitor therapeutic efficacy or as a potential therapeutic platform;

Data were presented at the 18th International Workshop on Kaposi’s Sarcoma Herpesvirus and Related Agents demonstrating the imaging and therapeutic potential for our CD206 targeting platform, Manocept, including inducing apoptosis in KS tumor tissue and tumor associated macrophages.

"We continue to build growing evidence supporting the potential of immunotherapeutic applications for Manocept based on these encouraging results," said Frederick O. Cope, Ph.D., SVP and Chief Scientific Officer of Navidea. "Our plans are to continue studies that will validate Lymphoseek’s ability to identify sites of disease and, through our Macrophage Therapeutics subsidiary, evaluate the modulation and/or destruction of macrophages and seek lucrative partnering and collaboration agreements to develop promising therapeutic applications."

(Filing, 10-Q, Sunesis, JUL 30, 2015, View Source [SID:1234506784])

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On July 30, 2015 Teva Pharmaceutical Industries Ltd. (NYSE:TEVA) reported results for the quarter ended June 30, 2015 (Press release, Teva, JUL 30, 2015, View Source;p=RssLanding&cat=news&id=2072734 [SID:1234506762]).
"Teva’s second quarter solid performance was driven by important contributions from across our integrated portfolio of high-quality generic and specialty medicines," stated Erez Vigodman, Teva’s President and CEO. "We continue to deliver on our promise to take bold steps forward, both organic and inorganic, to position Teva for sustainable, profitable growth, execute on our strategic and operational initiatives, improve our profitability, strengthen our cash flow generation, and build the most competitive operating network in the industry."

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Mr. Vigodman continued, "Based on our strong performance in the first half of the year, we are raising our guidance for 2015. We expect to complete the acquisition of Allergan’s global generics business in the first quarter of 2016, which will further diversify our business and support the continued creation of shareholder value. We remain excited about our future as we continue the positive momentum to transform our Company."

Second Quarter 2015 Results
Revenues in the second quarter of 2015 amounted to $5.0 billion, down 2% compared to the second quarter of 2014. Excluding the impact of foreign exchange fluctuations and the sale of our U.S. OTC plants in July 2014, revenues grew 6%.

Exchange rate differences (net of profits from certain hedging transactions) between the second quarter of 2015 and the second quarter of 2014 decreased our revenues by $341 million and reduced our non-GAAP operating income by $4 million but increased our GAAP operating income by $17 million.

Non-GAAP gross profit was $3.1 billion in the second quarter of 2015, up 7% from the second quarter of 2014. Non-GAAP gross profit margin was 62.8% in the second quarter of 2015, compared to 58.1% in the second quarter of 2014. GAAP gross profit was $2.9 billion in the second quarter of 2015, compared to $2.7 billion in the second quarter of 2014. GAAP gross profit margin was 58.4% in the quarter, compared to 52.7% in the second quarter of 2014.

Research and Development (R&D) expenditures (excluding equity compensation expenses and purchase of in-process R&D) in the second quarter of 2015 amounted to $357 million, compared to $340 million in the second quarter of 2014. R&D expenses were 7.2% of revenues in the quarter, compared to 6.7% in the second quarter of 2014. R&D expenses related to our generic medicines segment amounted to $134 million, up 7% compared to $125 million in the second quarter of 2014. In local currency terms, expenses increased 12%. The increase is the result of additional development activities for the U.S. market. R&D expenses related to our specialty medicines segment amounted to $220 million, an increase of 4% compared to $211 million in the second quarter of 2014. In local currency terms, expenses increased 6%, mainly as a result of investments in the assets acquired via the Labrys and Auspex deals.

Selling and Marketing (S&M) expenditures (excluding amortization of purchased intangible assets and equity compensation expenses) amounted to $846 million, or 17.0% of revenues, in the second quarter of 2015, compared to $911 million, or 18.1% of revenues, in the second quarter of 2014. S&M expenses related to our generic medicines segment amounted to $335 million, a decrease of 14% compared to $388 million in the second quarter of 2014. In local currency terms, S&M expenses decreased 1%. S&M expenses related to our specialty medicines segment amounted to $457 million, a decrease of 5% compared to $481 million in the second quarter of 2014. In local currency terms, S&M expenses increased 1%.

General and Administrative (G&A) expenditures (excluding equity compensation expenses) amounted to $307 million in the second quarter of 2015, or 6.2% of revenues, compared to $291 million and 5.8% in the second quarter of 2014.
Quarterly non-GAAP operating income was $1.6 billion, an increase of 16% compared to the second quarter of 2014. Quarterly GAAP operating income was $662 million in the second quarter of 2015, a decrease of 28% compared to $925 million in the second quarter of 2014.

Non-GAAP financial expenses amounted to $41 million in the second quarter of 2015, compared to $76 million in the second quarter of 2014. GAAP financial expenses for the second quarter of 2015 amounted to $41 million, compared to $78 million in the second quarter of 2014. The decrease was mainly due to finance income from derivative financial instruments as well as a lower cost of debt, partially offset by the impact of higher debt.

The provision for non-GAAP tax for the second quarter of 2015 amounted to $345 million on pre-tax non-GAAP income of $1.6 billion, for a quarterly tax rate of 22%. The provision for non-GAAP tax in the second quarter of 2014 was $245 million on pre-tax non-GAAP income of $1.3 billion, for a quarterly tax rate of 19%. GAAP tax expenses for the second quarter of 2015 amounted to $88 million or 14% on pre-tax income of $621 million. In the second quarter of 2014, the provision for taxes amounted to$102 million or 12% on pre-tax income of $847 million.

Non-GAAP net income and non-GAAP diluted EPS were $1.2 billion and $1.43, respectively, in the second quarter of 2015, up 15% and 14%, respectively, compared to the second quarter of 2014. GAAP net income and GAAP diluted EPS were $539 million and $0.63, respectively, in the second quarter of 2015, compared to $748 million and $0.87, respectively, in the second quarter of 2014.

Non-GAAP information: Net non-GAAP adjustments in the second quarter of 2015 amounted to $691 million. Non-GAAP net income and non-GAAP EPS for the quarter were adjusted to exclude the following items:

Legal settlements and loss contingencies of $384 million mainly related to the booking of an additional reserve for the settlement of the modafinil antitrust litigation;

Amortization of purchased intangible assets totaling $214 million, of which $206 million is included in cost of goods sold and the remaining $8 million in selling and marketing expenses;

Acquisition expenses of $132 million;

Impairment of long-lived assets of $81 million;

Restructuring expenses and other non-GAAP items of $54 million;

Equity compensation of $31 million;

Purchase of research and development in process of $24 million;

Contingent consideration of $18 million;

Costs related to regulatory actions taken in facilities of $10 million; and
Related tax benefit of $257 million.

Teva believes that excluding such items facilitates investors’ understanding of its business. See the attached tables for a reconciliation of the U.S. GAAP results to the adjusted non-GAAP figures.

Cash flow from operations generated during the second quarter of 2015 amounted to $1.5 billion, compared to $1.1 billion in the second quarter of 2014, an increase of 41%. The increase was mainly due to a decrease in accounts receivable net of SR&A and lower payments related to legal settlements in the second quarter of 2015. Free cash flow, excluding net capital expenditures, amounted to $1.3 billion compared to $0.9 in the second quarter of 2014, an increase of 51%.

Cash and investments at June 30, 2015 decreased to $2.8 billion, compared to $3.8 billion at March 31, 2015, mainly due to the Auspex acquisition payment and a repayment of $1 billion of senior notes, partially offset by short term borrowing and free cash flow generated during the quarter.

For the second quarter of 2015, the weighted average outstanding shares for the fully diluted earnings per share calculation was 859 million on both a GAAP and non-GAAP basis. At June 30, 2015, the outstanding shares for calculating Teva’s market capitalization were approximately 850 million.

Shareholders’ equity was $23.1 billion at June 30, 2015, compared to $22.7 billion at March 31, 2015. The increase primarily reflects $0.5 billion of GAAP net income offset by $0.3 billion of dividend payments.

Segment Results for the Second Quarter 2015

Generic Medicines Revenues

Generic medicines revenues in the second quarter of 2015 amounted to $2.5 billion, a decrease of 2% compared to the second quarter of 2014. In local currency terms, revenues increased 6%.

Generic revenues consisted of:
U.S. revenues of $1.3 billion, an increase of 24% compared to the second quarter of 2014. The increase resulted mainly from the launch of aripiprazole tablets (the generic equivalent of Abilify) this quarter, and from sales of other products that were not sold in the second quarter of 2014, the most significant of which was esomeprazole (the generic equivalent of Nexium). This was partially offset by declines in sales of other products, the most significant of which was capecitabine (the generic equivalent of Xeloda).
European revenues of $665 million, a decrease of 18%, or 3% in local currency terms, compared to the second quarter of 2014.

The decrease in local currency terms resulted mainly from our strategy of pursuing profitable and sustainable business in the region, with decreases in Spain, the U.K. and France offset by increases in Italy and Germany. This strategy has continued to lead to notable improvements in the profitability of our European generics business.

ROW revenues of $475 million, a decrease of 25%, or of 13% in local currency terms, compared to the second quarter of 2014. The decrease in local currency terms was mainly due to lower revenues in Canada and Japan, which were partially offset by higher revenues in Latin America and Russia.

API sales to third parties of $183 million (which is included in the market revenues above), an increase of 1%, compared to the second quarter of 2014.

Generic medicines revenues comprised 50% of our total revenues in the quarter, as in the second quarter of 2014.

Generic Medicines Gross Profit

Gross profit from our generic medicines segment in the second quarter of 2015 amounted to $1.2 billion, an increase of 14% compared to the second quarter of 2014. Gross profit margin for our generic medicines segment in the second quarter of 2015 increased to 48.6%, from 41.7% in the second quarter of 2014. The higher gross profit was mainly a result of the launches of arpiprazole (the generic equivalent of Abilify) and esomeprazole (the generic equivalent of Nexium) in the United States partially offset by lower gross profit in our ROW markets.

Generic Medicines Profit

Our generic medicines segment generated profit of $729 million in the second quarter of 2015, an increase of 36% compared to the second quarter of 2014. Generic medicines profitability as a percentage of generic medicines revenues was 29.6% in the second quarter of 2015, up from 21.3% in the second quarter of 2014. The increase was primarily due to higher gross profit coupled with a reduction in S&M expenses, partially offset by higher R&D expenses.

Specialty Medicines Revenues
Specialty medicines revenues in the second quarter of 2015 amounted to $2.1 billion, an increase of 3% compared to the second quarter of 2014. In local currency terms, revenues increased 8%. U.S. specialty medicines revenues amounted to $1.6 billion, up 14% compared to the second quarter of 2014. European specialty medicines revenues amounted to $378 million, a decrease of 25%, or of 8% in local currency terms, compared to the second quarter of 2014. ROW specialty revenues amounted to $90 million, down 16%, or 2% in local currency terms, compared to the second quarter of 2014.

Specialty medicines revenues comprised 42% of our total revenues in the quarter, compared to 40% in the second quarter of 2014.
The increase in specialty medicines revenues compared to the second quarter of 2014 was primarily due to higher sales of Copaxone in the U.S.

Global sales of Copaxone (20 mg/mL and 40 mg/mL), the leading multiple sclerosis therapy in the U.S. and globally, amounted to $1.1 billion, an increase of 12% compared to the second quarter of 2014.

In the United States, sales of Copaxone amounted to $870 million, an increase of 31% compared to the second quarter of 2014.
The increase was mainly due to higher sales volume in the second quarter of 2015 as well as price increases in August 2014 and January 2015. In addition, our U.S. Copaxone revenues in the second quarter of 2014 were relatively low following the launch of Copaxone 40 mg/mL in January 2014. At the end of the second quarter of 2015, according to June 2015 IMS data, our U.S. market shares for the Copaxone products in terms of new and total prescriptions were 23.8% and 31.2%, respectively. Copaxone 40 mg/mL accounted for 68.5% of total Copaxone prescriptions in the U.S.

In June 2015, Sandoz launched its once daily generic version of Copaxone 20 mg/mL, Glatopa, in the United States.

Sales outside the United States amounted to $184 million, a decrease of 34%, or of 20% in local currency terms, compared to the second quarter of 2014. The decrease in local currency terms stemmed from lower volumes sold in Europe due to increased competition, and from the effect of macro-economic conditions in certain Latin American countries.

Our global Azilect revenues amounted to $105 million, an increase of 2% compared to the second quarter of 2014. In local currency terms, sales increased 15%. The increase in local currency terms was mainly due to higher sales to Lundbeck, our marketing partner in certain territories. Global in-market sales decreased 10%.

Sales of our respiratory products amounted to $253 million, down 2% compared to the second quarter of 2014. ProAir revenues in the quarter amounted to $128 million, down 4% compared to the second quarter of 2014, as negative price fluctuations were partially offset by volume growth. In April 2015, the FDA approved ProAir RespiClick (albuterol sulfate) inhalation powder, a breath-actuated, multi-dose, dry-powder, short-acting beta-agonist inhaler. It was launched in the U.S. in May 2015.

QVAR global revenues amounted to $83 million in the second quarter of 2015, up 12% compared to the second quarter of 2014, due to volume growth.

Sales of our oncology products amounted to amounted to $293 million in the second quarter of 2015, up 3% from the second quarter of 2014. Sales of Treanda amounted to $179 million, down 1% compared to the second quarter of 2014.

Specialty Medicines Gross Profit
Gross profit from our specialty medicines segment amounted to $1.8 billion, up $40 million compared to the second quarter of 2014. Gross profit margin for our specialty medicines segment in the second quarter of 2015 was 86.5%, compared to 87.2% in the second quarter of 2014.

Specialty Medicines Profit
Our specialty medicines segment profit amounted to $1.1 billion in the second quarter of 2015, up 5% compared to the second quarter of 2014, mainly due to higher revenues and lower S&M expenses, which were partially offset by higher R&D expenses.
Specialty medicines profit as a percentage of segment revenues was 54.1% in the second quarter of 2015, up from 53.1% in the second quarter of 2014.

Beginning in 2015, expenses related to our equity compensation are excluded from our franchise results. The data presented have been conformed to reflect the exclusion of equity compensation expenses for all periods.

Other Activities
Our OTC revenues related to PGT amounted to $210 million, a decrease of 7% compared to $226 million in the second quarter of 2014. In local currency terms, revenues increased 10%. The increase in local currency terms was mainly due to higher sales in Latin America. PGT’s in-market sales amounted to $325 million in the second quarter of 2015, a decrease of $25 million compared to the second quarter of 2014. This decrease was due to foreign currency exchange fluctuations.

Our revenues from OTC products in the second quarter of 2015 amounted to $210 million, compared to $274 million in the second quarter of 2014. The decline was mainly due to the sale of our U.S. OTC plants, previously purchased from P&G, back to P&G in July 2014.

Other revenues amounted to $200 million in the second quarter of 2015, mostly from the distribution of third-party products in Israel and Hungary, compared to revenues of $229 million, in the second quarter of 2014.

Updated 2015 Financial Outlook
We are updating our 2015 full-year financial outlook. See detailed guidance below:

Dividend
The Board of Directors, at its meeting on July 26, 2015, declared a cash dividend for the second quarter of 2015 of $0.34.

The record date will be August 20, 2015, and the payment date will be September 3, 2015. Tax will be withheld at a rate of 15%.

On July 30, 2015 Threshold Pharmaceuticals, Inc. (NASDAQ: THLD) reported financial results for the second quarter 2015 (Press release, Threshold Pharmaceuticals, JUL 30, 2015, View Source [SID:1234506763]). Revenue for the second quarter ended June 30, 2015 was $3.7 million. The operating loss for the second quarter ended June 30, 2015 was $8.9 million. The net loss for the second quarter ended June 30, 2015 was $8.3 million, which included the operating loss of $8.9 million and non-cash income of $0.6 million related to the changes in fair value of the Company’s outstanding warrants and was classified as other income (expense). As of June 30, 2015, Threshold had $67.0 million in cash, cash equivalents and marketable securities, with no debt outstanding.

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"We are pleased with progress being made in the development programs for both of our product candidates, evofosfamide and tarloxotinib," said Barry Selick, Ph.D., Chief Executive Officer of Threshold. "We expect to announce top-line results from the two pivotal Phase 3 clinical trials of evofosfamide in patients with advanced soft tissue sarcoma and in patients with advanced pancreatic cancer (MAESTRO) around the end of this year. We are initiating two proof-of-concept Phase 2 clinical trials of tarloxotinib this year in patients whom we believe may benefit from treatment with our proprietary and novel hypoxia-activated EGFR tyrosine kinase inhibitor."

Second Quarter 2015 Financial and Operational Results

Revenue of $3.7 million was recognized for both the second quarter of 2015 and 2014. Revenue is related to the amortization of the aggregate of $110 million in upfront and milestone payments earned in 2013 and 2012 from Threshold’s collaboration with Merck KGaA, Darmstadt, Germany. The revenue from the upfront and milestone payments earned under the agreement is being amortized over the relevant performance period, rather than being immediately recognized when the upfront and milestone payments are earned or received.

The net loss for the second quarter of 2015 was $8.3 million compared to a net loss of $0.8 million for the second quarter of 2014. Included in the net loss for the second quarter of 2015 was an operating loss of $8.9 million and non-cash income of $0.6 million compared to an operating loss of $7.5 million and non-cash income of $6.7 million included in the net loss for the second quarter of 2014. The non-cash income is related to the change in fair value of the Company’s outstanding warrants and was classified as other income (expense).

Research and development expenses were $10.1 million for the second quarter of 2015 compared to $8.7 million for the second quarter of 2014. The increase in research and development expenses was due primarily to a $1.2 million increase in clinical development expenses, net of reimbursement from Merck KGaA, Darmstadt, Germany related to their 70% share of total development expenses for evofosfamide (previously known as TH-302).

General and administrative expenses were $2.5 million for both the second quarter of 2015 and 2014.

Non-cash stock-based compensation expense included in total operating expenses was $1.9 million for the second quarter of 2015 versus $1.5 million for the second quarter of 2014. The increase in stock-based compensation expense was due to the amortization of a greater number of options with higher fair values.

As of June 30, 2015 and March 31, 2015, Threshold had $67.0 million and $83.1 million in cash, cash equivalents and marketable securities, respectively. The net decrease of $16.1 million in cash, cash equivalents and marketable securities during the second quarter of 2015 was primarily due to the Company’s operating cash requirements for the second quarter of 2015.

Second Quarter and Recent Key Achievements

Evofosfamide

In May, Threshold announced that the U.S. Food and Drug Administration (FDA) granted Fast Track designation to the Company’s partner Merck KGaA, Darmstadt, Germany, for the development of evofosfamide (TH-302), administered in combination with gemcitabine, for the treatment of previously untreated patients with locally advanced unresectable or metastatic pancreatic cancer. This is the second Fast Track designation for evofosfamide, the first having been granted to Threshold in November 2014 for the development of evofosfamide in combination with doxorubicin for the treatment of patients with locally advanced or metastatic soft tissue sarcoma.

Also in May, Threshold presented data from the Phase 2 component of an ongoing Phase 1/2 trial of evofosfamide in combination with the proteasome inhibitor Velcade (bortezomib) and low-dose dexamethasone ("EBorD") in patients with relapsed or refractory multiple myeloma at the annual meeting of the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) (Abstract 8579). A clinical benefit rate of 29% (one complete response, two partial responses, and one minimal response) was observed in 4 of 14 patients treated at the recommended Phase 2 dose of evofosfamide (340 mg/m2) in EBorD. These patients had already received multiple types of treatment prior to enrollment including a median of 3 prior bortezomib-containing regimens. The most common adverse events were thrombocytopenia and anemia and no patients discontinued treatment due to an adverse event.

In April, preclinical data evaluating the potential use of evofosfamide in a variety of tumor types were presented by Threshold and Merck KGaA, Darmstadt, Germany, at the annual meeting of the American Association for Cancer Research (AACR) (Free AACR Whitepaper) (Abstract Nos. 2424, 2603, 3867, 5271, and 5333).

Tarloxotinib bromide* ("tarloxotinib")

In April, data on tarloxotinib (TH-4000; previously referred to as PR610 or Hypoxin), Threshold’s proprietary, hypoxia-activated irreversible epidermal growth factor receptor (EGFR) tyrosine kinase inhibitor, were presented in collaboration with the molecule’s co-inventors from The University of Auckland at the American Association for Cancer Research (AACR) (Free AACR Whitepaper) annual meeting (Abstract 5358). The Company believes the data presented support its planned Phase 2 proof-of-concept clinical trials of tarloxotinib in patients with EGFR-positive, T790M-negative NSCLC after conventional EGFR-TKI therapy has failed as well as in patients with recurrent or metastatic squamous cell carcinoma of the head and neck or skin.

Clinical Development Outlook for Threshold- and Merck KGaA, Darmstadt, Germany-Sponsored Trials of Evofosfamide

The development plan for evofosfamide is designed to investigate its safety and efficacy across a broad range of solid tumors and hematologic malignancies. Evofosfamide is being developed in therapeutic areas supported by preclinical and clinical data and where there is high unmet need for new anti-cancer agents. To date, evofosfamide has been evaluated in more than 1,500 patients with cancer. Threshold anticipates the following development activities related to Threshold- and Merck KGaA, Darmstadt, Germany-sponsored clinical trials for evofosfamide in 2015:

Continue to efficiently execute the two Phase 3 clinical trials of evofosfamide to allow for timely data analyses and to prepare for the potential submission of marketing applications, assuming the data from the trials are supportive;
Continue enrollment in the Phase 2 clinical trial of evofosfamide designed to support registration for the treatment of patients with non-squamous non-small cell lung cancer;
Complete enrollment in the Phase 2 clinical trial of evofosfamide in combination with bortezomib (Velcade) and low-dose dexamethasone in patients with relapsed or refractory multiple myeloma; and
Threshold is in the process of closing the Phase 2 clinical trial of evofosfamide in patients with melanoma due to a slower than anticipated enrollment rate in light of the evolving treatment landscape and new therapeutic options for patients with melanoma since the trial began.

About Evofosfamide

Evofosfamide is an investigational hypoxia-activated prodrug that is designed to be preferentially activated under severe tumor hypoxic conditions, a feature of many solid tumors. Areas of low oxygen levels (hypoxia) in solid tumors are due to insufficient blood vessel supply. Similarly, the bone marrow of patients with hematological malignancies has also been shown, in some cases, to be severely hypoxic.

Evofosfamide is currently in two Phase 3 trials, both of which are fully recruited: one in combination with doxorubicin versus doxorubicin alone in patients with locally advanced unresectable or metastatic soft tissue sarcoma (STS) (the TH-CR-406 trial), and the other in combination with gemcitabine versus gemcitabine and placebo in patients with locally advanced unresectable or metastatic pancreatic cancer (the MAESTRO trial). Both Phase 3 trials are being conducted under Special Protocol Assessment (SPA) agreements with the FDA. The FDA and the European Commission have granted evofosfamide Orphan Drug designation for the treatment of STS and pancreatic cancer. The FDA has also granted Fast Track designation for evofosfamide for both STS and pancreatic cancer. Evofosfamide is also being investigated in a Phase 2 trial designed to support registration for the treatment of non-squamous non-small cell lung cancer, and in earlier-stage clinical trials of other solid tumors and hematological malignancies.

Threshold has a global license and co-development agreement for evofosfamide with Merck KGaA, Darmstadt, Germany, which includes an option for Threshold to co-commercialize in the U.S.

About Tarloxotinib Bromide

Tarloxotinib bromide, or "tarloxotinib", (TH-4000) is a hypoxia-activated, covalent (irreversible) epidermal growth factor receptor tyrosine kinase inhibitor (EGFR-TKI) that targets the activating mutations of EGFR (L858R and Del19) and wild-type, or "normal", EGFR. Tarloxotinib is designed as a prodrug to selectively release its EGFR-TKI upon encountering severe tumor hypoxic conditions, a feature of many solid tumors. Accordingly, it has the potential to effectively shut down aberrant wild-type and mutant EGFR signaling in a tumor-selective manner, thus potentially avoiding or reducing the toxic side effects associated with currently available EGFR-TKIs and systemic wild-type EGFR inhibition. Threshold expects to initiate two Phase 2 proof-of-concept trials with tarloxotinib in 2015: one in patients with mutant EGFR-positive, T790M-negative advanced non-small cell lung cancer progressing on an EGFR-TKI, and the other in patients with recurrent or metastatic squamous cell carcinoma of the head and neck or skin. Threshold licensed exclusive worldwide rights to tarloxotinib from the University of Auckland in September 2014.