On October 25, 2017 OncoSec Medical Incorporated ("OncoSec") (NASDAQ: ONCS), a company developing DNA-based intratumoral cancer immunotherapies, reported financial results for the fourth quarter and fiscal year ended July 31, 2017 (Press release, OncoSec Medical, OCT 25, 2017, View Source [SID1234521172]).

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"We have made significant progress this past quarter in advancing the development of our lead clinical program, ImmunoPulse IL-12, which we believe could provide a meaningful clinical benefit to metastatic melanoma patients with limited or no treatment options," said Punit Dhillon, President and CEO of OncoSec. "Our organization remains focused on advancing our PISCES/KEYNOTE-695 registration-directed trial to address this significant unmet medical need through an innovative accelerated pathway."

Fourth Quarter 2017 and Recent Highlights

Program Highlights and Upcoming Milestones

Presented positive Phase 2 data with ImmunoPulse IL-12 as monotherapy and in combination with pembrolizumab at the 2017 9th World Congress of Melanoma – A Joint Meeting with the Society for Melanoma Research.
50% (11/22) BORR observed at 24 weeks (42.9% [9/21] achieved RECIST v1.1 BORR).
41% (9/22) complete responders (CR), 9% (2/22) partial responders (PR), and 9% (2/22) stable disease (SD) for a total disease control rate of 59% (38.1% [8/21] achieved RECIST v1.1 durable CR) in predicted anti-PD-1 non-responder melanoma patients at 24 weeks.
Comprehensive immune monitoring data demonstrated combination of ImmunoPulse IL-12 and pembrolizumab can convert "cold" tumors to "hot" tumors, priming a coordinated innate and adaptive immune response, suggesting a synergistic relationship with anti-PD-1.
Favorable safety profile with <10% SAE as ImmunoPulse IL-12 monotherapy or in combination with pembrolizumab.
Initiated global, open-label, registration directed clinical trial, PISCES/KEYNOTE-695, of ImmunoPulse IL-12 in combination with pembrolizumab.
Enrolling patients with unresectable metastatic melanoma who have progressed or are progressing on an anti-PD-1 therapy.
Global study in the U.S. and Australia.
ImmunoPulse IL-12 granted Fast Track and Orphan Drug Designation in the U.S.
Clinical trial collaboration and supply agreement with Merck (known as MSD outside the US and Canada); attained KEYNOTE status.
Anticipate initial data mid-2018.
Late breaking poster presentation at the upcoming Society for Immunotherapy of Cancer (SITC) (Free SITC Whitepaper) 32nd 2017 Annual Meeting to be held in National Harbor, MD on November 8-12, 2017.
Additional abstract highlighting preclinical data from novel multi-gene expression platform.
Presented comprehensive immune monitoring data from the Phase 2 clinical trial demonstrating that ImmunoPulse IL-12 in combination with pembrolizumab is well-tolerated and yields clinically meaningful synergy in immunologically "cold" tumors at the 2nd World Congress on Electroporation and Pulsed Electric Fields in Biology, Medicine and Food & Environmental Technologies.
Corporate Highlights

Added industry veterans Dr. Annalisa Jenkins, MBBS, FRCP and Daniel J. O’Connor to the Board of Directors;
Initiated a Technology Access Program collaboration with Jounce Therapeutics; and,
Raised and obtained commitments for $8.1 Million in offerings priced at or above market price
Fourth Quarter and Year-End 2017 Financial Results

For the fourth quarter of fiscal 2017 and the fiscal year ended July 31, 2017, OncoSec reported a net loss of $5.8 million and $21.4 million, or $0.28 per share and $1.06 per share, respectively, compared to a net loss of $6.6 million and $26.9 million, or $0.39 per share and $1.63 per share, respectively, for the same period last year. The decrease in net loss for the year ended July 31, 2017, compared with the same period in 2016, resulted primarily from: i) a $2.2 million decrease in non-cash stock-based compensation expense caused by an overall lower stock price and the Company’s tender offer exchange in December 2016 of certain then-outstanding stock options for a lesser number of new stock options with a lower exercise price; ii) a $1.8 million decrease in the costs of our research and development programs caused by our refocusing of resources to our higher priority PISCES/KEYNOTE-695 clinical program; and, iii) a $1.4 million decrease in personnel costs due to reduced headcount.

There were no revenues for the fiscal years ended July 31, 2017 or July 31, 2016.

Research and development expenses were $3.3 million and $12.0 million for the fourth quarter of fiscal 2017 and the fiscal year ended July 31, 2017, respectively, compared to $3.6 million and $14.7 million for the same periods in 2016. General and administrative expenses were $2.6 million and $9.5 million for the fourth quarter of fiscal 2017 and the fiscal year ended July 31, 2017, compared to $3.0 million and $12.1 million for the same period in 2016.

At July 31, 2017, OncoSec had $11.4 million in cash and cash equivalents, as compared to $28.7 million of cash and cash equivalents at July 31, 2016. OncoSec expects these funds to be sufficient to allow it to continue to operate its business to the third calendar quarter of 2018.

About PISCES (Anti-PD-1 IL-12 Stage III/IV Combination Electroporation Study)

PISCES is a global, multicenter phase 2b, open-label trial of intratumoral plasma encoded IL-12 (tavokinogene telseplasmid or "tavo") delivered by electroporation in combination with intravenous pembrolizumab in patients with stage III/IV melanoma who have progressed or are progressing on either pembrolizumab or nivolumab treatment. The Simon 2-stage study of intratumoral tavo plus electroporation in combination with pembrolizumab will enroll approximately 48 patients with histological diagnosis of melanoma with progressive locally advanced or metastatic disease defined as Stage III or Stage IV. The primary endpoint will be the Best Overall Response Rate (BORR).

On October 25, 2017 United Therapeutics Corporation (NASDAQ: UTHR) reported its financial results for the third quarter ended September 30, 2017 (Press release, United Therapeutics, OCT 25, 2017, View Source [SID1234521167]).

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“Our third quarter net revenues totaled $446 million,” said Martine Rothblatt, Ph.D., United Therapeutics Chairman and Chief Executive Officer. “In addition, Orenitram’s third quarter net revenues grew 29%, as compared to the same period in the prior year, resulting in two consecutive quarters of greater than 20% net revenue growth for this product. This further confirms our belief in the organic growth opportunity of Orenitram, which is the only true oral prostacyclin analog therapy for the large and increasing number of pulmonary arterial hypertension (PAH) patients. We also continued to invest in our growing pipeline of late stage programs in cardiopulmonary diseases and oncology, including the initial enrollment of patients into our phase III DISTINCT study of dinutuximab in small cell lung cancer, and our SOUTHPAW study of Orenitram in patients with WHO Group 2 pulmonary hypertension associated with left heart failure. Finally, we have continued to invest in our regenerative medicine and organ manufacturing programs to ultimately find a cure for PAH and other end-stage organ diseases.”

Key financial highlights include (dollars in millions, except per share data):

Three Months Ended
September 30,

Percentage



2017

2016

Changes









Revenues

$
445.5

$
408.2

9
%
Net income

$
276.3

$
161.8

71
%
Non-GAAP earnings(1)

$
206.9

$
195.6

6
%
Net income, per diluted share

$
6.27

$
3.50

79
%
Non-GAAP earnings, per diluted share(1)

$
4.69

$
4.23

11
%










(1)
See definition of non-GAAP earnings, a non-GAAP financial measure, and a reconciliation of net income to non-GAAP earnings below.
Financial Results for the Three Months Ended September 30, 2017 compared to the Three Months Ended September 30, 2016

Revenues

The following table presents the components of total revenues (dollars in millions):



Three Months Ended
September 30,

Percentage



2017

2016

Change

Net product sales:







Remodulin


$
187.3

$
152.4

23
%
Tyvaso


88.9

101.8

(13)
%
Adcirca


99.8

96.0

4
%
Orenitram


52.5

40.7

29
%
Unituxin


17.0

17.3

(2)
%
Total revenues


$
445.5

$
408.2

9
%
Revenues for the three months ended September 30, 2017 increased by $37.3 million as compared to the same period in 2016. The growth in revenues resulted from the following: (1) a $34.9 million increase in Remodulin net product sales; (2) an $11.8 million increase in Orenitram net product sales; and (3) a $3.8 million increase in Adcirca net product sales. During the three months ended September 30, 2017, an international distributor made a one-time purchase of Remodulin inventory of $47.4 million due to an expansion of the distributor’s commercial responsibilities. Because the payment terms span two quarters, this purchase increased our net revenues by $23.7 million during the three months ended September 30, 2017, with an additional increase of $23.7 million expected in the fourth quarter. These increases were partially offset by a $12.9 million decrease in Tyvaso net product sales and a $0.3 million decrease in Unituxin net product sales. $12.2 million of the decrease in Tyvaso net product sales was due to an additional one-time $12.2 million liability for estimated Medicaid rebates relating to Tyvaso sales prior to July 1, 2017 that we recorded during the three months ended September 30, 2017.

Expenses

Cost of product sales. The following table summarizes cost of product sales by major category (dollars in millions):



Three Months Ended
September 30,

Percentage



2017

2016

Change

Category:







Cost of product sales, excluding share-based compensation


$
21.3

$
20.0

7
%
Share-based compensation (benefit) expense(1)


(1.8)

3.6

(150)
%
Total cost of product sales


$
19.5

$
23.6

(17)
%










(1)
Refer to Share-based compensation (benefit) expense below for discussion.
Research and development expense. The following table summarizes research and development expense by major category (dollars in millions):



Three Months Ended
September 30,

Percentage



2017

2016

Change

Category:







Research and development, excluding share-based compensation


$
62.0

$
37.2

67
%
Share-based compensation (benefit) expense(1)


(7.0)

8.7

(180)
%
Total research and development expense


$
55.0

$
45.9

20
%










(1)
Refer to Share-based compensation (benefit) expense below for discussion.
Research and development, excluding share-based compensation. The increase in research and development expense of $24.8 million for the three months ended September 30, 2017, as compared to the same period in 2016, was driven by the expansion of our pipeline programs to treat cardiopulmonary diseases and cancer and to develop technologies in organ manufacturing. Research and development expense for the treatment of cardiopulmonary diseases increased by $14.3 million for the three months ended September 30, 2017, as compared to the same period in 2016, due to increased spending on several clinical and non-clinical studies, including FREEDOM-EV, INCREASE and SOUTHPAW, and on the development of new drug products, including RemoPro, and drug delivery devices, including the RemoSynch and RemUnity systems. Research and development expenses for cancer-related projects increased by $5.9 million for the three months ended September 30, 2017, as compared to the same period in 2016, driven by an increase in spending on the DISTINCT study. Research and development expenses for our organ manufacturing projects increased by $4.1 million for the three months ended September 30, 2017, as compared to the same period in 2016, due to increased preclinical work on technologies designed to increase the supply and distribution of transplantable organs and tissues.

Selling, general and administrative expense. The following table summarizes selling, general and administrative expense by major category (dollars in millions):



Three Months Ended
September 30,

Percentage



2017

2016

Change

Category:







General and administrative, excluding share-based compensation


$
46.6

$
42.4

10
%
Sales and marketing, excluding share-based compensation


15.8

20.1

(21)
%
Share-based compensation (benefit) expense(1)


(15.2)

37.6

(140)
%
Total selling, general and administrative expense


$
47.2

$
100.1

(53)
%










(1)
Refer to Share-based compensation (benefit) expense below for discussion.
General and administrative, excluding share-based compensation. The increase in general and administrative expense of $4.2 million for the three months ended September 30, 2017, as compared to the same period in 2016, was driven by a $2.7 million increase in legal fees incurred in connection with intellectual property litigation and the U.S. Department of Justice (DOJ) investigation of our support of 501(c)(3) organizations that provide financial assistance to patients.

Sales and marketing, excluding share-based compensation. The decrease in sales and marketing expense of $4.3 million for the three months ended September 30, 2017, as compared to the same period in 2016, was driven by a $3.7 million decrease in compensation and related costs associated with the 2016 consolidation of our sales and marketing staff.

Share-based compensation (benefit) expense. The following table summarizes share-based compensation (benefit) expense by major category (dollars in millions):



Three Months Ended
September 30,

Percentage



2017

2016

Change

Category:







Share tracking awards plan


$
(38.0)

$
45.8

(183)
%
Stock options


13.1

3.3

297
%
Other(1)


0.9

0.8

13
%
Total share-based compensation (benefit) expense


$
(24.0)

$
49.9

(148)
%










(1)
Includes expense related to restricted stock units and employee stock purchase plan.
Share tracking awards plan. We re-measure the fair value of share tracking awards at the end of each financial reporting period. Changes in the share tracking award liability resulting from such re-measurements are recorded as adjustments to share-based compensation (benefit) expense. Decreases in our stock price will generally result in a reduction in the share tracking award liability.

Income Tax Expense

The provision for income taxes was $44.4 million for the three months ended September 30, 2017, as compared to $77.3 million for the same period in 2016. The provision for income taxes is based on an estimated annual effective tax rate for the entire year. The estimated annual effective tax rate is subject to adjustment in subsequent quarterly periods if components used to estimate the annual effective tax rate are updated or revised. Our effective tax rate as of September 30, 2017 and September 30, 2016, was approximately 37 percent and approximately 32 percent, respectively. Our 2017 effective tax rate increased compared to 2016 primarily due to expenses that do not meet the criteria for tax deductibility.

Share Repurchase

In April 2017, our Board of Directors approved a share repurchase program, authorizing up to $250.0 million in aggregate repurchases of our common stock. Pursuant to this authorization, in May 2017 we paid $250.0 million to enter into an accelerated share repurchase agreement (ASR) with Citibank, N.A. (Citibank). Pursuant to the terms of the ASR, in June 2017 Citibank delivered to us approximately 1.7 million shares of our common stock, representing the minimum number of shares we were entitled to receive under the ASR. The ASR was originally scheduled to terminate during the fourth quarter of 2017; however, in September 2017 Citibank notified us of its election to accelerate the termination date of the contract to September 8, 2017. Upon termination of the ASR, Citibank delivered to us approximately 0.3 million additional shares of our common stock.

Non-GAAP Earnings

Non-GAAP earnings is defined as net income, adjusted for: (1) share-based compensation (benefit) expense, net (including expenses relating to stock options, share tracking awards, restricted stock units and our employee stock purchase plan); (2) extraordinary, non-recurring and unusual items; and (3) tax impact on non-GAAP earnings adjustments.

A reconciliation of net income to non-GAAP earnings is presented in the following table (in millions, except per share data):



Three Months Ended
September 30,



2017

2016

Net income, as reported

$
276.3

$
161.8

Adjusted for:





Share-based compensation (benefit) expense, net(1)


(24.0)

49.9

Estimated loss contingency(1)


0.9

—

Impairment of cost method investments(2)


3.1

—

Tax benefit (expense)(1)(3)


(49.4)

(16.1)

Non-GAAP earnings

$
206.9

$
195.6

Non-GAAP earnings per share:





Basic


$
4.77

$
4.53

Diluted


$
4.69

$
4.23

Weighted average number of common shares outstanding:





Basic


43.4

43.2

Diluted


44.1

46.2









(1)
We calculated the total tax impact of non-discrete quarterly non-GAAP earnings adjustments based on our estimated annual effective tax rates, before considering discrete items, of approximately 33 percent and approximately 32 percent for each of the quarters ended September 30, 2017 and 2016, respectively.
(2)
This non-GAAP earnings adjustment is currently not considered tax deductible.
(3)
The tax benefit (expense) for the three months ended September 30, 2017 includes $57.0 million of benefit for the estimated loss contingency recognized during the second quarter of 2017 relating to the DOJ investigation of our support of 501(c)(3) organizations that provide financial assistance to patients.

On October 25, 2017 Vertex Pharmaceuticals Incorporated (Nasdaq: VRTX) reported consolidated financial results for the third quarter ended September 30, 2017 (Press release, Vertex Pharmaceuticals, OCT 25, 2017, View Source [SID1234521175]). Vertex also increased its total 2017 CF product revenue guidance, including revenue guidance for ORKAMBI (lumacaftor/ivacaftor) and KALYDECO (ivacaftor), and reiterated its total 2017 combined GAAP and non-GAAP R&D and SG&A expense guidance.

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In addition, the company today reported top-line results for three clinical studies in CF, including: a Phase 3 study of ORKAMBI in children with CF ages 2 to 5 who have two copies of the F508del mutation; a Phase 3 study of the tezacaftor/ivacaftor combination in people with CF with one copy of the F508del mutation and one copy of a gating mutation; and a Phase 2 study of the ENaC inhibitor VX-371 in combination with ORKAMBI in people with CF who have two copies of the F508del mutation.

Key financial results include:

Three Months Ended September 30,

%

2017

2016

Change

(in millions, except per share and percentage data)
ORKAMBI product revenues, net
$
336

$
234

44%
KALYDECO product revenues, net
$
213

$
176

22%
TOTAL CF product revenues, net
$
550

$
410

34%

GAAP net loss
$
(103
)

$
(39
)

n/a
GAAP net loss per share – diluted
$
(0.41
)

$
(0.16
)

n/a

Non-GAAP net income
$
136

$
43

216%
Non-GAAP net income per share – diluted
$
0.53

$
0.17

212%

"Vertex has never been stronger than it is today with significant progress across all aspects of our business," said Jeffrey Leiden, M.D., Ph.D., Chairman, President and Chief Executive Officer of Vertex. "We are now treating more patients with our approved medicines than ever before, resulting in significant revenues and

earnings growth. We expect this financial trajectory to continue, driven by our pipeline of transformative CF medicines."

Dr. Leiden continued, "We look forward to continued progress in 2018 with the anticipated approval of our third CF medicine, and advancement into pivotal development of our portfolio of triple combination regimens, which have the potential to treat nearly all CF patients in the future."
Financial Highlights
Revenues:
•
Total CF net product revenues were $549.6 million compared to $409.7 million for the third quarter of 2016.
•
Net product revenues from ORKAMBI were $336.2 million compared to $234.0 million for the third quarter of 2016. The increase in ORKAMBI revenues was driven by a number of factors, including the continued uptake in children with CF ages 6 to 11 in the U.S. and the addition of revenues from European countries where ORKAMBI is currently reimbursed.
•
Net product revenues from KALYDECO were $213.5 million compared to $175.6 million for the third quarter of 2016. The increase in KALYDECO revenues was driven by the approval and uptake among people ages 2 and older in the U.S. who have certain residual function mutations.
Expenses:
•
Combined GAAP R&D and SG&A expenses were $575.7 million compared to $378.4 million for the third quarter of 2016. Combined non-GAAP R&D and SG&A expenses were $333.8 million compared to $295.0 million for the third quarter of 2016.
•
GAAP R&D expenses were $454.9 million compared to $272.4 million for the third quarter of 2016. The increase in GAAP R&D expenses was primarily due to an upfront payment of $160.0 million related to the acquisition of VX-561 (previously known as CTP-656), an investigational once-daily CFTR potentiator, from Concert Pharmaceuticals. Non-GAAP R&D expenses were $243.2 million compared to $211.0 million for the third quarter of 2016. The increase in non-GAAP R&D expenses was primarily attributable to the clinical development of the company’s triple combination regimens for CF.

•
GAAP SG&A expenses were $120.7 million compared to $106.1 million for the third quarter of 2016. Non-GAAP SG&A expenses were $90.6 million compared to $84.0 million for the third quarter of 2016. The increase in GAAP and non-GAAP SG&A expenses was driven by the global support for KALYDECO and ORKAMBI.
Net Income (Loss) Attributable to Vertex:
•
GAAP net loss was $(103.0) million, or $(0.41) per diluted share, for the third quarter of 2017, compared to a net loss of $(38.8) million, or $(0.16) per diluted share, for the third quarter of 2016. The GAAP net loss in the third quarter of 2017 was primarily due to an upfront payment of $160.0 million related to the acquisition of VX-561 from Concert Pharmaceuticals. Non-GAAP net income was $136.4 million, or $0.53 per diluted share, for the third quarter of 2017, compared to $43.1 million, or $0.17 per diluted share, for the third quarter of 2016. Third quarter 2017 non-GAAP net income growth was driven by increased CF product revenues.
Intangible Asset Impairment:
•
Based upon Phase 2 data evaluating VX-371 in combination with ORKAMBI (reported below), Vertex concluded that the intangible asset had become fully impaired, and also resulted in the deconsolidation of Parion Sciences. This impairment caused a write down of the assets, including the intangible asset, related to Parion, offset by the benefit from income taxes and the reversal of non-controlling interest, which resulted in an increase in GAAP net loss of $7.1 million for the third quarter of 2017 and had no impact on non-GAAP net income.
Cash Position:
•
As of September 30, 2017, Vertex had $1.81 billion in cash, cash equivalents and marketable securities compared to $1.43 billion in cash, cash equivalents and marketable securities as of December 31, 2016.

On October 25, 2017 2X Oncology, Inc. ("2X" or the "Company"), a precision medicine company developing targeted therapeutics to address significant unmet needs in hard-to-treat cancers, reported that the Company will participate in the Life Sciences Summit 2017 on November 1-2 in New York City and the Jefferies 2017 London Healthcare Conference on November 15-16 (Press release, 2X Oncology, OCT 25, 2017, View Source [SID1234526101]).

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Chief Executive Officer George O. Elston will participate in and hold 1x1s with investors at both conferences, joined by Chief Financial Officer Jarne Elleholm.

Additionally, Mr. Elston will present in the Emerging Company Showcase at the Life Sciences Summit on Thursday, November 2, 2017 at 3:30pm EDT, with a discussion period to follow.

Investors wishing to meet with 2X Oncology at or around either conference should notify the respective conference one-on-one desk, or contact Amy Raskopf to schedule a meeting.

On October 25, 2017 Chugai Pharmaceutical Co., Ltd. (TOKYO: 4519) reported that it filed an application with the Japanese Ministry of Health, Labour and Welfare (MHLW) for the approval of anti-HER2 humanized monoclonal antibody, "Perjeta I.V. Infusion 420mg/14mL [generic name: pertuzumab (genetical recombination)] (hereafter, Perjeta)" for the additional indication of adjuvant therapy for HER2-positive early breast cancer (Press release, Chugai, OCT 25, 2017, View Source [SID1234521138]).

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"Currently, adjuvant chemotherapy with Herceptin for HER2-positive early breast cancer has been recommended in the clinical practice guidelines for breast cancer and has contributed to patients," said Dr. Yasushi Ito, Chugai’s Senior Vice President, Head of Project & Lifecycle Management Unit. "We are going to continue discussions with the health authorities so that adjuvant chemotherapy using Perjeta in combination with Herceptin, which has outperformed the current standard of care, will be used as a new treatment option for patients."

Chugai filed the application with the MHLW based on the results from the APHINITY study (Adjuvant Pertuzumab and Herceptin IN Initial TherapY in Breast Cancer) and several clinical studies. The APHINITY study is an international, phase III, randomised, double-blind, placebo-controlled, two-arm study evaluating the efficacy and safety of Perjeta plus Herceptin and chemotherapy (anthracycline medicine followed by docetaxel monotherapy / docetaxel plus carboplatin) compared to Herceptin and chemotherapy as adjuvant therapy in 4,805 patients with HER2-positive early breast cancer who undergone curative surgery. The primary endpoint of the APHINITY study is invasive disease-free survival (iDFS), which is defined as the time a patient lives without return of invasive breast cancer at any site or death from any cause after adjuvant treatment. The secondary endpoints were cardiac and overall safety, and other endpoints.

The results of the APHINITY study are as follows:

– At three years, iDFS, the primary endpoint, was 94.1% in the Perjeta arm and 93.2% in the control arm, and a statistically significant improvement was observed in the Perjeta arm. Perjeta arm significantly reduced the risk of recurrence or death by 19% compared to control arm (HR=0.81, 95%CI 0.66-1.00, stratified log-rank test, p=0.045).

– The iDFS at four years estimated by the Kaplan-Meier method showed that 92.3% (95%CI: 91.1-93.4) of people treated with the Perjeta arm did not have their breast cancer return compared to 90.6% (95%CI: 89.3-91.8) treated with control arm.

– The safety profile of Perjeta was consistent with that seen in previous studies. The incidence of cardiac events was 0.7% in the Perjeta arm and 0.3% in the control arm.

In the US and Europe, Perjeta is under review for postoperative adjuvant chemotherapy for HER2-positive breast cancer, and the US Food and Drug Administration has granted Priority Review to Perjeta for this indication. Perjeta was approved for adjuvant therapy (before surgery) for HER2-positive early breast cancer in September 2013 in the US and in July 2015 in Europe.

As the top pharmaceutical company in the field of oncology in Japan, Chugai will work for early approval to provide Perjeta as a new treatment option for patients with HER2-positive early breast cancer.