On August 8, 2017 ChemoCentryx, Inc., (Nasdaq:CCXI), a biopharmaceutical company developing new medications targeted at inflammatory and autoimmune diseases and cancer, reported financial results for the second quarter ended June 30, 2017 (Press release, ChemoCentryx, AUG 8, 2017, View Source [SID1234520164]).

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"We’ve had a highly productive second quarter, activating many new sites in our avacopan Phase III ADVOCATE trial, which is producing a multiplier effect on patient enrollment," said Thomas J. Schall, Ph.D., President and Chief Executive Officer of ChemoCentryx. "Now we are launching a clinical trial for avacopan in a second indication, C3G, executing on our ‘pipeline in a drug’ strategy. We are also working with regulatory authorities on the design of a third trial, involving our CCR2 inhibitor, CCX140, intended to support registration in patients with Focal Segmental Glomerulosclerosis (FSGS)."

Recent Highlights

ChemoCentryx’s Phase III ADVOCATE trial of avacopan (formerly CCX168) for the treatment of ANCA-associated vasculitis is gaining momentum, with 143 sites activated in 18 countries across the world. The trial will test the safety and efficacy of avacopan following 12 months of treatment and will include approximately 300 patients. Enrollment rates per activated sites are exceeding projections, and the trial is on track to complete enrollment by mid 2018. In addition to testing the effect of avacopan on improving active vasculitis, the ADVOCATE trial will also test the effect of avacopan on preventing a recurrence of vasculitis, one of the major limitations of the current standard of care for this disease.

In May 2017, ChemoCentryx announced that the European Medicines Agency granted orphan medicinal product designation for avacopan in the treatment of patients with C3G, which followed shortly after orphan drug designation was granted for avacopan in the treatment of C3G by the U.S. Food and Drug Administration. The Company is launching a registration-supporting trial of avacopan in C3G patients. There is currently no approved therapy for C3G.
In June 2017, ChemoCentryx announced program advances in two oral presentations that were given during the 54th European Renal Association – European Dialysis and Transplant Association (ERA-EDTA) Congress in Madrid, which highlighted an additional potential clinical indication for avacopan and the potential for CCR2 inhibition in FSGS. The Company plans to launch a registration-supporting trial of CCR2 inhibitor CCX140 in patients with FSGS later this year.
Second Quarter 2017 Financial Results

Pro forma cash, cash equivalents, investments and remaining upfront commitments totaled $166.7 million at June 30, 2017.

Revenue was $8.9 million for the second quarter, compared to $2.8 million for the same period in 2016. The increase in revenues from 2016 to 2017 was due to; (i) amortization of the upfront license fee commitments from Vifor pursuant to the avacopan and CCX140 agreements, as well as (ii) collaboration revenue for development services under the CCX140 agreement.

Research and development expenses were $14.3 million for the second quarter, compared to $9.1 million for the same period in 2016. The increase in research and development expenses from 2016 to 2017 was primarily attributable to higher Phase III development expenses due to the initiation of the avacopan Phase III ADVOCATE trial in patients with AAV in the fourth quarter of 2016 and start-up expenses related to the Phase II clinical trial of avacopan for the treatment of C3G. These increases were partially offset by decreases in (i) Phase I clinical development expense due to the completion of enrollment in the Phase I clinical trial for CCX872 in patients with advanced pancreatic cancer in 2016 and (ii) Phase II development expense due to the completion of the avacopan CLEAR and CLASSIC Phase II clinical trials for the treatment of AAV in 2016.

General and administrative expenses were $4.2 million for the second quarter, compared to $3.9 million for the same period in 2016. The increase from 2016 to 2017 was primarily due to higher intellectual property related expenses and accounting related fees associated with preparing to meet the requirements pursuant to the Sarbanes-Oxley Act of 2002.

Net losses for the second quarter were $9.2 million, compared to $10.0 million for the same period in 2016.

Total shares outstanding at June 30, 2017 were approximately 48.6 million shares.

The Company expects to utilize cash and cash equivalents in the range of $50 million and $55 million in 2017.

On August 8, 2017 Verastem, Inc. (NASDAQ: VSTM), focused on discovering and developing drugs to improve the survival and quality of life of cancer patients, reported financial results for the second quarter ended June 30, 2017 and provided an overview of certain corporate developments (Press release, Verastem, AUG 8, 2017, View Source;p=RssLanding&cat=news&id=2292669 [SID1234520207]).

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"The second quarter of 2017 was marked by several duvelisib data presentations at top hematology-focused medical meetings," said Robert Forrester, President and Chief Executive Officer of Verastem. "Long-term follow-up data from the Phase 2 DYNAMO study, which was presented at the 14th International Conference on Malignant Lymphoma (ICML), demonstrated a durable 47% response rate and a well characterized and manageable safety profile in patients with indolent non-Hodgkin Lymphoma (iNHL) whose disease is refractory to both rituximab and chemotherapy or radioimmunotherapy. These overall DYNAMO results were followed by promising subgroup data for DYNAMO patients with follicular lymphoma (FL) or small lymphocytic lymphoma (SLL), presented at the 22nd Congress of the European Hematology Association (EHA) (Free EHA Whitepaper), which described high response rates of 43% and 68% in FL and SLL, respectively. We remain highly encouraged by the data generated to date from the duvelisib program and we look forward to reporting top-line data from the Phase 3 DUO study in relapsed/refractory chronic lymphocytic leukemia and small lymphocytic lymphoma (CLL/SLL) currently expected in the latter part of summer 2017."

Second Quarter 2017 and Recent Highlights:
Duvelisib
Ongoing Phase 3 DUO Study in Relapsed or Refractory CLL/SLL – The efficacy and safety of duvelisib is currently being evaluated in the randomized Phase 3 DUO study in patients with relapsed or refractory CLL/SLL. In the DUO study, approximately 300 patients were randomized 1:1 to receive duvelisib or ofatumumab. The trial was fully enrolled in November 2015. The primary endpoint of this study is progression free survival (PFS). Key secondary endpoints include overall response rate (ORR), overall survival (OS), duration of response (DOR) and safety. Verastem expects to report top-line data from the DUO study in the latter part of summer 2017.

Presented Long-Term Follow Up Data in Patients with Double-Refractory FL and SLL at EHA (Free EHA Whitepaper) 2017 – Long-term follow up data from the subsets of patients with FL or SLL who were enrolled in the ongoing Phase 2 DYNAMO study were the subject of presentations at EHA (Free EHA Whitepaper) 2017 in Madrid, Spain. In an oral presentation, titled "DYNAMO: A Phase 2 Study Demonstrating the Clinical Activity of Duvelisib in Patients with Double-Refractory Follicular Lymphoma," Pier Luigi Zinzani, M.D., Ph.D., of the University of Bologna Institute of Hematology, reported that duvelisib monotherapy demonstrated an ORR of 43%, as determined by an independent review committee, with 83% of patients experiencing a reduction in the size of target lymph nodes. The median DOR was 7.9 months, the median PFS was 8.3 months, and the median overall survival (OS) was 27.8 months. In an e-poster presentation, titled "DYNAMO: The Clinical Activity of Duvelisib in Patients with Double-Refractory Small Lymphocytic Lymphoma in a Phase 2 Study," Dr. Zinzani reported that duvelisib as a monotherapy demonstrated an ORR of 68%, as determined by an independent review committee, with 100% of patients experiencing a reduction in the size of target lymph nodes.

With a median time on duvelisib of 12 months, median DOR was 10.1 months, median PFS was 11.7 months, and median OS was 28.9 months. The safety profile of duvelisib monotherapy remained consistent with what has been previously reported in iNHL and other hematologic malignancies. Copies of Dr. Zinzani’s oral and e-poster presentations are available here and here.

Presented Long-Term Follow Up Data from the Phase 2 DYNAMO Study at ICML 2017 – Long-term follow up data from the ongoing Phase 2 DYNAMO study was highlighted in an oral presentation at ICML 2017 in Lugano, Switzerland. In the presentation, titled "DYNAMO: A Phase 2 Study Demonstrating the Clinical Activity of Duvelisib in Patients with Double-Refractory Indolent Non-Hodgkin Lymphoma," Dr. Zinzani, reported that duvelisib as a monotherapy demonstrated an ORR of 47%, as determined by an independent review committee, with 88% of patients experiencing a reduction in the size of target lymph nodes. Overall, the median DOR was 10 months, the median PFS was 9 months, and the median overall survival was 27.8 months. With additional follow-up (median 18 months), the safety profile of duvelisib monotherapy remained consistent with what has been previously reported in iNHL and other hematologic malignancies. The DYNAMO study met its primary ORR endpoint (p=0.0001) at the primary analysis. A PDF of Dr. Zinzani’s oral presentation is available here.

Defactinib (VS-6063)
Published Scientific Data Highlighting Potential Role of Focal Adhesion Kinase (FAK) Inhibition in Pancreatic and Breast Cancer – In July 2017, Verastem announced the publication of two papers in the peer-reviewed journals, PLoS One and Oncotarget. The two published articles reported scientific findings from studies evaluating FAK inhibition in preclinical models of pancreatic and breast cancer and continue to validate the underlying thesis for ongoing clinical collaborations evaluating Verastem’s lead FAK inhibitor defactinib in combination with chemotherapeutic and leading immunotherapeutic agents in several difficult to treat types of cancer. The PLoS One paper in pancreatic cancer is available here and the Oncotarget paper in breast cancer is available here.

Presented Preclinical Data at the 2017 American Association for Cancer Research (AACR) (Free AACR Whitepaper) Annual Meeting – In an oral presentation titled, "Reprogramming the tumor microenvironment to improve responses to therapy," Verastem scientific collaborator David G. DeNardo, Ph.D., Associate Professor of Medicine, Division of Oncology, Department of Immunology, Washington University School of Medicine in St. Louis, described data demonstrating that FAK inhibition can enable efficacy of PD-1 inhibition in preclinical models of pancreatic cancer that, like the clinical disease, are otherwise refractory to checkpoint inhibition. Verastem’s FAK inhibitor, defactinib, is currently being evaluated in combination with Merck’s PD-1 inhibitor, pembrolizumab, and gemcitabine in patients with advanced pancreatic ductal adenocarcinoma (PDAC). Initial analysis of immune biomarkers from matched pairs of metastatic biopsies, taken either pre- or post-treatment, from patients with PDAC showed an increase in activated proliferating cytotoxic T cells together with a reduction in tumor-associated macrophages (TAMs). A PDF copy of Dr. DeNardo’s oral presentation is available here.

Corporate and Financial
Julie B. Feder Appointed Chief Financial Officer – In July 2017, Verastem announced the appointment of Ms. Feder as its Chief Financial Officer. Ms. Feder is an accomplished financial professional with invaluable leadership experience in the healthcare industry. She joins Verastem from the Clinton Health Access Initiative, Inc. (CHAI), where she served as Chief Financial Officer. Prior to joining CHAI, Ms. Feder held finance roles of increasing responsibility at Genzyme Corporation including leading the internal audit process. Ms. Feder began her career at Deloitte & Touche LLP and she holds a Bachelor of Science in Accounting from Yeshiva University’s Sy Syms School of Business.

Eric K. Rowinsky, M.D. Appointed to the Board of Directors – Verastem announced the appointment of Eric K. Rowinsky, M.D., to its Board of Directors. Dr. Rowinsky brings to Verastem nearly 30 years of experience in the development of cancer treatments, such as cetuximab (Erbitux) when he was Chief Medical Officer of ImClone Systems, as well as Cyramza, Portrazza, Taxol, Taxotere, Hycamtin, Tarceva, Camptosar, Tykerb, and cixutumumab, among others. He is a member of the board of directors of Biogen, Navidea, and Fortress Biotech, all public life sciences companies, and has served on the board of directors of BIND Therapeutics, a life-science company acquired by Pfizer. Dr. Rowinsky replaced Paul A. Friedman, M.D. who transitioned from his role as Director to become a member of Verastem’s Clinical and Scientific Advisory Board.

Second Quarter 2017 Financial Results
Net loss for the three months ended June 30, 2017 (2017 Quarter) was $13.4 million, or $0.36 per share, as compared to a net loss of $8.6 million, or $0.23 per share, for the three months ended June 30, 2016 (2016 Quarter). Net loss includes non-cash stock-based compensation expense of $1.2 million and $1.7 million for the 2017 Quarter and 2016 Quarter, respectively. Verastem used $14.5 million for operating activities during the 2017 Quarter.

Research and development expense for the 2017 Quarter was $9.0 million compared to $4.5 million for the 2016 Quarter. The $4.5 million increase from the 2016 Quarter to the 2017 Quarter was primarily related to an increase of $3.6 million in contract research organization expense for outsourced biology, development and clinical services, which includes our clinical trial costs, an increase of approximately $894,000 in consulting fees, and an increase in personnel related costs of approximately $244,000. These increases were offset by a decrease in stock-based compensation and other expenses of approximately $176,000.

General and administrative expense for the 2017 Quarter was $4.4 million compared to $4.2 million for the 2016 Quarter. The increase of approximately $208,000 from the 2016 Quarter to the 2017 Quarter primarily resulted from an increase in consulting and professional fees of approximately $870,000, partially offset by decreases in stock-based compensation expense of approximately $534,000 and personnel costs of approximately $152,000.
As of June 30, 2017, Verastem had cash, cash equivalents and investments of $57.9 million compared to $80.9
million as of December 31, 2016.

The number of outstanding common shares as of June 30, 2017, was 36,992,418.

Financial Guidance
Based on our current operating plans, we expect to have sufficient cash, cash equivalents and investments to fund our research and development programs and operations into 2018.

About the Tumor Microenvironment
The tumor microenvironment encompasses various cellular populations and extracellular matrices within the tumor or cancer niche that support cancer cell survival. This includes immunosuppressive cell populations such as regulatory T-cells, myeloid-derived suppressor cells, M2 TAMS, as well as tumor-associated fibroblasts and extracellular matrix proteins which can hamper the entry and therapeutic benefit of cytotoxic immune cells and anti-cancer drugs. In addition to targeting the proliferative and survival signaling of cancer cells, Verastem’s compounds duvelisib and defactinib target the tumor microenvironment as a mechanism of action to potentially improve a patient’s response to therapy.

About Duvelisib
Duvelisib is an investigational, dual inhibitor of phosphoinositide 3-kinase (PI3K)-delta and PI3K-gamma, two enzymes that are known to help support the growth and survival of malignant B-cells and T-cells. PI3K signaling may lead to the proliferation of malignant B-cells and is thought to play a role in the formation and maintenance of the supportive tumor microenvironment.1,2,3 Duvelisib is currently being evaluated in late- and mid-stage clinical trials, including DUO, a randomized, Phase 3 monotherapy study in patients with relapsed/refractory CLL/SLL,4 and DYNAMO, a single-arm, Phase 2 monotherapy study in patients with refractory iNHL that achieved its primary endpoint of ORR upon topline analysis of efficacy data.5 Duvelisib is also being evaluated for the treatment of hematologic malignancies through investigator-sponsored studies, including T-cell lymphoma.6 Information about duvelisib clinical trials can be found on www.clinicaltrials.gov.

About Defactinib
Defactinib (VS-6063) is an investigational inhibitor of FAK, a non-receptor tyrosine kinase that mediates oncogenic signaling in response to cellular adhesion and growth factors.7 Based on the multi-faceted roles of FAK, defactinib is used to treat cancer through modulation of the tumor microenvironment, enhancement of anti-tumor immunity, and reduction of cancer stem cells.8,9 Defactinib is currently being evaluated in three separate clinical collaborations in combination with immunotherapeutic agents for the treatment of several different cancer types including pancreatic, ovarian, non-small cell lung cancer, and mesothelioma. These studies are combination clinical trials with pembrolizumab and avelumab from Merck & Co. and Pfizer/Merck KGaA, respectively.10,11,12 Information about these and additional clinical trials evaluating the safety and efficacy of defactinib can be found on www.clinicaltrials.gov.

Alder Biopharmaceuticals has filed a 10-Q – Quarterly report [Sections 13 or 15(d)] with the U.S. Securities and Exchange Commission (Filing, 10-Q, Alder Biopharmaceuticals, 2017, AUG 8, 2017, View Source [SID1234521724]).

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On August 8, 2017 Delcath Systems, Inc. (NASDAQ: DCTH), an interventional oncology Company focused on the treatment of primary and metastatic liver cancers, reported financial results for the three and six months ended June 30, 2017 (Press release, Delcath Systems, AUG 8, 2017, View Source;p=RssLanding&cat=news&id=2292560 [SID1234520165]).

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Highlights from the second quarter of 2017 and recent weeks include:

Revenue for the second quarter of 2017 increased 20% to $0.6 million from $0.5 million in the prior-year quarter;
Revenue for the first six months of 2017 increased 44% to $1.3 million from $0.9 million in the prior-year period;
Inclusion of CHEMOSAT in Dutch Health Authorities Guidelines (published in July 2017) as a recommended treatment for ocular melanoma liver metastases;
Reduction of an additional $9.5 million in principal amount related to the Company’s Convertible Notes, with $12.6 million in debt remaining; and
Raised $2.0 million through the issuance of Series B preferred shares to current noteholders, which are convertible into common shares at $0.153 per share.
Proposal on Effecting a Reverse Stock Split

Delcath recently filed a Definitive Schedule 14A detailing a proposed reverse stock split, subject to shareholder approval. Delcath needs the ability to issue common shares to fund operations, support clinical programs, service the amortization of its Convertible Note and explore alternative equity financing opportunities. However, the Company is currently at the maximum amount of authorized shares of common stock under its Certificate of Incorporation. Without a significant increase in available authorized shares, the Company is unable to access the $11.8 million of cash in the restricted accounts associated with the Convertible Notes issued last year, or to undertake any type of equity financing. The proposed reverse stock split will reduce the number of shares outstanding and provide Delcath with the flexibility to raise equity capital and support its important clinical trials and commercial efforts in Europe.

In addition, the reverse stock split will allow Delcath to regain compliance with NASDAQ Capital Markets continued-listing requirements, which provides liquidity and other important benefits to the Company and its investors. It is important to note that the floor price for the Convertible Note will adjust with the effected reverse stock split ratio to a minimum of $1.00. Delcath believes this will serve to support the stock price following a split and reduce future potential dilution related to the Convertible Notes.

For these reasons, the Company’s Board of Directors encourage all investors to support the proposed reverse stock split. Investors are encouraged to read the Company’s Definitive Schedule 14A in detail for full information regarding the proposed reverse stock split.

Management Commentary

"During the first half of 2017 we continued to advance our clinical development programs in ocular melanoma liver metastases (OM) and intrahepatic cholangiocarcinoma (ICC), while making steady progress with the ongoing commercialization of CHEMOSAT in Europe," said Jennifer K. Simpson, Ph.D., MSN, CRNP President and CEO of Delcath.

"Revenues for the second quarter of 2017 increased 20% from a year ago, demonstrating continued growing demand in our core markets. This increase is largely driven by the recent establishment of ZE diagnostic-related (DRG) reimbursement for CHEMOSAT in Germany. We continue to leverage this positive German reimbursement to support our efforts to obtain market access and payment in other markets such as the U.K. and the Netherlands, where there is growing interest in and use of CHEMOSAT. This is evidenced by the recent inclusion of CHEMOSAT in the Dutch Health Authorities treatment guidelines for ocular melanoma liver metastases, an important step toward eventual reimbursement coverage of CHEMOSAT in the Dutch market.

"Our primary focus continues to be on the clinical trials that comprise our Clinical Development Program (CDP), where we believe shareholder value ultimately lies. Our CDP consists of our FOCUS Phase 3 clinical trial of Melphalan/HDS in hepatic dominant OM (the FOCUS trial) and our intrahepatic cholangiocarcinoma (ICC) pivotal trial, which is scheduled to initiate enrollment by the end of 2017. The objective for our Phase 2 trial program in hepatocellular carcinoma (HCC) and ICC was to identify an efficacy signal worthy of further clinical investigation. This objective was met by the retrospective data collection performed by European investigators last year, which informed our development path for ICC. The U.S. Food and Drug Administration (FDA) endorsed that development pathway via a Special Protocol Assessment agreement negotiated earlier this year. With the Phase 2 trial program goals now met, we have terminated enrollment in the Phase 2 trials in order to devote available resources to the FOCUS Trial and the Phase 3 ICC pivotal trial.

"In March, we announced a SPA with the FDA for a pivotal trial of our Melphalan/HDS to treat ICC. As with the FOCUS trial, this SPA indicates that the trial design adequately addresses objectives that, if met, will support regulatory requirements for approval of Melphalan/HDS in the treatment of ICC. Since announcing the SPA we have been working with potential trial sites with the goal of initiating patient enrollment by the end of 2017. We are committed to executing this trial in a financially prudent manner and for this reason initiation of enrollment is contingent on effecting the reverse stock split as outlined in our consent proposal.

Enrollment in our FOCUS Phase 3 clinical trial of Melphalan/HDS in hepatic dominant OM (the FOCUS trial) has been proceeding more slowly than we expected. We have been continually reviewing the pace of recruitment in this study, and have discovered reluctance among some patients to participate as there was no mechanism to receive the experimental treatment at any time if they were randomized to the best alternative care arm. In a rare and deadly disease such as OM, it is not surprising that patients facing few treatment options would be reluctant to participate in a trial where there is no opportunity to receive the experimental treatment and where treatment is commercially available on a private pay basis in Europe. We are currently exploring options that will allow us to accelerate enrollment, which include adding new sites in both the U.S. and Europe. We have recently added several European clinical sites that are expected to provide increased patient flow starting this fall. We remain on track to conduct an interim safety analysis by the end of this year.

"Throughout the balance of 2017 we remain dedicated to advancing the clinical programs for our innovative Melphalan/HDS as well as to our commercialization efforts for CHEMOSAT in Europe. In order to support these important programs and create value, we need to enhance our capital structure, which begins with a favorable vote on the reverse stock split," concluded Dr. Simpson.

Second Quarter Financial Results

Revenue for the second quarter of 2017 was $0.6 million, an increase of 20% from $0.5 million for the second quarter of 2016. Selling, general and administrative expenses increased modestly to $2.5 million in the 2017 second quarter from $2.3 million in the prior-year quarter. Research and development expenses for the second quarter of 2017 increased to $2.5 million from $1.9 million in the prior-year quarter. Total operating expenses for the current quarter were $5.0 million compared with $4.2 million in the prior-year quarter.

The Company recorded a net loss for the three months ended June 30, 2017, of $2.0 million, a decrease of $4.7 million, or 70.9%, compared to a net loss of $6.7 million for the same period in 2016. This decrease in net loss is primarily due to a $9.6 million gain on the extinguishment of the June 2016 Series C Warrants which was offset by a $5.3 million increase in interest expense related to the convertible note, both non-cash items. Additionally, there was a $1.2 million decrease in the change in the fair value of the warrant liability, a non-cash item, offset by a $0.8 million increase in operating expenses primarily related to increased investment in our clinical trial initiatives.

Six Month Financial Results

Revenue for the first half of 2017 was $1.3 million, an increase of 44% from $0.9 million for the first half of 2016. Selling, general and administrative expenses in the first half of 2017 were approximately $4.9 million compared with $4.7 million in the prior-year period. Research and development expenses for the first six months of 2017 increased to $4.8 million from $3.3 million in the first six months of 2016. Total operating expenses for the first half of 2017 were $9.8 million compared with $8.0 million in the prior-year quarter.

The Company recorded a net loss for the six months ended June 30, 2017, of $13.3 million, an increase of $4.8 million, or 56.5%, compared to a net loss of $8.5 million for the same period in 2016. This increase in net loss is primarily due to a $13.7 million increase in interest expense primarily related to the amortization of debt discounts, offset by a $9.6 million gain on the extinguishment of the June 2016 Series C Warrants, both non-cash items. Additionally, there was a $1.8 million increase in operating expenses primarily related to increased investment in our clinical trial initiatives, offset by $0.4 million increase in gross profit and a $0.7 million increase in the change in the fair value of the warrant liability, a non-cash item.

Balance Sheet Highlights

As of June 30, 2017, Delcath had cash and cash equivalents of $1.8 million, compared with $4.4 million as of December 31, 2016. In addition, the Company has $12.9 million in restricted cash primarily related to the Convertible Notes issued in June 2016. During the six months ended June 30, 2017, the Company used $8.1 million of cash to fund operating activities. Assuming the Company is able to effect a reverse stock split as proposed in its recent consent solicitation statement filed with the SEC on July 26, 2017, management believes that its capital resources are adequate to fund operating activities through the end of 2017.

Recent Financial Transactions

In July 2017 Delcath issued two series of preferred stock (Series A Preferred Stock and Series B Preferred Stock) in transactions with holders of its Convertible Note. The Series A shares were issued to address a short-term valuation issue for common shares delivered to the Note holders to close an installment period. Through the Series A Preferred Shares placement, the Company was able to value the open installment shares such that the amount of debt remaining under the Convertible Note was reduced by $4.2 million. The Series B Preferred Shares, which are convertible to common shares at $0.153, allowed the Company to raise $2.0 million in unrestricted cash.

On August 8, 2017 Endocyte, Inc. (NASDAQ:ECYT), a leader in developing targeted small molecule drug conjugates (SMDCs) and companion imaging agents for personalized therapy, reported financial results for the second quarter ending June 30, 2017, and provided a clinical and pipeline update (Press release, Endocyte, AUG 8, 2017, View Source [SID1234520166]).

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"We’ve continued to make important progress on each of our three development programs," said Mike Sherman, President and CEO of Endocyte. "Dr. Michael Jensen at the Seattle Children’s Research Institute has exceeded our expectations in the breadth of work he has completed in optimizing the vector to be used in our chimeric antigen receptor T-cell (CAR T-cell) therapy, and we are happy to report that we expect to initiate the CAR T-cell manufacturing process for clinical supply in the fourth quarter of this year. In addition, we have filed an Investigational New Drug (IND) application for EC2629, which we believe is the first agent in development that simultaneously targets cancer cells and the tumor associated macrophages (TAMs) that support and protect them – an approach that could continue to evolve the immunotherapy treatment landscape. Finally, we expect to complete enrollment of taxane-exposed prostate cancer patients in the EC1169, PSMA-tubulysin expansion trial this fall."

"We believe our pipeline has significant potential to create value and we are committed to effective, timely execution in bringing these assets forward through clinical development and identifying paths to accelerate value-driving catalysts. With this in mind, our strategy is to select receptor-positive patients in highly-targeted indications from the beginning of development, including during dose escalation," continued Mr. Sherman. "We will also continue to objectively measure our pipeline investments relative to opportunities to outlicense assets or access external opportunities to ensure we are deploying capital productively."

Development Programs Overview

CAR T-Cell (Bi-specific adaptor molecule): Today, Endocyte announced that Dr. Michael Jensen of Seattle Children’s Research Institute will lead the clinical evaluation of Endocyte’s first CAR T-cell adaptor molecule in patients with osteosarcoma. This is primarily a pediatric indication with a significant need for new therapeutic options. Recent results from tumor micro-array analysis and human intravital fluorescent imaging studies have confirmed this disease as positive for the folate receptor, the target of Endocyte’s first bi-specific adaptor. Pre-clinical evaluations for the CAR T-cell program by Dr. Jensen are expected to be completed in the second half of 2017, in anticipation of a potential IND filing in 2018. Multiple additional adaptor molecules designed to be directed to distinct tumor targets including, potentially, PSMA, NK1R and others, are in development through the company’s collaboration with Purdue University.

In April, Endocyte announced new research in a late-breaking poster session at the American Association for Cancer Research (AACR) (Free AACR Whitepaper) Annual Meeting on this application of Endocyte’s SMDC technology. Data demonstrated that Endocyte’s bi-specific adaptor molecules can mitigate or eliminate adverse cytokine storms in animal models which could meaningfully improve the safety and tolerability of CAR T-cell therapies.

EC1169 (PSMA-targeted tubulysin): Endocyte is currently enrolling a phase 1 expansion cohort of 40 metastatic castration-resistant prostate cancer (mCRPC) patients who have previously been treated with a taxane-based therapy. Data presented at the annual meeting of the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) in June demonstrated EC1169’s anti-tumor activity particularly in patients with previous exposure to taxane therapy. Endocyte stopped enrollment of taxane-naïve mCRPC patients in the trial in June. Updated interim results will be presented at the annual meeting of the European Society for Medical Oncology (ESMO) (Free ESMO Whitepaper) in September. This presentation is expected to be an incremental update to data presented at ASCO (Free ASCO Whitepaper) a few months prior. Completion of enrollment is expected in the fall.

EC2629 (Folate-targeted PBD): Endocyte recently filed an IND with the U.S. FDA and is planning to initiate a phase 1 clinical trial in patients selected as positive for the folate receptor in cancers where TAMs are known to be prevalent in the tumor micro-environment, for example, breast, endometrial, ovarian, and non-small cell lung cancers. This novel agent leverages a proprietary DNA crosslinking warhead targeted to cancer cells and the TAMs that both support their growth as well as protect them from the immune system. This mechanism is particularly compelling in light of recent research that has identified mechanisms by which TAMs can mediate resistance to the use of checkpoint inhibitor therapies such as PD-1 and PD-L1.

Financial Expectations

The company anticipates its cash, cash equivalents and investments balance at the end of 2017 to be approximately $105 million. As the full expense impact of the company’s restructuring is expected to be realized by the end of the fourth quarter of 2017, the company anticipates cash expenses to be approximately $5 million per quarter prior to potential increases associated with advancing clinical trials and new investment opportunities currently under evaluation.

Second Quarter 2017 Financial Results

Endocyte reported a net loss of $11.7 million, or $0.28 per basic and diluted share, for the second quarter of 2017, compared to a net loss of $14.0 million, or $0.33 per basic and diluted share for the same period in 2016.

In June 2017, the company stopped enrollment in its EC1456 phase 1b trial as the assessment of trial data did not yield the level of clinical activity necessary to support continued advancement of EC1456. The company is, however, continuing enrollment of a small number of patients in its EC1456 ovarian cancer surgical study to inform other SMDC programs in development. In addition, in June, Endocyte narrowed the focus of its EC1169 development program, refocused its efforts on two pre-clinical programs, and reduced its workforce by approximately 40% to align resources to focus aggressively on the company’s highest value opportunities while maintaining key capabilities. Endocyte recorded $2.3 million of restructuring expenses for the three months ended June 30, 2017 as follows:

Included in research and development expenses were expenses for employee termination benefits of $0.9 million, $0.9 million for the remaining EC1456 phase 1b trial expenses, including site close-out expenses, $0.3 million related to other restructuring expenses, and $0.1 million related to fixed asset impairment charges; and
Included in general and administrative expenses were expenses for employee termination benefits of $0.1 million.
Research and development expenses were $8.7 million for the second quarter of 2017, compared to $6.8 million for the same period in 2016. The increase was primarily attributable to $2.2 million of expenses recorded in June due to the company’s restructuring relating primarily to severance for the workforce reduction, EC1456 trial termination expenses and fixed asset impairment charges. Other increases included expenses for the EC1169 phase 1 trial, development of EC2629 and other pre-clinical and general research. These increases were partially offset by a decrease in non-cash stock compensation expense as a result of employee terminations since the second quarter of 2016.

General and administrative expenses were $3.3 million for the second quarter of 2017, compared to $7.4 million for the same period in 2016. The decrease was due to a decrease in compensation expense, including non-cash stock compensation expense and severance expense related to the resignation of our former Chief Executive Officer in June of 2016.

Cash, cash equivalents and investments were $118.4 million at June 30, 2017, compared to
$154.6 million at June 30, 2016, and $138.2 million at December 31, 2016.