On March 15, 2017 Pfenex Inc. (NYSE MKT: PFNX), a clinical-stage biotechnology company engaged in the development of biosimilar therapeutics, including high value and difficult to manufacture proteins, reported financial results for the fourth quarter and full year ended December 31, 2016 and provided a business update (Press release, Pfenex, MAR 15, 2017, View Source [SID1234518198]).

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Business Review and Update

PF708 is the Pfenex product candidate that is being developed as a therapeutic equivalent to Forteo (teriparatide), marketed by Eli Lilly for the treatment of osteoporosis patients at high risk of fracture. The PF708 bioequivalence study, conducted in 70 healthy subjects, was completed in the second quarter of 2016 and met its primary objectives. We initiated an immunogenicity/pharmacokinetics clinical study in osteoporosis patients in the fourth quarter of 2016. The interim pharmacokinetic data from this study is expected in the second half of 2017 and the immunogenicity data is expected in the first half of 2018. Pfenex believes this study, along with the positive bioequivalence study, is anticipated to satisfy the filing requirements for PF708 through the 505(b)(2) regulatory pathway.

In August 2016, Pfenex regained full rights from Pfizer to PF582, our biosimilar candidate to Lucentis (ranibizumab) for the treatment of retinal diseases, and announced positive results from the phase 1/2 trial, which showed that PF582 was pharmacologically active and with a safety profile that was consistent with that of Lucentis. We are continuing to explore strategic options for PF582.

Px563L, a novel anthrax vaccine candidate, is being developed by Pfenex in response to the United States government’s unmet demand for increased quantity, stability and dose sparing regimens of anthrax vaccine. We initiated a randomized, placebo-controlled Phase 1a trial in healthy subjects in the second half of 2015 to investigate the safety and immunogenicity of Px563L, and we announced the interim analysis results in the second half of 2016. Findings indicated that the vaccine was well-tolerated, with the potential to afford immunogenicity protection against anthrax infection with fewer injections. The development of Px563L is funded by the U.S. Department of Health and Human Services, through the Biomedical Advanced Research and Development Authority, or BARDA, in accordance with a cost plus fixed fee advanced development contract valued at up to approximately $143.5 million. In addition to the base period, BARDA has now exercised additional phases of the development contract effective January 2017, allowing for the continuing development of Px563L. The phase 2 study could initiate in 2018, provided the program continues to successfully advance with the support of BARDA. Pfenex believes the successful completion of the activities under this contract could lead to a procurement contract for supply of Px563L to the Strategic National Stockpile.

Regulatory feedback for PF529, our biosimilar candidate to Neulasta (pegfilgrastim), was received in 2016 and supported the feasibility of development under the 351(k) biosimilar pathway. Pfenex continues to evaluate the potential resource requirements and timeline for development.

In January 2017, Pfenex announced that Dr. Bertrand C. Liang resigned his position as Chief Executive Officer, President, Secretary and as a member of the Board of Directors of the Company following the completion of an independent investigation overseen by the Audit Committee that revealed Dr. Liang had not acted in accordance with the Company’s Board Approval Process Policy and Code of Ethics and Conduct. The misconduct did not impact the operating results for Pfenex. Patrick K. Lucy, the Company’s Chief Business Officer, was appointed to serve as Interim Chief Executive Officer, President, and Secretary. The Board of Directors has formed a search committee consisting of select independent directors to initiate an executive search for a replacement CEO.

Financial Highlights for the Fourth Quarter and Full Year 2016

Total Revenue increased by $50.6 million, or 528%, from $9.6 million in 2015 to $60.2 million in 2016. The increase in revenue was primarily due to the termination of our development and license agreement with Pfizer. As a result of the termination in August 2016, the estimated performance period was accelerated resulting in the recognition of $45.8 million of revenue that had been previously deferred. As a result of the termination, we will not recognize any additional future revenue under the Pfizer development and license agreement. Revenue increased by $2.2 million, or 68%, to $5.5 million in the three month period ended December 31, 2016 compared to $3.3 million in the same period in 2015. The increase in the three month period was due primarily to one-time milestone payments which contributed approximately $2 million to license fee revenue for the quarter ended December 31, 2016.

Cost of revenue increased by $0.7 million, or 15%, to $5.3 million in 2016 compared to $4.6 million in 2015. The change was due primarily to a net increase of $0.7 million in costs for our proprietary novel vaccine program Px563L, which is funded by a government agency. Cost of revenue decreased by approximately $0.4 million, or 24%, to $1.3 million in the three month period ending December 31, 2016 compared to $1.7 million in the same period in 2015 due primarily to timing of costs related to the development of our Px563L product candidate. Given the nature of the novel vaccine development process, cost of revenue will fluctuate depending on stage of development.

Research and development expenses increased by approximately $14.2 million, or 78%, to $32.4 million in 2016 compared to $18.2 million in 2015. The increase in research and development expenses in 2016 compared to 2015 was due to manufacturing and development activities of PF708, which is being developed as a therapeutically equivalent candidate Forteo, and our other biosimilar product candidates. R&D expenses increased by approximately $4.6 million, or 75%, to $10.7 million in the three months ended December 31, 2016 compared to the same period in 2015. The increase in the three month period was due primarily to manufacturing and development costs associated with our product candidates.

Selling, general and administrative expenses increased by $2.7 million, or 19% to $17.3 million in 2016 compared to $14.6 million in 2015 and increased by $0.7 million, or 18%, to $4.4 million in the three month period ended December 31, 2016 from $3.7 million in the same period in 2015. The increases in selling, general and administrative expenses were primarily due to higher personnel-related expenses.

Cash and cash equivalents as of December 31, 2016 was $81.5 million.

On March 16, 2017 National Institutes of Biomedical Innovation, Health and Nutrition (Director General: Yoshihiro Yoneda; Ibaraki-shi, Osaka; hereinafter "NIBIOHN"), Daiichi Sankyo Company, Limited (Representative Director, President and CEO: George Nakayama; head office: Chuo-ku, Tokyo; hereinafter "Daiichi Sankyo"), and Mitsubishi UFJ Capital Co., Ltd. (President: Muneki Handa; head office: Chuo-ku, Tokyo; hereinafter "Mitsubishi UFJ Capital") reported that they will launch open innovation research ("the research") on new cancer immunotherapy (Press release, Daiichi Sankyo, MAR 15, 2017, View Source [SID1234518205]).

To carry out the research, a new company called OiDE Adjubilee, Inc. (head office: Chuo-ku, Tokyo; hereinafter "Adjubilee") was established and wholly funded by the OiDE Fund Investment Limited Partnership ("OiDE Fund"), operated by Mitsubishi UFJ Capital.

If the goals of the two-year joint research are achieved, Daiichi Sankyo will purchase all Adjubilee stock in order to continue research and development of the new cancer immunotherapy on its own, paying sales royalties to NIBIOHN following a successful product launch.

This research into new cancer immunotherapy is the second OiDE Fund investment, and Daiichi Sankyo and Mitsubishi UFJ Capital plan to continue to promote open innovation activities to develop new drug discovery platforms using the OiDE Fund.

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One of these, SB02024 has been selected for further profiling in pre-GLP toxicology studies prior to the selection of a clinical candidate (Company Pipeline, Sprint Bioscience, MAR 14, 2017, View Source [SID1234518115]).

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(Filing, 10-K, Kura Oncology, MAR 14, 2017, View Source [SID1234518147])

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On March 14, 2017 Ignyta, Inc. (Nasdaq: RXDX), a biotechnology company focused on precision medicine in oncology, reported company highlights and financial results for the full year ended December 31, 2016 (Press release, Ignyta, MAR 14, 2017, View Source [SID1234518168]). The company is issuing this press release in lieu of conducting a conference call.

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"In 2016, we continued to advance our pipeline of molecularly targeted therapies for the benefit of patients with cancer, including the STARTRK-2 registration-enabling Phase 2 clinical trial of our lead product candidate, entrectinib, our CNS-active tyrosine kinase inhibitor targeting tumors that harbor TRK, ROS1 or ALK fusions," said Jonathan Lim, M.D., Chairman and CEO of Ignyta. "We demonstrated robust clinical proof-of-concept data for entrectinib, as well as RXDX-105—our investigational, VEGFR-sparing, potent RET inhibitor—and made significant preclinical progress on RXDX-106, which represents a novel class of immunomodulatory agents that appears to restore innate immunity in preclinical models via potent inhibition of the TYRO3, AXL and MER (or TAM) family of receptors. Furthermore, in 2016, our in-house Trailblaze Pharos diagnostic assay achieved multiple regulatory milestones, we bolstered our balance sheet, and strengthened our leadership team."

Company Highlights

Entrectinib Clinical Progress

In February 2017, the company announced that updated results from two Phase 1 trials of entrectinib were published in the peer-reviewed journal, Cancer Discovery. Highlights of that publication included that entrectinib has the largest published safety experience of any TRK inhibitor in clinical development and continues to be well tolerated. As of the September 2016 data cutoff, RECIST responses were noted in three of three patients with TRK-positive extracranial solid tumors, with the longest ongoing TRK responder on therapy for 17 months; and RECIST responses in 12 of 14 patients with ROS1-positive solid tumors, with the longest ongoing ROS1 responder on therapy for 32.2 months. Within the subset of 13 patients with ROS1-positive non-small cell lung cancer (NSCLC), the response rate was 85% with a median duration of response of 17.3 months. Additionally, RECIST responses were noted in 63% of patients (five out of eight) with primary or metastatic disease involving the brain.

RXDX-105 Clinical Progress

In November 2016, Ignyta announced interim results from the ongoing Phase 1/1b clinical study of RXDX-105, which were presented at the 2016 EORTC-NCI-AACR (Free EORTC-NCI-AACR Whitepaper) (ENA) Symposium on Molecular Targets and Cancer Therapeutics in Munich, Germany.

Those results highlighted RXDX-105’s clinical activity in patients harboring RET molecular alterations, with five out of nine patients with RET fusion-positive cancers who were RET inhibitor-naïve achieving a RECIST response (one complete response, three partial responses, and one unconfirmed partial response), for a preliminary objective response rate (ORR) of 56%. Within the subset of seven patients with RET fusion-positive NSCLC, four responded, for a preliminary ORR of 57%.

RXDX-106 Preclinical Progress

In November 2016, preclinical data on RXDX-106 were presented at the 2016 ENA Symposium highlighting immuno-oncological and direct tumor-inhibiting activity of this novel agent via potent inhibition of its targets. Those data showed that RXDX-106 is a potent inhibitor of TAM and c-MET targets, and inhibited TAM-mediated and c-MET-mediated tumor growth in vivo. Also, via in vitro and in vivo studies, RXDX-106, as a single agent, appears to release the molecular brakes on immune activation in macrophages, NK cells, and T cells, resulting in the repolarization of the immune response to elicit an anti-tumor effect; and emerging in vivo combination data suggest that RXDX-106 potentiates the activity of anti-PD-1 and anti-CTLA-4 agents.

Diagnostics Laboratory

In November 2016, the company announced that it has received Expedited Access Pathway (EAP) designation from the U.S. Food and Drug Administration (FDA) and also "European Conformity" (CE) marking for its Trailblaze Pharos companion diagnostic test service. The EAP designation enables Ignyta and FDA to have more interactive discussions of the premarket approval application (PMA) for Trailblaze Pharos, which is the proposed companion diagnostic for entrectinib. In August 2016, the FDA approved an investigational device exemption (IDE) for Trailblaze Pharos.

Financing Transactions

In June 2016, the company secured a $42 million term loan facility from Silicon Valley Bank and Oxford Finance. Under the loan facility, the company received initial funding of $32 million, substantially all of which was used to repay the company’s prior loan with Silicon Valley Bank, and has a conditional option to receive an additional $10 million.

In May 2016, the company issued an aggregate of 9.2 million shares of its common stock in an underwritten public offering at a purchase price of $6.25 per share, which resulted in aggregate gross proceeds of $57.5 million.

Financial Results

For the 2016 fiscal year, net loss was $103.6 million, or $2.69 per share, compared with $92.5 million, or $3.44 per share, for the 2015 fiscal year.

Ignyta had no revenues during 2016 or 2015.

Research and development expenses for 2016 were $76.9 million, compared with $73.5 million for 2015. During 2015, the company incurred total costs of $28.2 million in connection with its acquisition of rights to development programs from Teva and Lilly, consisting of the combined $25.3 million net value of our common stock issued and combined upfront payments totaling $2.9 million made to Teva and Lilly in connection with these transactions. Excluding these costs, R&D costs increased by $31.6 million, or 70%, during 2016 as compared to the same period in 2015. This increase was due to the $20.7 million increase in the chemistry, manufacturing, and control and external clinical development costs associated with entrectinib and the company’s other product candidates, and increased facilities costs due to an expansion of its leased facilities space. Additionally, the company incurred increased personnel costs, including additional stock compensation costs of $0.9 million, due to an increase in R&D personnel.

General and administrative expenses were $23.8 million for 2016, compared with $17.1 million for 2015. The increase was primarily attributable to increases in personnel costs, including additional stock compensation costs of $1.5 million.

At December 31, 2016, the company had cash, cash equivalents, and investment securities totaling $133.0 million and current and long-term debt of $32.0 million. At December 31, 2015, the company had cash, cash equivalents, and investment securities totaling $172.1 million and current and long-term debt of $31.0 million.