On August 4, 2016 Juno Therapeutics, Inc. (NASDAQ: JUNO), a biopharmaceutical company focused on re-engaging the body’s immune system to revolutionize the treatment of cancer, reported financial results and business highlights for the second quarter 2016 (Press release, Juno, AUG 4, 2016, View Source;p=RssLanding&cat=news&id=2193215 [SID:1234514279]).

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"The JCAR015 Phase II ROCKET trial is open again after we amended the protocol to return to a cyclophosphamide-only preconditioning regimen. If the ROCKET data are in the range of the Phase I results, where most patients were treated using this preconditioning regimen, we will have the opportunity to change the standard of care and offer improved hope for adult patients with relapsed or refractory ALL," said Hans Bishop, Juno’s President and Chief Executive Officer. "Additionally, we continue to enroll patients in our JCAR017 trial. We are encouraged that JCAR017, the backbone of our CD19 franchise, will change the standard of care again across a range of B cell malignancies with approvals projected to occur as early as 2018."
Second Quarter 2016 and Recent Corporate Highlights
Clinical Update:

CD19 Portfolio:

JCAR015
Announced the removal on July 12, 2016 by the U.S. FDA of a clinical hold that the agency had placed on the Phase II ROCKET trial on July 6, 2016. The ROCKET trial continues using JCAR015 with cyclophosphamide (cy) preconditioning alone. Juno’s trials and plans for its other CD19-directed CAR T cell product candidates, including JCAR017, were not affected.

Announced interim results, as of May 19, 2016, in Memorial Sloan Kettering Cancer Center’s (MSK) Phase I trial of JCAR015 in adult relapsed or refractory (r/r) acute lymphoblastic leukemia (ALL) patients:
Complete remission was observed in 23/30 (77%) patients with morphologic disease and in 18/20 (90%) patients with minimal disease. In patients who achieved a complete remission and had adequate evaluation for minimal residual disease by flow cytometry or polymerase chain reaction, complete molecular remission (CmR) was observed in 19/21 (90%) patients with morphologic disease and in 14/18 (78%) patients with minimal disease.

Median overall survival (OS) for patients with minimal disease treated with JCAR015 had not been reached yet, and that for morphologic patients treated with JCAR015 was 9 months; median OS follow-up for all patients was 13 months with 40% of patients alive at two years.

Durable responses and survival observed in patients who received JCAR015 were comparable between groups that received a subsequent stem cell transplant and those that did not.

Severe cytokine release syndrome (sCRS) was observed in 14/51 (27%) patients and severe neurotoxicity was observed in 15/51 (29%) patients. For patients with minimal disease, 1/20 (5%) patients experienced sCRS and 4/20 (20%) patients had severe neurotoxicity.

JCAR017
Announced Phase I non-Hodgkin lymphoma (NHL) preliminary efficacy and safety data for the ongoing trial. As of early July, 13 patients were evaluable for safety. Two, or 15%, experienced severe neurotoxicity and no patients experienced sCRS. There are early signs of efficacy with an overall response rate of eight out of ten efficacy-evaluable patients, or 80%, and a complete response rate of seven out of ten, or 70%. We plan to update results with more patients and durability data at a future scientific meeting.

Announced interim results, as of May 17, 2016, from Seattle Children’s ongoing Phase I/II study of JCAR017 in pediatric and young adults with r/r ALL (n=42) demonstrating 39/42 (93%) patients experienced a complete remission, all of which were a CmR by flow cytometry. In patients who received fludarabine/cyclophosphamide (flu/cy) preconditioning followed by JCAR017, 14/14 (100%) achieved a complete remission and a CmR. sCRS was observed in 10/42 (24%) patients and severe neurotoxicity was observed in 10/42 (24%) patients. The rates of sCRS and severe neurotoxicity were similar in the flu/cy and cy cohorts of this trial.
JCAR014 – Announced interim results, as of May 18, 2016, from Fred Hutchinson Cancer Research Center’s (FHCRC) ongoing Phase I/II study of JCAR014 in adults with advanced B cell malignancies:
In efficacy-evaluable ALL patients (n=34), complete remission was reported in 34/34 (100%) patients and a CmR as measured by flow cytometry was achieved in 32/34 (94%) patients. In the cohort that received flu/cy preconditioning followed by JCAR014, 22/22 (100%) of the efficacy-evaluable patients achieved a complete remission, all of which were a CmR. Median disease free survival (DFS) and OS have not yet been reached in this cohort of patients, with follow-up for up to 18 months. sCRS was observed in 14/36 (39%) patients and severe neurotoxicity was observed in 14/36 (39%) patients.

In patients with multiple NHL histologies (n=20), predominantly diffuse large B-cell lymphoma, who received flu/cy preconditioning followed by JCAR014 dose level 2 (2×106/kg), 16/20 (80%) had an overall response (OR), of which 10/20 (50%) experienced a complete response (CR). CRs continued in 70% of patients, ranging from 3 to 11+ months. sCRS was observed in 2/20 (10%) patients and severe neurotoxicity was observed in 2/20 (10%) patients. Notably, 16/20 (80%) patients treated with flu/cy preconditioning followed by JCAR014 dose level 2 were treated in the outpatient setting, and 6/20 (30%) did not require hospitalization during the first 30 days of treatment.

A total of 13 high-risk chronic lymphocytic leukemia (CLL) patients (complex karyotype, del17p, ibrutinib-refractory, ibrutinib-intolerant) received JCAR014 and either non-flu/cy (n=2) or flu/cy (n=11) preconditioning. In the flu/cy patients, the OR rate was 10/11 (91%) patients, of which 5/11 (45%) patients achieved CR. CRs were ongoing in 100% of these five patients with a range of 3 to 19+ months. sCRS was observed in 3/13 (23%) patients and severe neurotoxicity was observed in 3/13 (23%) patients.
JCAR018 – Investigators presented interim data, from the ongoing Phase I study in pediatric and young adult r/r ALL patients at the American Association for Cancer Research (AACR) (Free AACR Whitepaper) Annual Meeting 2016 (AACR 2016), showing all three patients at dose level 2 (1 x 106 cells/kg) achieved a complete remission and CmR as measured by flow cytometry. These patients remained in complete remission with follow-up ranging from 3 to 6 months. Limited cytokine release syndrome and no severe neurotoxicity was seen at dose level 2. Dose limiting toxicity was observed at higher doses, so dosing will continue at dose level 2 (1 x 106 cells/kg).

JTCR016 – In the first three solid organ tumor patients treated on the trial, all with mesothelioma, preliminary data, as of early April, presented at AACR (Free AACR Whitepaper) 2016 showed one patient with an ongoing partial response to the WT-1 TCR. The clinical activity appeared to correlate with the pharmacokinetics of the engineered T cells, as the patient with the partial response had the best T cell expansion and persistence. JTCR016 was generally well-tolerated in these three refractory mesothelioma patients, with no evidence of sCRS or severe neurotoxicity.

Corporate News:
Celgene Corporation exercised its option to develop and commercialize CAR product candidates from Juno’s CD19 program outside of North America and China. With the exercise of this option, Celgene paid Juno a fee of $50.0 million and the companies will now generally share worldwide research and development expenses for CAR product candidates in the CD19 program. Celgene has commercial rights outside of North America and China, and will pay Juno a royalty at a percentage in the mid-teens on any future net sales in Celgene’s territories of CAR therapeutic products developed through the CD19 program. Juno retains commercialization rights in North America and China.

Juno entered into an exclusive license agreement with MSK and Eureka Therapeutics, Inc. for a novel, fully-human binding domain targeting B-cell maturation antigen (BCMA), along with antibodies against two additional undisclosed multiple myeloma targets to be used for the potential development and commercialization of CAR cell therapies for patients with multiple myeloma. MSK and Eureka Therapeutics are eligible to receive an undisclosed upfront payment, additional payments upon the achievement of undisclosed clinical, regulatory, and commercial milestones, and royalties on net sales. The parties expect the BCMA CAR to enter human testing as early as the first half of 2017.

Juno acquired RedoxTherapies, a privately held company. The acquisition provides Juno with an exclusive license to vipadenant, a small molecule adenosine A2a receptor antagonist that has the potential to disrupt important immunosuppressive pathways in the tumor microenvironment in certain cancers. Juno intends to explore this molecule in combination with its engineered T cell platform and may over time explore it in other areas as well. The upfront consideration for the RedoxTherapies acquisition was $10.0 million in cash. The seller is also eligible to receive payments upon the achievement of clinical, regulatory, and commercial milestones.

Second Quarter 2016 Financial Results
Cash Position: Cash, cash equivalents, and marketable securities as of June 30, 2016 were $1.11 billion compared to $1.13 billion as of March 31, 2016 and $1.22 billion as of December 31, 2015.

Cash Burn: Cash burn in the second quarter of 2016, excluding the $50.0 million opt-in fee from Celgene and cash inflows and outflows from business development, was $55.2 million. Including the cash inflow from Celgene of $50.0 million, and excluding cash inflows and outflows from business development activities, cash burn in the second quarter of 2016 was $5.2 million, compared to $18.5 million in the second quarter of 2015. Included in cash burn in the three months ended June 30, 2016 and 2015 are cash outflows for capital expenditures of $7.4 million and $6.8 million, respectively.

Revenue: Revenue for the three and six months ended June 30, 2016 was $27.6 million and $37.4 million, respectively, compared to $12.5 million for the three and six months ended June 30, 2015. The increase of $15.1 million and $24.9 million in the three and six months ended June 30, 2016, respectively, was due primarily to revenue recognized in connection with the Celgene collaboration and CD19 opt-in as well as milestone revenue from Novartis. Included in revenue for the three and six months ended June 30, 2015 was an upfront fee of $12.3 million received in connection with the Novartis sublicense agreement.

R&D Expenses: Research and development expenses for the three and six months ended June 30, 2016, inclusive of non-cash expenses and computed in accordance with GAAP, were $72.3 million and $146.0 million, respectively, compared to $60.2 million and $118.0 million for the same periods in 2015. The increases in 2016 were primarily due to increased costs incurred to execute Juno’s clinical development strategy, manufacture its product candidates, and expand its overall research and development capabilities, milestones achieved in 2016, and an increase in stock-based compensation expense. These increases were offset by upfront payments made to Fate Therapeutics and Editas in 2015, the gains recognized during the first two quarters of 2016 related to the change in the estimated value of Juno’s contingent consideration liabilities, and the difference between the periods in expense related to Juno’s estimated success payment liability. For the three months ended June 30, 2016 and 2015, Juno recorded expenses of $3.5 million and $4.0 million, respectively, related to Juno’s success payment liability. For the six months ended June 30, 2016, Juno recorded a gain of $3.1 million related to Juno’s success payment liability, compared to an expense of $42.9 million for the same period in 2015, resulting in a decrease of $46.0 million in research and development expense for the six months ended June 30, 2016.

Non-GAAP R&D Expenses: Non-GAAP research and development expenses for the three and six months ended June 30, 2016 were $72.1 million and $152.3 million, respectively, compared to $23.9 million and $40.9 million for the same periods in 2015. Non-GAAP research and development expenses for the three and six months ended June 30, 2016 include $8.9 million and $18.0 million of stock-based compensation expense, respectively, compared to $2.3 million and $4.1 million for the same periods in 2015. Non-GAAP research and development expenses in the first half of 2016 exclude the following:
An expense of $3.5 million for the three months ended June 30, 2016 and a gain of $3.1 million for the six months ended June 30, 2016 associated with the change in the estimated value and elapsed service period for Juno’s potential success payment liabilities to FHCRC and MSK.

Non-cash stock-based compensation expense of $1.2 million and $2.4 million for the three and six months ended June 30, 2016, respectively, related to a 2013 restricted stock award to a co-founding director that became a consultant upon his departure from Juno’s board of directors in 2014.

A gain of $4.5 million and $5.5 million for the three and six months ended June 30, 2016, respectively, associated with the change in the estimated fair value of the contingent consideration liabilities recorded in connection with the Stage and X-Body acquisitions.
Non-GAAP research and development expenses in the first half of 2015 exclude the following:
Expense of $4.0 million and $42.9 million for the three and six months ended June 30, 2015, respectively, associated with the change in estimated value and elapsed accrual period for Juno’s potential success payment liabilities to FHCRC and MSK.

Non-cash stock-based compensation expense of $1.7 million and $3.6 million for the three and six months ended June 30, 2015, respectively, related to a 2013 restricted stock award to a co-founding director that became a consultant upon his departure from Juno’s board of directors in 2014.

An expense of $0.1 million for the three and six months ended June 30, 2015, associated with the change in the estimated fair value of the contingent consideration liabilities recorded in connection with the Stage and X-Body acquisitions.

Upfront payments related to license agreements of $30.8 million for the three and six months ended June 30, 2015 associated with the Editas and Fate Therapeutics collaborations.

G&A Expenses: General and administrative expenses on a GAAP basis for the three and six months ended June 30, 2016 were $16.8 million and $32.8 million, respectively, compared to $20.2 million and $27.6 million for the same periods in 2015. The decrease in the second quarter of 2016 compared to the same period in 2015 was primarily due to lower litigation and business development costs, offset by increased personnel costs, including non-cash stock-based compensation expense, and increased consulting fees including costs related to commercial readiness. The increase in the first half of 2016 compared to the first half of 2015 was primarily due to increased personnel costs, including non-cash stock-based compensation expense, and consulting fees including costs related to commercial readiness, offset by lower litigation and business development expenses. General and administrative expenses include $5.5 million and $10.4 million of non-cash stock-based compensation expense for the three and six months ended June 30, 2016, respectively, compared to $3.0 million and $4.8 million for the same periods in 2015.

GAAP Net Loss: Net loss for the three and six months ended June 30, 2016 was $64.8 million, or $0.64 per share, and $135.9 million, or $1.35 per share, respectively, compared to $66.0 million, or $0.79 per share and $130.9 million, or $1.58 per share for the same periods in 2015.

Non-GAAP Net Loss: Non-GAAP net loss, which incorporates the non-GAAP R&D expense, for the three and six months ended June 30, 2016 was $64.6 million, or $0.64 per share and $142.1 million, or $1.40 per share, respectively, compared to $29.6 million, or $0.35 per share and $53.8 million, or $0.65 per share, respectively, for the same periods in 2015.
A reconciliation of GAAP net loss to non-GAAP net loss is presented below under "Non-GAAP Financial Measures."

2016 Financial Guidance
Juno reaffirms 2016 cash burn guidance, excluding cash inflows or outflows from business development activities, of between $220 million and $250 million.
Operating burn estimated to be between $170 million and $195 million.
Capital expenditures estimated to be between $40 million and $55 million, the vast majority of which are related to one-time infrastructure build-outs.

On August 4, 2016 Astellas Pharma Inc. (TSE: 4503, President and CEO: Yoshihiko Hatanaka, "Astellas") reported that Astellas’ US holding company, Astellas US Holding, Inc. ("Astellas US Holding"), has transferred its wholly owned manufacturing subsidiary Astellas Pharma Technologies, Inc. (Location: Norman, OK, USA, "APT") to Avara Norman Pharmaceutical Services, Inc. (Headquarters: Norwalk, CT, USA, "Avara") (Press release, Astellas, AUG 4, 2016, View Source [SID:1234514333]). Astellas Pharma Technologies, Inc. will be renamed Avara Pharmaceutical Technologies, Inc.

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"We sincerely thank the Astellas Pharma Technologies employees in Norman for their dedication over many years of service. In addition, I am very grateful for the way they have kept our operation running smoothly through the last months of uncertainty as we searched for the right buyer — and we wish them the best as they transition to Avara," said Mitsunori Matsuda, president of Technology at Astellas. "We have confidence that Avara is the right company to oversee the continuing supply of the Astellas products that are made at the facility, as well as the fulfillment of capacity use at and capabilities of the facility. We look forward to working with Avara as the new owner of the facility to ensure the continuous supply of our products for the patients who need them."

Astellas is engaged in ongoing efforts to create organizations and systems that can flexibly respond to rapidly changing environments and work toward higher quality and efficiency of operations. In the areas of manufacturing and technology, Astellas strives to promote the establishment of a stable manufacturing system that will efficiently realize the steady supply of high-quality drugs through the effective use of external resources and the strengthening of Astellas’ own internal functions. As a part of these efforts, Astellas has transferred APT, which owns the plant used for the formulation and packaging of certain Astellas pharmaceutical products, to Avara.

Under the terms of the transaction, APT employees will remain employed at the site, and the plant will continue to manufacture certain Astellas products on a contract basis.

Astellas expects to continue to source a stable supply of high-quality products from the facility under the oversight of Avara.

Deloitte Corporate Finance served as financial advisor to Astellas in connection with the transaction.

1. Financial terms of this deal Financial terms including the value of this acquisition are not disclosed.

2. Outline of APT and the Norman Plant
Astellas Pharma Technologies, Inc.
Location : Norman, OK, USA
Representative : Brian McLellan, President
Capital : 100% owned by US holding company, Astellas US Holding, Inc.
Business description : Manufacturing of pharmaceutical products

Norman Plant
Site area : Approx.810,000 m2
Building area : Approx.29,000 m2
Total number of employees : Approx.200 (as of June 2016）

3. Outline of Transferee
Company name : Avara Norman Pharmaceutical Services, Inc.
Head office : Norwalk, CT, USA
Representative : Timothy C. Tyson, Chairman, Chief Executive Officer
Capital : Avara US Holdings, Ltd. 100%
Business description : Contract manufacturing of pharmaceutical products

In line with the transfer of APT, Astellas expects approximately ¥9.0 billion of one-time expenses including impairment loss of plant and equipment, among others, for the second quarter ending September 30, 2016. Astellas doesn’t revise the full-year consolidated business forecasts for FY2016 (April 1, 2016 to March 31, 2017) announced in May 2016.

On August 3, 2016 Synthetic Biologics, Inc. (NYSE MKT: SYN), a clinical stage company focused on developing therapeutics to protect the gut microbiome while targeting pathogen-specific diseases, reported an operational update and reported financial results for the three months ended June 30, 2016(Press release, Synthetic Biologics, AUG 3, 2016, View Source [SID:1234514220]).

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Synthetic Biologics, Inc. www.syntheticbiologics.com (PRNewsFoto/Synthetic Biologics, Inc.)
"In the second quarter we continued the transition from an early-stage clinical development company to a late-stage clinical development company focused on the commercialization of our two lead GI microbiome-focused drug candidates," said Jeffrey Riley, Chief Executive Officer. "We held an End of Phase 2 meeting with FDA and received guidance for advancement to a pivotal clinical trial for SYN-010, designed to treat an underlying cause of the symptoms associated with irritable bowel syndrome with constipation (IBS-C)." Mr. Riley continued, "The approval of the generic name ‘ribaxamase’ for SYN-004, the announcement of positive clinical outcomes from a second Phase 2a clinical trial and robust enrollment in our global Phase 2b proof-of-concept clinical trial continued to fuel momentum for our program designed to protect the gut microbiome and prevent C. difficile infection (CDI), antibiotic-associated diarrhea (AAD) and the emergence of antibiotic resistant organisms. To date, we have enrolled 374 patients and anticipate announcing topline results from our ongoing Phase 2b clinical trial for SYN-004 in early 2017."

Microbiome-Focused Clinical Program Progress

SYN-010 – Treatment of irritable bowel syndrome with constipation (IBS-C):

Held End of Phase 2 meeting with FDA and received guidance for clinical study design and requirements for Phase 3 development
Plan to initiate Phase 2b/3 pivotal clinical trial (1Q 2017)
Presented detailed data during Digestive Disease Week 2016 supporting previously reported positive outcomes from two Phase 2 clinical trials of SYN-010, including:
Data demonstrating an inverse correlation between breath methane Area Under Curve (AUC) and complete spontaneous bowel movements (CSBMs) in study participants diagnosed with IBS-C
Data demonstrating clear improvements in abdominal pain, bloating and quality of life measures (IBS-SSS) in study participants who were administered SYN-010
Announced results from a separate randomized, open-label Pharmacokinetic (PK) study demonstrating SYN-010 avoided desired drug release in the stomach and delivered the antimethanogenic lovastatin lactone into the lower small intestine and colon while reducing systemic exposure to the cholesterol-lowering lovastatin beta-hydroxyacid metabolite

SYN-004 (ribaxamase) – Prevention of CDI, AAD and the emergence of antibiotic-resistant organisms:

Received approval from United States Adopted Names Council (USAN) for the generic name "ribaxamase" for SYN-004
Continued enrollment in global Phase 2b proof-of-concept clinical trial intended to evaluate the ability of ribaxamase to prevent CDI, C. difficile-associated diarrhea (CDAD) and AAD in patients hospitalized with a lower respiratory tract infection and receiving intravenous (IV) ceftriaxone
Enrolled 374 patients to date across global clinical sites; enrollment expected through 3Q 2016
Anticipate announcing topline results from Phase 2b proof-of-concept clinical trial (1Q 2017)
Announced positive results from second Phase 2a clinical trial demonstrating a correlation of the 150 mg dose of ribaxamase, both alone and in the presence of the proton pump inhibitor, esomeprazole and the successful degradation of IV ceftriaxone to levels that were near or below detectable without impacting ceftriaxone plasma concentrations
The 150 mg dose strength of ribaxamase was well tolerated by all participants
Operational Update – Expanded Leadership Team

Deb Mathews, PharmD, joined the Company as Vice President, Medical Affairs, bringing broad experience and strong leadership of clinical and medical affairs as the Company begins to implement commercialization strategies
Isaac J. Bright, MD, joined the Company in the newly created position of Vice President, Corporate Development, to lead all strategic corporate and business development efforts for the Company’s two lead microbiome-focused drug candidates
Second Quarter 2016 Financial Results

General and administrative expenses decreased by 3% to $2.1 million for the second quarter of 2016, from $2.2 million for the second quarter of 2015. This decrease is primarily the result of lower legal fees offset by an increase in stock-based compensation and increased employee costs associated with the transition of the administrative and financial office to our Maryland headquarters. The charge related to stock-based compensation expense was $507,000 for the second quarter of 2016, compared to $335,000 for the second quarter of 2015.

Research and development expenses decreased by 5% to $7.2 million for the second quarter of 2016, from $7.5 million for the second quarter of 2015. This decrease is primarily the result of decreased Phase 2 program costs associated with clinical development programs, manufacturing and research activities within our microbiome-focused pipeline. Research and development expenses also include a charge related to non-cash stock-based compensation expense of $400,000 for the second quarter of 2016, compared to $252,000 for the second quarter of 2015.

Other income was $3.5 million for the second quarter of 2016, compared to other expense of $3.9 million for the second quarter of 2015. Other income for the second quarter of 2016 is due to non-cash expense of $3.5 million from the change in fair value of warrants. The decrease in the fair value of the warrants was due to the decrease in our stock price from the year ended December 31, 2015. Non-cash expense related to the increase of fair value of warrants for the second quarter of 2015 was $3.9 million.

On August 3, 2016 Geron Corporation (Nasdaq:GERN) reported financial results for the three and six months ended June 30, 2016 and recent events (Press release, Geron, AUG 3, 2016, View Source;p=irol-newsArticle&ID=2192600 [SID:1234514221]).

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For the second quarter of 2016, the company reported a net loss of $8.6 million, or $0.05 per share, compared to $9.4 million, or $0.06 per share, for the comparable 2015 period. Net loss for the first six months of 2016 was $17.5 million, or $0.11 per share, compared to $18.7 million, or $0.12 per share, for the comparable 2015 period. The company ended the second quarter of 2016 with $136.4 million in cash and investments and has not incurred any impairment charges on its marketable securities portfolio.

Revenues for the three and six months ended June 30, 2016 were $211,000 and $960,000, respectively, compared to $251,000 and $788,000 for the comparable 2015 periods. Revenues for the three and six month periods ending June 30, 2016 and 2015 included royalty and license fee revenues under various non-imetelstat license agreements.

Total operating expenses for the three and six months ended June 30, 2016 were $9.1 million and $18.9 million, respectively, compared to $9.7 million and $19.7 million for the comparable 2015 periods. Research and development expenses for the three and six months ended June 30, 2016 were $4.6 million and $9.6 million, respectively, compared to $4.8 million and $9.8 million for the comparable 2015 periods. General and administrative expenses for the three and six months ended June 30, 2016 were $4.5 million and $9.3 million, respectively, compared to $4.0 million and $8.6 million for the comparable 2015 periods. Operating expenses for the three and six months ended June 30, 2015 also included restructuring charges of $941,000 and $1.3 million, respectively, in connection with the company’s organizational resizing announced in March 2015.

The decrease in research and development expenses for the three and six month periods ending June 30, 2016, compared to the same periods in 2015, primarily reflects the net result of reduced personnel-related costs resulting from the March 2015 organizational resizing and lower costs for the manufacturing of imetelstat drug product, partially offset by higher costs for the company’s proportionate share of clinical development expenses under the imetelstat collaboration with Janssen Biotech, Inc. (Janssen). The company expects research and development expenses to increase during the remainder of the year as the clinical development of imetelstat continues in collaboration with Janssen. The increase in general and administrative expenses for the three and six month periods ending June 30, 2016, compared to the same periods in 2015, primarily reflects higher non-cash stock-based compensation expense and increased allocation of facilities and other overhead costs to general and administrative activities.

Interest and other income for the three and six months ended June 30, 2016 was $293,000 and $549,000, respectively, compared to $145,000 and $294,000 for the comparable 2015 periods. The increase in interest and other income for the three and six month periods ending June 30, 2016, compared to the same periods in 2015, primarily reflects higher yields on the company’s marketable securities portfolio.

Recent Company Events

In July 2016, three U.S. patents related to imetelstat were issued by the U.S. Patent and Trademark Office. U.S. 9,375,485 has claims covering the use of telomerase inhibitor compounds, including imetelstat, for alleviating at least one symptom of myelofibrosis or myelodysplastic syndromes, including chronic myelomonocytic leukemia, and is expected to remain in force until at least March 2033. U.S. 9,388,415 and U.S. 9,388,416 have claims covering methods for using imetelstat to inhibit the activity of telomerase and using imetelstat to inhibit cancer cell proliferation, as well as methods for using imetelstat to treat cancer, and are expected to remain in force until at least September 2024. These patents are related to Geron’s existing imetelstat composition of matter patent U.S. 7,494,982, which issued in 2009 and is expected to remain in force until at least December 2025. Further extension of patent terms may be available for regulatory review periods.

Geron’s portfolio of patents related to imetelstat and related products whose mechanism of action is telomerase inhibition have been licensed to Janssen under an exclusive worldwide license and collaboration agreement for all human disorders or medical conditions.

On August 3, 2016 XOMA Corporation (Nasdaq:XOMA), a leader in the discovery and development of therapeutic antibodies, reported recent achievements and financial results for the second quarter ended June 30, 2016 (Press release, Xoma, AUG 3, 2016, View Source [SID:1234514339]).

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"The second quarter of 2016 marked our full transition to a solely endocrine-focused business as we have concluded all biodefense and Servier activities. During the quarter, we strategically focused on two antibody programs that are addressing areas of significant unmet medical need in endocrinology and that could create significant value for XOMA," said John Varian, Chief Executive Officer of XOMA. "First, we continued to advance our Phase 2 proof-of-concept study of XOMA 358 in the United States and EU in patients with hypoglycemia due to congenital hyperinsulinism. We also initiated a Phase 2 proof-of-concept study of XOMA 358 in patients who experience severe hypoglycemia following gastric bypass surgery. We remain on track to provide an update on our clinical experience with this first-in-class compound later this summer."

"Additionally, we advanced our second endocrine-focused asset into mid-stage clinical development with the initiation of a Phase 2 proof-of-concept study of XOMA 213 to confirm its ability to curtail prolactin signaling. This monoclonal antibody could be an important therapeutic option for people with prolactinomas, benign tumors of the pituitary gland, who do not respond to or are intolerant to current standard of care medications."

Recent Achievements

Received Orphan Drug Designation in the European Union for XOMA 358 for the treatment of congenital hyperinsulinism, a rare genetic disorder in which the insulin cells of the pancreas (beta cells) secrete inappropriate and excessive insulin
Initiated XOMA 358 proof-of-concept study in patients with hypoglycemia post gastric bypass surgery, representing the second rare hypoglycemic indication in which this first-in-class insulin receptor antibody is being studied
Initiated an open-label, mechanism of action, single-dose, multi-center Phase 2 proof-of-concept study of XOMA 213
Second Quarter 2016 Financial Results
XOMA recorded total revenues of $0.4 million for the three months ended June 30, 2016, compared with $2.5 million during the corresponding period of 2015. The decrease in second quarter 2016 revenues was due primarily to decreased revenues from the National Institute of Allergy and Infectious Diseases (NIAID) and Servier due to the Company’s decision to eliminate its non-endocrine assets. Going forward, revenues are expected to result from potential new transactions or payments under existing contracts.

Research and development (R&D) expenses for the second quarter of 2016 were $13.7 million, compared with $19.7 million in the corresponding 2015 period. The decrease was due primarily to a $3.9 million reduction in salaries and related expenses, a $1.2 million reduction in clinical trial costs, and a $0.9 million reduction in outside consulting fees due to the termination of the Servier Phase 3 program, partially offset by an increase of over $2.0 million in manufacturing costs related to the production of XOMA 358 material for the use in future clinical trials.

Selling, general and administrative expenses (SG&A) were $4.8 million for the three months ended June 30, 2016, compared with $5.1 million incurred during the same period in 2015, reflecting reduced salary and related personnel costs following the Company’s restructuring activities that were initiated in the third quarter of 2015.

For the second quarter ended June 30, 2016, XOMA had a net loss of $15.2 million, compared with a net loss of $23.8 million in the quarter ended June 30, 2015. The net losses in the three months ended June 30, 2016 and 2015, included a $3.3 million gain and $0.2 million loss, respectively, in non-cash revaluations of contingent warrant liabilities, resulting primarily from fluctuations in XOMA’s stock price. Excluding those revaluations, the net loss for the three months ended June 30, 2016, was $18.5 million, compared with a net loss of $23.6 million for the same reporting period in 2015.

On June 30, 2016, XOMA had cash and cash equivalents of $33.9 million compared with $65.8 million at December 31, 2015.

The Company expects its available capital will be sufficient to fund operations through at least the first quarter of 2017.

About XOMA 358
Insulin is the major physiologic hormone for controlling blood glucose levels. Abnormal increases in insulin secretion can lead to profound hypoglycemia (low blood sugar), a state that can result in significant morbidities, including brain damage, seizures and epilepsy. XOMA, leveraging its scientific expertise in allosteric monoclonal antibodies, developed the XMet platform, consisting of separate classes of selective insulin receptor modulators (SIRMs) that could have a major effect on treating patients with abnormal metabolic states. XOMA 358 binds selectively to insulin receptors and attenuates insulin action.

XOMA 358 is being investigated as a novel treatment for non-drug-induced, endogenous hyperinsulinemic hypoglycemia, as well as hypoglycemia after bariatric surgery and other related disorders. XOMA recently initiated Phase 2 development activities for XOMA 358. One Phase 2 study is being conducted in patients with congenital hyperinsulinism at The Children’s Hospital in Philadelphia (CHOP) and the Great Ormond Street Hospital (GOSH) in London. A second multi-center Phase 2 study is being conducted in patients who experience hypoglycemia post gastric bypass surgery. A therapy that safely and effectively mitigates insulin-induced hypoglycemia has the potential to address a significant unmet therapeutic need for certain rare medical conditions associated with hyperinsulinism. More information on the XOMA 358 clinical trial may be found at www.clinicaltrials.gov and www.clinicaltrialsregister.eu.

About Congenital Hyperinsulinismi, ii, iii, iv
Congenital Hyperinsulinism (CHI) is a genetic disorder in which the insulin cells of the pancreas (beta cells) secrete inappropriate and excessive insulin. Ordinarily, beta cells secrete just enough insulin to keep blood sugar in the normal range. In people with CHI, the secretion of insulin is not properly regulated, causing excess insulin secretion and frequent episodes of low blood sugar (hypoglycemia). In infants and young children, these episodes are characterized by a lack of energy (lethargy), irritability or difficulty feeding. Repeated episodes of low blood sugar increase the risk for serious complications, such as breathing difficulties, seizures, intellectual disability, vision loss, brain damage, coma, and possibly death. About 60 percent of infants with CHI experience a hypoglycemic episode within the first month of life. Other affected children develop hypoglycemia by early childhood. Current treatments for CHI are limited to medical therapy and surgical removal of part or all of the pancreas (pancreatectomy).

About Hypoglycemia Post Gastric Bypass Surgery
As the number of gastric bypass surgeries to treat severe obesity has increased, so too has the awareness that this population may experience postprandial hypoglycemia (low blood glucose following a meal) with symptoms developing months or years following the gastric bypass surgery. Postprandial hypoglycemia occurs with a range of severity in post-gastric bypass patients. The mild end of the spectrum may be managed largely through diet modification. The most severe forms are more prevalent in patients who underwent a Roux-en-Y procedure, and result in severe refractory postprandial hyperinsulinemic hypoglycemia with neuroglycopenic symptoms (altered mental status, loss of consciousness, seizures) that cannot be managed through diet modification. If currently available pharmacologic agents do not resolve the condition, these patients are treated with either a partial pancreatectomy or reversal of the gastric bypass.

About XOMA 213
XOMA 213 (formerly LFA 102) is a monoclonal antibody that neutralizes prolactin-induced signaling. Prolactin is a protein that in normal post-partum females enables the production of milk. XOMA 213 is being developed for diseases of hyperprolactinemia — specifically, prolactinomas, benign tumors of the pituitary gland that have serious medical consequences, particularly sexual dysfunction, infertility and osteoporosis. Prolactinomas also can lead to anti-psychotic-induced hyperprolactinemia, a side effect seen in patients treated with commonly used antipsychotics, antidepressants, and pain medications. Ten to twenty percent of patients do not respond to or are intolerant of current standard of care medications.