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Lilly to Acquire AurKa Pharma

On May 14, 2018 Eli Lilly and Company (NYSE: LLY) reported an agreement to acquire AurKa Pharma, Inc., a company established by TVM Capital Life Science to develop oncology compound AK-01, an Aurora kinase A inhibitor that was originally discovered at Lilly (Press release, Eli Lilly, MAY 14, 2018, View Source [SID1234526591]). The compound is a potential first-in-class asset that AurKa Pharma is studying in Phase 1 clinical trials in multiple types of solid tumors.

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Aurora kinases are believed to play a crucial role in cellular division by controlling chromosomal segregation. Defects in segregation can cause genetic instability, a condition highly associated with the formation of tumors. Aurora kinases, consisting of Aurora A, Aurora B and Aurora C, are key mitotic regulators required for genome stability and are frequently overexpressed in cancerous tumors. AurKa Pharma’s asset, AK-01, has been shown to be highly selective for Aurora A, with potential clinical benefit observed in Phase 1 studies. Future studies will seek to determine if the selectivity profile of AK-01 can improve efficacy while limiting toxicity risks to a manageable level.

After a review of its clinical pipeline priorities in 2016, Lilly sold the compound to TVM Capital Life Science, which then established AurKa as part of the TVM Life Science Ventures VII fund. The fund is a novel investment model that seeks to develop early-stage pharmaceutical assets in a capital-efficient manner. As part of its innovation strategy, Lilly actively participates with venture capital firms to source early stage opportunities.

"The acquisition of AurKa Pharma supports Lilly’s external innovation strategy, in which we seek to partner with leading life science venture capital firms in order to identify, support and access promising innovation in areas of unmet medical need," said Darren Carroll, senior vice president of corporate business development at Lilly. "We are excited with the value TVM created for this compound through its early-Phase studies, and we look forward to more opportunities in the future."

"Lilly Oncology is focused on the development of innovative cancer therapies that can make a meaningful difference for patients," said Levi Garraway, M.D., Ph.D., senior vice president, global development and medical affairs, Lilly Oncology. "The acquisition of AurKa Pharma expands our pipeline with a promising oncology compound targeting a distinct cell cycle pathway. The work done by AurKa will allow Lilly to leverage emerging data about cancers in which this molecule might be effective, and determine if it can be beneficial to people living with various forms of cancer."

"Through the unique healthcare venture capital model pioneered by TVM Capital Life Science, companies such as AurKa have been established to more quickly and efficiently bring promising compounds to clinical proof-of-concept," said Luc Marengere, Ph.D., Managing Partner at TVM Capital Life Science. "We are pleased that the scientific advances made by AurKa could contribute to the development of AK-01 and hopefully help deliver a potential new medicine for cancer patients."

Under the terms of the agreement, Lilly will acquire all shares of AurKa Pharma. In return, AurKa Pharma shareholders will receive an upfront payment of $110 million. AurKa Pharma shareholders are also eligible to receive up to $465 million in regulatory and sales milestones should AK-01 gain approval in the U.S. and other markets, and achieve certain sales levels.

This transaction will be reflected in Lilly’s reported results and financial guidance according to Generally Accepted Accounting Principles (GAAP), and is subject to customary closing conditions. There will be no change to Lilly’s 2018 non-GAAP earnings per share guidance as a result of this transaction.

Baird is acting as financial advisor to AurKa in this transaction.

Zymeworks and Daiichi Sankyo Expand Immuno-Oncology Collaboration Focused on Bispecific Antibodies

On May 14, 2018 Zymeworks Inc. (NYSE/TSX: ZYME), a clinical-stage biopharmaceutical company developing multifunctional therapeutics, and Daiichi Sankyo Company, Limited (Daiichi Sankyo) reported that they entered into a new license agreement, building upon their 2016 cross-licensing and collaboration agreement (Press release, Zymeworks, MAY 14, 2018, View Source [SID1234526590]).

"With a successful track record and our first bispecific antibody incorporating the Azymetric and EFECT technology having achieved a key research milestone in 2017, we look forward to adding two more bispecific compounds to our pipeline," said Antoine Yver, MD, MSc, Executive Vice President and Global Head, Oncology Research and Development, Daiichi Sankyo. "We are exceptionally impressed with the robust impact that Zymeworks’ technology brings to antibody development."

Under the terms of the second agreement, Daiichi Sankyo will acquire licenses to Zymeworks’ Azymetric and EFECT technology platforms to develop two additional bispecific antibody therapeutics. In exchange, Zymeworks will receive an upfront technology access fee of US$18 million and may receive up to US$466.7 million in potential clinical, regulatory and commercial milestone payments. In addition, Zymeworks will receive up to double-digit tiered royalties on global product sales.

"Expanding our relationship with a leading global pharmaceutical partner like Daiichi Sankyo is extremely satisfying as it underscores the power, versatility, and attractiveness of our technology platforms," said Ali Tehrani, Ph.D., President and CEO of Zymeworks. "Having already used our platforms to discover one bispecific antibody, Daiichi Sankyo now has increased access to our technology to create additional therapeutic candidates. We are pleased to be working with a healthcare pioneer with a proven track record of over 100 years of innovation leading to major breakthroughs in patient care."

Zymeworks and Daiichi Sankyo began working together in September 2016 through an agreement to develop one bispecific antibody therapeutic for which Zymeworks is eligible to receive preclinical, clinical, and commercial milestones payments, as well as up to double-digit tiered royalties on global product sales. Additionally, Zymeworks obtained a license to certain immuno-oncology antibodies from Daiichi Sankyo, with the right to research, develop, and commercialize multiple bispecific products globally in exchange for royalties on global product sales

Sophiris Bio Reports First Quarter 2018 Financial Results and Key Corporate Highlights

On May 14, 2018 Sophiris Bio Inc. (NASDAQ: SPHS) (the "Company" or "Sophiris"), a biopharmaceutical company studying topsalysin (PRX302), a first-in-class, pore-forming protein, in late stage clinical trials for the treatment of patients with urological diseases, reported first quarter 2018 financial results (Press release, Sophiris Bio, MAY 14, 2018, View Source [SID1234526589]).

"It has been an exciting quarter at Sophiris as we continue to make progress in advancing topsalysin," said Randall E. Woods, president and CEO of Sophiris. "We are looking ahead to two key events in 2018. By the end of the second quarter, we expect to announce the biopsy results from all patients receiving the first administration of topsalysin in our Phase 2b study, and by the end of the year, we expect complete data from all patients including those patients who received a second administration of topsalysin. In advance of these milestones, we have been actively preparing for a Phase 3 registration study, including engaging in initial discussions with European regulatory agencies. In addition, we are actively moving forward with our manufacturing plans to provide sufficient drug substance for a potential Phase 3 registration study in localized prostate cancer and also a potential second Phase 3 in BPH."

Upcoming Milestones:

Advancement of Phase 2b Localized Prostate Cancer Study. The Company announced in December 2017 that it had completed enrollment in its Phase 2b localized prostate cancer study to evaluate the safety and tolerability of topsalysin in treating men with clinically significant localized prostate cancer. A total of 38 patients have been treated with topsalysin in the study. The Company expects biopsy data from all patients receiving the first dose of topsalysin to be available by the end of the second quarter for 2018.

During the first quarter of 2018, the independent data monitoring committee (IDMC) for the Phase 2b trial met to review the reported adverse events from all patients after the first administration of topsalysin. The IDMC unanimously recommended the clinical trial continue without changes to the protocol. The Company believes that topsalysin continues to demonstrate a favorable safety profile.

The Phase 2b study was designed to include an option to re-treat patients who did not have any clinically significant adverse events and who responded to the first administration of topsalysin but still had a clinically significant lesion. These patients will have the option to receive a second administration of topsalysin followed by an additional, targeted biopsy six months following the second administration. The Company expects to have final biopsy data in the fourth quarter of 2018 from all patients who receive a second administration. This will be the first data potentially supporting repeat administration of topsalysin.

Financial Results:

At March 31, 2018, the Company had cash, cash equivalents and securities available-for-sale of $22.1 million and working capital of $19.2 million. The Company expects that its cash and cash equivalents will be sufficient to fund its operations to the middle of 2019, assuming no new clinical trials are initiated. The Company reported a net loss of $3.3 million or $(0.11) per share for the three months ended March 31, 2018, compared to a net loss of $2.6 million or $(0.09) per share for the three months ended March 31, 2017.

Research and development expenses

Research and development expenses were $3.3 million for the three months ended March 31, 2018, compared to $1.2 million for the three months ended March 31, 2017. The increase in research and development costs is primarily attributable to increases in the costs associated with manufacturing activities for topsalysin, and to a lesser extent, an increase in clinical costs associated with our Phase 2b clinical trial of topsalysin for the focal treatment of localized prostate cancer.

General and administrative expenses

General and administrative expenses were $1.2 million for the three months ended March 31, 2018, compared to $1.4 million for the three months ended March 31, 2017. The decrease in general and administrative expense is primarily due to a decrease in non-cash stock-based compensation expense which was partially offset by an increase in professional services.

Gain (loss) on revaluation of the warrant liability

Gain on revaluation of the warrant liability was $1.4 million for the three months ended March 31, 2018, compared to a loss of $86,000 for the three months ended March 31, 2017. As these warrants may require the Company to pay the warrant holder cash under certain provisions of the warrant, the Company accounts for these warrants as a liability, and the Company is required to calculate the fair value of these warrants each reporting date. The non-cash gain reported for the three months ended March 31, 2018, is associated with a decrease in the fair value of the Company’s warrant liability from December 31, 2017, to March 31, 2018, which is calculated using a Black-Scholes pricing model. Certain inputs utilized in the Company’s Black-Scholes fair value calculation may fluctuate in future periods based upon factors which are outside of the Company’s control. A significant change in one or more of these inputs used in the calculation of the fair value may cause a significant change to the fair value of the Company’s warrant liability, which could also result in a material non-cash gain or loss being reported in the Company’s consolidated statement of operations and comprehensive loss.

Mustang Bio Reports First Quarter 2018 Financial Results

On May 14, 2018 Mustang Bio, Inc. ("Mustang") (NASDAQ:MBIO), a Fortress Biotech (NASDAQ:FBIO) Company focused on the development of novel immunotherapies based on proprietary chimeric antigen receptor engineered T cell (CAR-T) technology, reported financial results for the first quarter ended March 31, 2018 (Press release, Mustang Bio, MAY 14, 2018, View Source [SID1234526588]).

Manuel Litchman, M.D., President and Chief Executive Officer of Mustang, said, "In the first quarter of 2018, Mustang continued to execute on our strategy of developing a portfolio of differentiated CAR-T therapies for patients with aggressive forms of cancer. We are pleased to report significant progress on the build-out of our proprietary CAR-T cell processing facility at UMass Medicine Science Park in Worcester, Mass., which is on track to be fully operational and ready to process cells by the end of the year. We are also transitioning two preclinical CAR-T programs at City of Hope into the clinic in 2018, and plan to file our first Investigational New Drug Application during the fourth quarter. In March, we were delighted to announce the promotion of Sadik Kassim, Ph.D., to Chief Scientific Officer, and Knut Niss, Ph.D., to Chief Technology Officer, and look forward to continuing to work together to innovate in cell processing and to explore opportunities to leverage best-in-class science to strengthen our CAR-T pipeline. To this end, we will expand our internal research capabilities and plan to hire a team of scientists that will be fully dedicated to preclinical and translational research efforts."

Financial Results:

As of March 31, 2018, Mustang’s consolidated cash, cash equivalents, short-term investments (certificates of deposit) and restricted cash totaled $55.3 million, compared to $61.5 million as of December 31, 2017, a decrease of $6.2 million for the quarter.
Research and development expenses were $4.3 million for the first quarter of 2018, compared to $0.7 million for the first quarter of 2017. Non-cash, stock-based compensation expenses included in research and development were $1.5 million for first quarter of 2018, compared to $0 million for the first quarter of 2017.
Research and development expenses from license acquisitions totaled $0.1 million for the first quarter of 2018, compared to $0.6 million for the first quarter of 2017.
General and administrative expenses were $2.1 million for the first quarter of 2018, compared to $2.0 million for the first quarter of 2017. Non-cash, stock-based compensation expenses included in general and administrative expenses were $0.5 million for the first quarter of 2018, compared to $1.2 million for the first quarter of 2017.
Net loss attributable to common stockholders was $6.3 million, or $0.24 per share, for the first quarter of 2018, compared to $3.2 million, or $0.14 per share, for the first quarter of 2017.

Molecular Templates, Inc. Reports First Quarter 2018 Financial Results

On May 14, 2018 Molecular Templates, Inc. (Nasdaq:MTEM) ("Molecular"), a clinical-stage oncology company focused on the discovery and development of the company’s proprietary engineered toxin bodies (ETBs), which are differentiated, targeted, biologic therapeutics for cancer, reported financial results for the first quarter of 2018 (Press release, Molecular Templates, MAY 14, 2018, View Source [SID1234526587]). As of March 31, 2018, cash and cash equivalents totaled $49.3 million. Molecular’s current cash balance is expected to fund operations into late 2019.

"We are very pleased with the clinical results we have generated to date for MT-3724, which we expect to enter Phase II studies in relapsed/refractory DLBCL patients in the second half of 2018," said Eric Poma, Ph.D., CEO and CSO of Molecular Templates. "In the next twelve months, we expect our clinical pipeline to expand significantly as we file INDs for MT-4019 as well as our ETBs targeting HER2 and PD-L1."

Company Highlights and Upcoming Milestones

Corporate

At the American Association of Cancer Research (AACR) (Free AACR Whitepaper) annual meeting in April 2018, preclinical data were presented for Molecular’s ETBs targeting PD-L1 (which incorporates Molecular’s Antigen Seeding Technology – a differentiated immune-oncology approach) and HER2.
On March 2, 2018, Molecular closed a $10 million debt facility with Perceptive Advisors. The proceeds were used to repay an existing debt facility with Silicon Valley Bank and will support Molecular’s build out of its GMP manufacturing facility, to support Molecular’s own pipeline as well as partnerships. The first tranche of $5 million was received in 1Q18 and the second tranche of $5 million is due to be received in 3Q18.
MT-3724

MT-3724 (an ETB targeting CD20) is in an ongoing Phase Ib expansion study intended to better define the single agent overall response rate in heavily pre-treated diffuse large B-cell lymphoma (DLBCL) patients with additional updates expected in 2Q18.
Molecular also expects to initiate Phase II combination studies with MT-3724 in earlier lines of DLBCL in 2H18.
MT-4019

MT-4019 (an ETB candidate designed to target CD38-expressing myeloma cancer cells) is progressing through IND enabling studies.
Takeda and Molecular are evaluating CD38 ETBs and could potentially select a drug candidate for development by the end of 3Q18. If the two companies do not select a joint candidate for development, Molecular anticipates filing an IND application for MT-4019 in 3Q18 and initiating a Phase I clinical trial in 2H18.
Research

Molecular expects to file an IND application for an ETB targeting HER2 in 4Q18.
Molecular expects to file an IND application for an ETB targeting PD-L1 (with antigen seeding) in 1Q19.
Several other ETB candidates are in pre-clinical development, targeting both solid and hematological cancers.
Takeda Multi-Target Collaboration

In December 2017, Takeda selected two targets for further research using Molecular’s ETBs. This triggered $4 million in milestone payments, which were paid by Takeda in 2Q18.
Financial Results

The net loss attributable to common shareholders for the first quarter was $8.7 million, or $0.32 per basic and diluted share. This compares with a net loss attributable to common shareholders of $1.6 million, or $7.56 per basic and diluted share for the same period in 2017.

Revenues for the first quarter of 2018 were $0.5 million, compared to $1.9 million for the same period in 2017. Revenues for the first quarter of 2018 and 2017 were comprised of grant revenue from the Cancer Prevention & Research Institute of Texas, and revenues from collaborative research and development agreements. Total research and development expenses for the first quarter of 2018 were $6.7 million, compared with $1.1 million for the same period in 2017. Total general and administrative expenses for the first quarter of 2018 were $2.9 million, compared with $1.8 million for the same period in 2017.