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Immune Design Reports Second Quarter 2016 Financial Results and Provides Corporate Update

On August 9, 2016 Immune Design (Nasdaq:IMDZ), a clinical-stage immunotherapy company focused on oncology, reported financial results and a corporate update for the second quarter ended June 30, 2016 (Press release, Immune Design, AUG 9, 2016, View Source [SID:1234514421]).

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"The positive data we presented during the second quarter provide a strong rationale for the continued advancement of our two lead programs, CMB305 and G100," said Carlos Paya, M.D., Ph.D., President and Chief Executive Officer of Immune Design. "These two programs offer distinct approaches that use the patient’s immune system to fight cancer, and which are different from previous efforts in this field."

Recent Highlights

Product Development Progress

Specific Antigen Approach: LV305/CMB305 and ZVex-Neo Programs

LV305/CMB305: Positive data in NY-ESO-1 Soft Tissue Sarcoma (STS) patients, Phase 2 combination study in collaboration with Genentech ongoing.

LV305: Positive PFS and OS data in STS
Data from the single agent Phase 1 study in 24 patients with advanced or metastatic soft tissue sarcoma, which were presented at the 2016 American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) annual meeting, revealed:
clinical benefit for 58% of the patients in the form of partial response (PR) or stable disease (SD);
median progression-free survival (PFS) of 4.6 months and a median overall survival (OS) that had not yet been reached, with 81% of the patients alive at one year; and
very favorable safety profile, with no Grade 3/4 adverse events (AEs)
We believe these data compare favorably with approved STS agents and further support the applicability of the mechanism of action of the Prime/Boost agent, CMB305, in STS, and as a potential first registration path for an Immune Design product.
CMB305: (1) positive STS signal in early look; and (2) randomized Phase 2 combination study with Genentech’s anti-PDL1 antibody, TECENTRIQ (atezolizumab) ongoing in STS

Early data from the single agent Phase 1 study in 14 patients with STS showed
the median OS had not been reached, with 93% of the patients alive at one year, and the median PFS was 5.5 months, both of which we believe compare favorably to approved chemotherapy agents for STS patients who have received at least one or more prior therapies;
a favorable safety profile, with only Grade 1/2 AEs; and
a deeper immune response than seen in the LV305 Phase 1 study, including a trend of increased T cell clonality.
A randomized 80-patient Phase 2 study of CMB305 with or without the anti-PD-L1 checkpoint inhibitor, atezolizumab, is ongoing in patients with STS
Part 1 of the study included a safety run in, which was deemed favorable by an independent Data Monitoring Committee, allowing enrollment in part 2 of the study to commence.
ZVex-Neo: Neoantigen Collaboration with Gritstone Oncology
In May 2016, Immune Design announced a collaboration with Gritstone Oncology to combine Immune Design’s ZVex discovery platform with Gritstone’s proprietary genomics and proteomics platform for identification of patient-specific tumor antigens to develop neoantigen-based immunotherapies. The collaboration has commenced, with the intent to begin a study in patients with non-small cell lung cancer in 2017 in combination with a checkpoint inhibitor of the PD-1/PD-L1 axis.
Intratumoral Immune Activation Approach: Positive Clinical and Translational Data

G100: (1) positive final Phase 1 results in Merkel cell carcinoma (MCC); and (2) randomized Phase 2 combination with KEYTRUDA (pembrolizumab) in follicular non-Hodgkin’s lymphoma (NHL) in collaboration with Merck is ongoing
The final results of a 10-patient Phase 1 study of G100 administered intratumorally and combined with radiation in patients with MCC, which were presented at the ASCO (Free ASCO Whitepaper) annual meeting, revealed:
a 50% overall response rate (ORR) per protocol, including one of the complete responses (CR) resulting from single agent G100 alone (no radiation);
no treatment-related AEs were observed, and all AEs were grade 1/2; and
analysis of the tumor microenvironment (TME) in G100-responding patients demonstrated the increase of innate immune molecules that favor (i) immune cell chemotaxis, (ii) increased NK cells and M1 macrophage markers, and (iii) dendritic cell antigen presentation and dynamics of adaptive immunity such as trafficking of CD8 and CD4 T cells from the stroma into the tumor bed, underscoring the transition to a "hot" tumor.
A randomized Phase 2 study of G100 with low dose radiation, with Merck’s checkpoint inhibitor KEYTRUDA (pembrolizumab) in NHL patients is ongoing.
Part 1 (dose escalation of G100 without Keytruda) was deemed safe, allowing the move to Part 2 of the study, in which patients are randomized to receive Keytruda in combination with G100 and radiation or G100 and radiation alone.
Expansion of the Team

Susan L. Kelley M.D. Joins Board of Directors: Addition of Oncology Development Expertise

Dr. Susan L. Kelley joined the Immune Design Board in June 2016, and brings more than 25 years’ experience in oncology and immunology drug development to the company.
Financial Results

Second Quarter

Immune Design ended the second quarter of 2016 with $92.6 million in cash, cash equivalents and short-term investments, compared to $112.9 million as of December 31, 2015. Net cash used in operations for the six months ended June 30, 2016 was $20.4 million.
Net loss and net loss per share for the second quarter of 2016 were $14.3 million and $0.71, respectively, compared to $10.5 million and $0.54, respectively, for the second quarter of 2015.
Revenue for the second quarter of 2016 was $1.1 million and was attributable primarily to the Sanofi G103 (HSV2 therapeutic vaccine) collaboration established in the fourth quarter of 2014 and GLA product sales to collaboration partners Medimmune/Astra Zeneca and Sanofi. Revenue for the second quarter of 2015 was $1.8 million and was attributable primarily to collaboration revenue associated with Sanofi G103 collaboration.
Research and development expenses for the second quarter of 2016 were $11.4 million, compared to $8.5 million for the second quarter of 2015. The $2.9 million increase was primarily attributable to continuing advancement of Immune Design’s ongoing research and development programs, including ongoing Phase 1 and Phase 2 clinical trials.
General and administrative expenses did not materially differ over the comparative periods. For the second quarter of 2016 general and administrative expenses were $3.9 million, compared to $3.8 million for the second quarter of 2015.
Year-to-Date

Net loss and net loss per share for the six months ended June 30, 2016 were $26.6 million and $1.32, respectively, compared to $19.9 million and $1.10, respectively, for the same period in 2015.
Revenue for the six months ended June 30, 2016 was $3.0 million and was attributable primarily to collaboration revenue associated with the Sanofi G103 collaboration established in the fourth quarter of 2014 and GLA product sales to collaboration partners. Revenue for the same period in 2015 was $3.7 million and was attributable primarily to collaboration revenue associated with the Sanofi G103 collaboration.
Research and development expenses for the six months ended June 30, 2016 were $22.0 million compared to $15.9 million for the same period in 2015. The $6.0 million increase was primarily attributable to continuing advancement of Immune Design’s ongoing research and development programs, including ongoing Phase 1 and Phase 2 clinical trials and an increase in personnel-related expenses to support the company’s advancing research and clinical pipeline.
General and administrative expenses did not materially differ over the comparative periods. For the six months ended June 30, 2016 general and administrative expenses were $7.9 million, compared to $7.6 million for the same period in 2015.

Genmab Announces Financial Results for the First Half of 2016 and Improves 2016 Financial Guidance

On August 9, 2016 Genmab reported its Interim Report for First Half 2016 (Press release, Genmab, AUG 9, 2016, View Source [SID:1234514420]).

Net Sales of DARZALEX (daratumumab) by Janssen for the first half of 2016 were USD 209 million, resulting in royalty income of USD 25 million (DKK 168 million)
2016 financial guidance improved
Announced European conditional marketing authorization of DARZALEX for heavily pre-treated or double-refractory multiple myeloma
Achieved USD 30 million milestone for first commercial sale of DARZALEX in Europe
Announced positive topline result in Phase III POLLUX study of daratumumab in relapsed or refractory multiple myeloma
Announced that U.S. Food and Drug Administration (FDA) granted priority review to sBLA for ofatumumab (Arzerra) in combination with fludarabine and cyclophosphamide (FC) in relapsed chronic lymphocytic leukemia (CLL)
Announced that the Committee for Medicinal Products for Human Use (CHMP) issued a negative opinion for Arzerra as maintenance therapy in relapsed CLL
Announced Phase III studies of ofatumumab in relapsing multiple sclerosis
"The two major highlights during the second quarter were the rapid European approval of DARZALEX and positive Phase III data from the POLLUX study. DARZALEX was successfully launched by our collaboration partner Janssen shortly after the approval, triggering a milestone payment of USD 30 million to Genmab. We were also very excited about the Phase III POLLUX study data which showed that daratumumab in combination with lenalidomide and dexamethasone led to a significant improvement in progression free survival in treatment of relapsed or refractory multiple myeloma," said Jan van de Winkel, Ph.D., Chief Executive Officer of Genmab.
Financial Performance First Half
Revenue was DKK 524 million in the first half of 2016 compared to DKK 281 million in the first half of 2015. The increase of DKK 243 million, or 86%, was mainly driven by higher royalty and milestone revenue under our daratumumab collaboration with Janssen.
Operating expenses were DKK 366 million in the first half of 2016 compared to DKK 244 million in the first half of 2015. The increase of DKK 122 million, or 50%, was due to the additional investment in our pipeline of products, including the advancement of tisotumab vedotin, HuMax-AXL-ADC, HexaBody-DR5/DR5, DuoBody-CD3xCD20, and our other pre-clinical programs.
Operating income was DKK 158 million in the first half of 2016 compared to DKK 212 million in the first half of 2015. The decrease of DKK 54 million, or 25%, was driven by the one-time reversal of the ofatumumab funding liability of DKK 176 million in 2015 combined with increased operating expenses in 2016, which were partly offset by higher revenue in 2016.
On June 30, 2016, Genmab had a cash position of DKK 3,762 million compared to DKK 3,493 million at December 31, 2015. This represented a net increase of DKK 269 million, which was driven primarily by income from operations and the proceeds from the exercise of warrants for DKK 82 million.
Business Progress Second Quarter

Daratumumab
May: Achieved a USD 30 million milestone triggered by the first commercial sale of DARZALEX in Europe.
May: Announced that the European Commission (EC) granted a conditional marketing authorization for DARZALEX for heavily pre-treated or double-refractory multiple myeloma. The approval followed a positive recommendation for DARZALEX from the CHMP of the European Medicines Agency (EMA) in April.

May: Announced that the Phase III POLLUX study (MMY3003) of daratumumab in combination with lenalidomide and dexamethasone in patients with relapsed or refractory multiple myeloma met the primary endpoint at a pre-planned interim analysis (Hazard Ratio (HR) = 0.37 (95% CI 0.27-0.52), p<0.0001). Patients who received treatment with daratumumab in combination with lenalidomide and dexamethasone had a 63% reduction in risk of their disease progressing, compared to those who did not receive daratumumab. The median progression free survival (PFS) for patients treated with daratumumab in combination with lenalidomide and dexamethasone has not been reached, compared to an estimated median PFS of 18.4 months for patients who received lenalidomide and dexamethasone alone. Janssen will engage in a dialogue with health authorities about the potential for a regulatory submission for this indication.

April: Reported more detailed data from the Phase III CASTOR (MMY3004) study of daratumumab in combination with bortezomib and dexamethasone versus bortezomib and dexamethasone in patients with relapsed or refractory multiple myeloma. The study met the primary endpoint of improving PFS; HR = 0.39, p<0.0001. The median PFS for patients treated with daratumumab has not been reached, compared to median PFS of 7.2 months for patients who did not receive daratumumab.

April: Announced that MorphoSys filed a complaint at the U.S. District Court of Delaware against Genmab and Janssen Biotech, Inc. (Janssen), for patent infringement under U.S. patent no. 8,263,746 based on activities relating to the manufacture, use and sale of DARZALEX in the United States. Genmab and Janssen disagree with the allegations made by MorphoSys in its complaint for patent infringement and intend to vigorously contest those allegations.

Ofatumumab
June: Announced that the CHMP of the EMA issued a negative opinion on the use of Arzerra as maintenance therapy for patients with relapsed CLL.

June: Announced that Novartis will start Phase III studies of the subcutaneous formulation of ofatumumab in relapsing multiple sclerosis (MS) with enrollment of patients to start in September 2016.

May: Announced that the U.S. FDA granted Priority Review to the supplemental Biologics License Application (sBLA) for the use of ofatumumab in combination with FC for the treatment of patients with relapsed CLL.

Subsequent Event
July: The U.S. FDA granted Breakthrough Therapy Designation for DARZALEX injection in combination with lenalidomide and dexamethasone, or bortezomib and dexamethasone for the treatment of patients with multiple myeloma who have received at least one prior therapy. Breakthrough Therapy Designation is a program intended to expedite the development and review of drugs to treat serious or life-threatening diseases in cases where preliminary clinical evidence shows that the drug may provide substantial improvements over available therapy.

Calithera Biosciences Reports Second Quarter 2016 Financial Results and Recent Highlights

On August 9, 2016 Calithera Biosciences, Inc. (Nasdaq:CALA), a clinical-stage pharmaceutical company focused on discovering and developing novel small molecule drugs directed against tumor and tumor immune cell metabolism targets for the treatment of cancer, reported its financial results for the second quarter ended June 30, 2016. As of June 30, 2016, cash, cash equivalents and investments totaled $60.4 million (Press release, Calithera Biosciences, AUG 9, 2016, View Source;p=RssLanding&cat=news&id=2194344 [SID:1234514418]).

"During the second quarter, we significantly advanced our pipeline of novel cancer therapeutics," said Susan Molineaux, Ph.D., President and Chief Executive Officer of Calithera. "Data presented on the tumor metabolism drug CB-839 at the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) helped us to define a path forward for clinical development in renal cell carcinoma and triple negative breast cancer. With the FDA’s acceptance of our IND for our metabolic immune checkpoint drug candidate CB-1158, we now have two novel metabolic agents targeting tumor and immune cell metabolism in clinical development."

Second Quarter 2016 and Recent Highlights

FDA acceptance of Investigational New Drug Application for CB-1158. In July 2016, the U.S. Food and Drug Administration (FDA) accepted the company’s Investigational New Drug (IND) application for CB-1158 for the treatment of solid tumors. CB-1158 is a first-in-class immuno-oncology metabolic checkpoint inhibitor targeting arginase, an immunosuppressive enzyme in myeloid-derived suppressor cells responsible for T-cell suppression. Arginase exerts its immunosuppressive effect by depleting the amino acid arginine in the tumor microenvironment and preventing activation and proliferation of the immune system’s cytotoxic T-cells and natural killer (NK) cells. Inhibition of arginase activity reverses this immunosuppressive block and restores T-cell function. The Phase I clinical trial will enroll patients with advanced solid tumors treated with CB-1158 as a monotherapy, as well as in combination with an anti-PD1 antibody.
CB-839 solid tumor combination data presented at the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper). In June 2016, Calithera presented clinical data for CB-839 in combination with everolimus in renal cell carcinoma, and CB-839 in combination with paclitaxel in triple negative breast cancer. Among ten renal cell carcinoma patients treated in the everolimus combination group, the overall disease control rate was 80%, including one partial response. Among eight clear cell and papillary patients, the disease control rate was 100%. The median time on study exceeded the expected progression free survival for everolimus alone in this population. Fifteen triple negative breast cancer patients were treated with CB-839 in combination with paclitaxel. The majority of patients had received at least three prior lines of therapy. Most patients had received prior taxanes in either the neo-adjuvant, adjuvant or metastatic setting. Among patients treated with CB-839 doses of at least 600 mg bid (n=8), there were 3 partial responses (38%) and disease control (response or stable disease) in 7 patients (88%). Two of the partial responses were observed in patients refractory to paclitaxel in a prior course of therapy. CB-839 in combination with either everolimus or paclitaxel has been well tolerated to date, with adverse events that have been manageable and reversible.
Selected Second Quarter 2016 Financial Results

Research and development expenses were $7.8 million for the three months ended June 30, 2016, compared with $5.5 million for the same period in the prior year. The increase of $2.2 million was primarily attributed to increased development activities in Calithera’s arginase inhibitors program.

General and administrative expenses were $2.7 million for the three months ended June 30, 2016, compared with $2.3 million for the same period in the prior year. The increase of $0.3 million was primarily due to higher employment related expenses, including stock-based compensation expense.

Net loss for the three months ended June 30, 2016 was $10.4 million, or $0.55 per share.

Athersys Reports Second Quarter 2016 Results

On August 9, 2016 Athersys, Inc. (Nasdaq:ATHX) reported its financial results for the three months ended June 30, 2016 (Press release, Athersys, AUG 9, 2016, View Source [SID:1234514416]).

Highlights of the second quarter of 2016 include:

Successful discussions with the Japanese Pharmaceuticals and Medical Devices Agency ("PMDA") on ischemic stroke study design and requirements, led by HEALIOS K.K. ("Healios") with Athersys support, laying the groundwork for study initiation later this year;
Productive discussions with U.S. Food and Drug Administration ("FDA") about the design of our planned international Phase 3 study of MultiStem treatment for ischemic stroke, and ongoing engagement with European regulators;
Inclusion of our common stock in the broad-market Russell 3000 Index as part of the Russell U.S. Indices annual reconstitution, which became effective in June 2016;
Recorded revenues of $0.6 million and net loss of $7.0 million for quarter ended June 30, 2016; and
Ended the quarter with $24.0 million in cash and cash equivalents and available-for-sale securities.
"Along with our partner, Healios, we are focused on completing the preparations and activities related to the initiation of the confirmatory clinical trial in Japan, and continue to make steady progress toward that goal. In addition, we are engaged in discussions with FDA and other regulators regarding our larger, Phase 3 international clinical trial for stroke," stated Dr. Gil Van Bokkelen, Chairman & CEO at Athersys. "We have had productive and successful engagement with the regulators, including completing an End of Phase 2 meeting with the FDA, and have advanced our operational preparations to support both studies. As we have described previously, the studies will be focused on ischemic stroke patients that have suffered meaningful disability and who can be treated within 36 hours of the event, which would represent a significant expansion of the treatment window for these patients, which is currently limited to several hours. This would overcome a key limitation of current standard of care, enable many more stroke victims to be treated, and could redefine stroke therapy as we know it. It also represents a substantial clinical and commercial opportunity.

"We believe that we could have a favorable path forward for the continued development of MultiStem for the treatment of ischemic stroke, which represents one of the greatest areas of unmet clinical need in medicine, and an urgent priority in many countries due to the growing impact of an expanding elderly population that is more susceptible to stroke," continued Dr. Van Bokkelen. "Based on discussions with the PMDA and recent precedents, we believe that a successful trial in Japan with positive results could make conditional, or even full, approval possible, utilizing Japan’s progressive regulations for the development and approval of regenerative medicine products. Moreover, our engagement so far with the FDA suggests that the data from this Japan study, together with data from our Phase 3 international study, could provide the basis for a Biologics License application ("BLA") for registration, meaning that we would have an accelerated path to commercialization in the United States, as well as potentially other regions.

"We continue to enroll our two grant-supported Phase 2 trials, in AMI and ARDS, although progress is slower than we would like," commented Dr. Van Bokkelen. "We have undertaken a number of actions to accelerate enrollment, including adding clinical sites. We believe that MultiStem cell therapy is well-suited to treat these acute conditions based on our preclinical and clinical experience to date.

"We continue to focus on other important areas, including actively exploring partnering opportunities. We also have a substantial manufacturing and process development efforts underway focused, first, on supplying our planned clinical studies, and second, on advancing our manufacturing platform and related capabilities to support eventual commercialization," concluded Dr. Van Bokkelen.

Second Quarter Results

For the three months ended June 30, 2016, total revenues were $0.6 million compared to $0.2 million in the same period in 2015, due to an increase of $0.1 million in contract revenues from royalties and a $0.3 million increase in grant revenue. Grant revenues relate to both clinical and preclinical studies.

Research and development expenses increased to $5.8 million in the 2016 second quarter from $5.3 million in the 2015 second quarter, primarily due to increased clinical and preclinical development. Our clinical and preclinical costs increased during the period as a result of our process development activities to support large-scale manufacturing, and clinical product manufacturing costs during the period, with such increases partially offset by a decrease in costs for our stroke B01-02 study that concluded this spring. General and administrative expenses were $2.0 million and $1.9 million for the three months ended June 30, 2016 and 2015, respectively.

We recognized net loss for the three months ended June 30, 2016 of $7.0 million compared to net loss of $1.0 million for the same period in 2015. The $6.0 million net variance is due primarily to a $5.7 million decrease in non-cash income from the change in the fair value of our warrant liabilities, combined with the net impact of the $0.4 million increase in revenues and the $0.7 million increase in operating expenses for the three-month period ended June 30, 2016. Cash used in operating activities was $6.5 million during the 2016 second quarter compared to $5.8 million in the 2015 second quarter. As of June 30, 2016, we had $24.0 million in cash and cash equivalents and available-for-sale securities, compared to $23.0 million at December 31, 2015.

Aptose Biosciences Reports Financial Results for the Second Quarter Ended June 30, 2016

On August 9, 2016 Aptose Biosciences Inc. (NASDAQ:APTO) (TSX:APS), a clinical-stage company developing new therapeutics and molecular diagnostics that target the underlying mechanisms of cancer, reported unaudited financial results for the three months ended June 30, 2016 and reported on corporate developments. Unless specified otherwise, all amounts are in Canadian dollars (Press release, Aptose Biosciences, AUG 9, 2016, View Source;p=RssLanding&cat=news&id=2194360 [SID:1234514415]).

Net loss for the three months ended June 30, 2016 was $5.6 million ($0.46 per share) compared with $3.4 million ($0.28 per share) during the three months ended June 30, 2015. Total cash and cash equivalents at June 30, 2016 were $12.6 million.
"During the second quarter, we continued our disciplined approach to developing a stable formulation of APTO-253 and evaluating multiple formulations in order to select the best method for delivery of the product to patients," said William G. Rice, Ph.D., Chairman, President and Chief Executive Officer. "We have selected a methodology to create a stable formulation of APTO-253 and are performing numerous mock infusion studies and extensive analyses on that formulation. In parallel we continue to research alternate formulations to ensure we leave no stone unturned. We look forward to reporting back to you regarding the mock infusion studies, discussions with the FDA, and potential re-initiation of our Phase 1B clinical trial of APTO-253."

Corporate Highlights
During the quarter, Aptose worked with a formulation contract manufacturing organization (CMO) to select a new methodology to manufacture APTO-253 drug product with greatly improved solubility and stability characteristics, including an ability to remain stable and soluble at room temperature. Aptose performed mock infusion studies at multiple dose levels, and no filter clogging events were observed. Multiple contract research organizations are now performing the mock infusion studies and conducting extensive analyses on the optimized formulation of APTO-253.

Aptose’s clinical team has prepared additional clinical sites for the potential re-initiation of the Phase 1b trial of APTO-253, expanding the number of sites, at major cancer research and treatment centers in the U.S., to as many as 15.

Aptose has modified the clinical trial design for the Phase 1b study, pending approval from the FDA. Under the proposed modification, Arm B of the dose-escalation phase of the study, initially designed to enroll approximately fifteen (15) patients with multiple myeloma and lymphoma, will be discontinued. Arm A of the study, focused on patients with acute leukemias and myelodysplastic syndromes (MDS) remains unchanged. The rationale underlying this modification is to focus all resources on the patient population most likely to benefit from APTO-253.

In June, Aptose and CrystalGenomics, Inc. announced an exclusive global option and license agreement focused on the development of CG‘806, a highly potent, non-covalent small molecule anti-cancer agent. This multi-kinase inhibitor exhibits a picomolar IC50 toward the FMS-like tyrosine kinase 3 with the Internal Tandem Duplication (FLT3-ITD) and potency against a host of mutant forms of FLT3, as well as single-digit nanomolar IC50’s against Bruton’s tyrosine kinase and its C481S mutant.

Aptose and its collaborators have submitted three abstracts for presentation at the American Society of Hematology (ASH) (Free ASH Whitepaper) Meeting, planned for December 3-6, 2016 in San Diego, CA.
Financial Results
Net loss for the three months ended June 30, 2016 was $5.6 million ($0.46 per share) compared with $3.4 million ($0.28 per share) in the same period in the prior year. Net loss for the six months ended June 30, 2016 was $10.7 million ($0.88 per share) compared with $6.9 million ($0.59 per share) during the six months ended June 30, 2015.
Aptose utilized cash of $4.6 million in operating activities in the three-month period ended June 30, 2016 compared with $4.3 million during the three months ended June 30, 2015. For the six months ended June 30, 2016, Aptose utilized cash of $9.2 million compared with $6.5 million in the six months ended June 30, 2015. The cash utilized in the three month period ended June 30, 2016 is only slightly higher than the three months ended June 30, 2015 despite a higher net loss due to cash used to reduce accounts payable and accrual balances in the prior year period. The cash utilized in the six months ended June 30, 2016 increased compared to the prior year comparable period due to an increased net loss offset by cash used to reduce accounts payable and accrual balances in the prior year period.
Research and Development
Research and development expenses totaled $3.3 million in the three months ended June 30, 2016 compared to $1.3 million during the three months ended June 30, 2015 and totaled $5.6 million for the six month period ended June 30, 2016 compared with $2.2 million in the same period in the prior year. Research and development costs consist of the following:
Components of research and development expenses:
Three months ended Six months ended
June 30, June 30, June 30, June 30,
(in thousands) 2016 2015 2016 2015

Program costs $ 1,879 $ 1,257 $ 4,126 $ 2,117
CrystalGenomics Option Fee 1,294 − 1,294 −
Stock-based compensation 109 46 165 65
Depreciation of equipment 11 5 23 10
$ 3,293 $ 1,308 $ 5,608 $ 2,192

The increase in research and development costs in the three and six months ended June 30, 2016 compared with the three and six months ended June 30, 2015 is due to the following reasons:
Costs associated with the LALS/Moffitt collaboration developing epigenetic single molecule inhibitors of multiple targets, including the BET proteins, and other kinases for which no comparable expenses existed in the prior year;
Increased research and clinical operations headcount;
Formulation and manufacturing costs associated with APTO-253 and the root cause analysis of the filter clogging identified in November 2015; and
Increased Contract Research Organization costs related to consultants and advisors as we work towards returning APTO-253 to the clinic.
During the three months ended June 30, 2016 Aptose paid US$1.0 million ($1.3 million) to CG for an option fee related to the CG’806 technology. Should the results of the planned pre-clinical studies be positive, we would choose to pay an additional US$2.0 million in cash or common shares to exercise the option and receive the commercial license prior to initiating any clinical studies. No comparable expense existed in the same period in the prior year.
Stock-based compensation costs allocated to research and development increased in the three and six months ended June 30, 2016 to reflect option grants to new employees.
General and Administrative
General and administrative expenses totaled $2.3 million in the three-month period ended June 30, 2016 compared to $2.5 million in the three months ended June 30, 2015. For the six month period ended June 30, 2016, general and administrative expenses totaled $5.0 million compared with $5.2 million in the same period in the prior year. General and administrative expenses consist of the following:
Components of general and administrative expenses:
Three months ended Six months ended
June 30, June 30, June 30, June 30,
(in thousands) 2016 2015 2016 2015

General and administrative excluding salaries $ 822 $ 1,149 $ 1,955 $ 2,178
Salaries 823 757 1,798 1,510
Stock-based compensation 677 579 1,156 1,519
Depreciation of equipment 21 19 42 26
$ 2,343 $ 2,504 $ 4,951 $ 5,233

General and administrative expenses excluding salaries, decreased in the three months ended June 30, 2016 compared with the three months ended June 30, 2015. The decrease is primarily attributable to lower legal and patent costs as well as lower regulatory and filing fees related to transactions completed in the same period in the prior year.
General and administrative expenses excluding salaries, decreased in the six months ended June 30, 2016 compared with the six months ended June 30, 2015. The decrease is the result of lower legal costs related to transactions completed in the prior year as well as costs due to the clean-up and move associated with the Toronto office and lab relocation completed in the six months ended June 30, 2015 for which comparable expenses do not exist in the current year.
Salary charges in the three and six months ended June 30, 2016 increased in comparison with the three and six months ended June 30, 2015 due to additional headcount as well as a higher average CA/US exchange rate which increased the cost of our US denominated salaries.
Stock-based compensation costs increased in the three months ended June 30, 2016 compared with the three months ended June 30, 2015 due to annual option grants at the end of March 2016 compared with June 2015 which resulted in higher amortization earlier in the year.
Stock-based compensation decreased in the six months ended June 30, 2016 compared with the six months ended June 30, 2015 due to large option grants in April, June and July 2014 which vested 50% during the first year and therefore contribute to higher stock-based compensation expense during the first twelve month period captured in the prior year period.
Finance Expense
Finance expense for the three months ended June 30, 2016 totaled $9 thousand compared with $15 thousand for the three months ended June 30, 2015. For the six months ended June 30, 2016, finance expense totaled $205 thousand compared with $35 thousand for the same period in the prior year. Finance expense includes the following items:
Three months ended Six months ended
June 30, June 30, June 30, June 30,
(in thousands) 2016 2015 2016 2015
Interest expense $ − $ 15 $ − $ 35
Foreign exchange loss 9 − 205 −
$ 9 $ 15 $ 205 $ 35

Interest expense for the three and six months ended June 30, 2015 relates to interest accrued at a rate of 10% on the remaining balance of convertible promissory notes issued in September 2013 as well as accretion expense related to the conversion feature of the notes. As the promissory notes were converted before September 2015, no interest expense was incurred in 2016.
Foreign exchange loss is the result of the fluctuation of exchange rates between US and Canadian dollars and the impact on our US dollar denominated cash balances.
Finance Income
Finance income totaled $33 thousand in the three months ended June 30, 2016 compared to $462 thousand in the three months ended June 30, 2015. For the six months ended June 30, 2016, finance income totaled $80 thousand compared with $526 thousand in the same period in the prior year. Finance income includes the following items:
Three months ended Six months ended
June 30, June 30, June 30, June 30,
(in thousands) 2016 2015 2016 2015
Interest income $ 33 $ 72 $ 80 $ 176
Foreign exchange gain − 390 − 350
$ 33 $ 462 $ 80 $ 526
Interest income represents interest earned on our cash and cash equivalent and investment balances. The foreign exchange gain incurred in the three and six months ended June 30, 2015 was the result of an increase in the value of US dollar denominated cash and cash equivalents balances during such periods due to a depreciation of the Canadian dollar compared to the US dollar.
Aptose Biosciences Inc.
Condensed Consolidated Interim Statements of Loss and
Comprehensive Loss

(unaudited)

(amounts in 000’s of Canadian Dollars except for per common share data)

Three months
ended
June 30, 2016 Three months
ended
June 30, 2015 Six months
ended
June 30, 2016 Six months
ended
June 30, 2015
REVENUE $ - $ - $ - $ -
EXPENSES
Research and development 3,293 1,308 5,608 2,192
General and administrative 2,343 2,504 4,951 5,233
Operating expenses 5,636 3,812 10,559 7,425
Finance expense 9 15 205 35
Finance income (33 ) (462 ) (80 ) (526 )
Net financing (income) expense (24 ) (447 ) 125 (491 )
Net loss and comprehensive loss for the period 5,612 3,365 10,684 6,934
Basic and diluted loss per common share $ 0.46 $ 0.28 $ 0.88 $ 0.59
Weighted average number of common shares
outstanding used in the calculation of
basic and diluted loss per common share (000’s) 12,231 11,909 12,140 11,852