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OXGN > SEC Filings for OXGN > Form 10-Q on 8-Aug-2014All Recent SEC Filings

Show all filings for OXIGENE INC

Form 10-Q for OXIGENE INC


8-Aug-2014

Quarterly Report


Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Our Management's Discussion and Analysis of Financial Condition and Results of Operations as of June 30, 2014 and for the three and six month periods then ended should be read in conjunction with the sections of our audited consolidated financial statements and notes thereto, as well as our "Management's Discussion and Analysis of Financial Condition and Results of Operations" that are included in our Annual Report on Form 10-K for the year ended December 31, 2013, and also with the unaudited condensed financial statements set forth in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Update on Strategy and Status of fosbretabulin tromethamine (also known as ZYBRESTAT®) Development Program

Our lead compound, fosbretabulin tromethamine, is a reversible tubulin binding agent that selectively targets the endothelial cells that make up the blood vessel walls in most solid tumors and causes them to swell, obstructing the flow of blood and starving the tumor of vital nutrients including oxygen. This deprivation, also known as tumor hypoxia, results in rapid downstream tumor cell death.

Ovarian Cancer

Our current clinical development plan in ovarian cancer is as follows:

Fosbretabulin tromethamine in combination with AVASTIN® (bevacizumab) - Completed Phase 2 Trial

Genentech / Roche's AVASTIN® (bevacizumab) is an anti-vascular endothelial growth factor (VEGF) monoclonal antibody that is currently FDA-approved for the treatment of a variety of solid tumor indications, but the approval currently does not include ovarian cancer. We believe that using fosbretabulin tromethamine in combination with AVASTIN® (bevacizumab) may provide a clinically active yet potentially better tolerated alternative to the current standard of care, cytotoxic chemotherapy, for relapsed ovarian cancer. In the European Union, AVASTIN® (bevacizumab) in combination with carboplatin and paclitaxel is approved for the front-line treatment of adult patients with advanced ovarian, fallopian tube, or primary peritoneal cancer and, in combination with carboplatin and gemcitabine, is approved for treatment of adult patients with first recurrence of platinum-sensitive epithelial ovarian, fallopian tube or primary peritoneal cancer who have not received prior therapy with AVASTIN® (bevacizumab) or other VEGF inhibitors or VEGF receptor-targeted agents. As front-line treatment in the European Union, AVASTIN® (bevacizumab) is approved in addition to carboplatin and paclitaxel for up to 6 cycles of treatment followed by continued use of AVASTIN® (bevacizumab) as single agent until disease progression or for a maximum of 15 months or until unacceptable toxicity, whichever occurs earlier. The EU Committee for Medicinal Products for Human Use (CHMP) has also recommended that the European Commission approve the use of AVASTIN ® (bevacizumab) in combination with chemotherapy as a treatment for women with platinum-resistant ovarian cancer.

In March 2014, we announced top line results from a randomized, two-arm Phase 2 trial evaluating AVASTIN® (bevacizumab) alone, as compared to AVASTIN® (bevacizumab) plus fosbretabulin tromethamine in patients with recurrent ovarian cancer. The topline results indicated a statistically significant increase in progression-free survival with the combination, the primary endpoint of the trial, with a p-value of less than 0.05. The trial enrolled 107 patients at 67 clinical sites in the United States and was conducted by the Gynecologic Oncology Group (GOG) under the sponsorship of the Cancer Therapy Evaluation Program (CTEP) of the National Cancer Institute.


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Secondary endpoints in the study included safety, objective response rate (measured according to RECIST criteria) and overall survival. The topline results announced in March 2014 also indicate that patients receiving the combination of fosbretabulin tromethamine and AVASTIN® (bevacizumab) achieved a higher objective response rate than patients receiving AVASTIN® (bevacizumab) alone, but that increase was not statistically significant. At the time of analysis of the primary endpoint of the study, too few deaths had occurred to analyze overall survival for this study. In accordance with the study protocol, all patients will continue to be followed for overall survival. Consistent with prior clinical experience with fosbretabulin tromethamine, patients in the combination arm experienced a higher incidence of hypertension compared to the control arm. All cases of hypertension were managed with antihypertensive treatments, as specified in the study protocol. Patients in both arms were treated until disease progression or adverse effects prohibited further therapy. The updated study results are scheduled to be presented at the 15th Biennial International Gynecologic Cancer Society (IGCS) conference in Melbourne, Australia on November 9, 2014.

Fosbretabulin tromethamine in combination with AVASTIN® (bevacizumab) - Potential Future Development

In light of the top line results from the GOG-0186I trial, which demonstrated a statistically significant increase in progression-free survival from the combination of AVASTIN® (bevacizumab) plus fosbretabulin tromethamine as compared to AVASTIN® (bevacizumab) alone, we are currently evaluating the potential development pathway for fosbretabulin tromethamine in ovarian cancer. We are also conducting discussions regarding the development pathway in ovarian cancer with leading experts in this indication. Following our receipt of the complete data from the GOG-0186I trial and the feedback from discussions with experts in this indication, we will evaluate next steps in the development of fosbretabulin tromethamine for ovarian cancer.

Fosbretabulin tromethamine in combination with VOTRIENT® (pazopanib)

GlaxoSmithKline (GSK)'s VOTRIENT® (pazopanib) is an anti-angiogenic oral tyrosine kinase inhibitor that is currently FDA-approved for the treatment of renal cell carcinoma (RCC) and soft tissue sarcoma (STS), with compelling early clinical data in the treatment of relapsed ovarian cancer. We believe that using fosbretabulin tromethamine in combination with VOTRIENT® (pazopanib) may provide a clinically active yet potentially better tolerated alternative to the current standard of care, cytotoxic chemotherapy, for relapsed ovarian cancer.

We may provide fosbretabulin tromethamine to clinical investigators from two U.K.-based non-profit research organizations, The Christie National Health Service (NHS) Foundation Trust and the Hillingdon Hospital NHS Trust, for the implementation of this study. We expect that GSK will provide the VOTRIENT® (pazopanib). The study is designed as a Phase 1b/2 trial of VOTRIENT® (pazopanib) with and without fosbretabulin tromethamine, in advanced recurrent ovarian cancer. The trial design consists of a Phase 1 dose escalation portion with the combination of VOTRIENT® (pazopanib) and fosbretabulin tromethamine and a randomized Phase 2 portion comparing VOTRIENT ® (pazopanib) alone versus VOTRIENT® (pazopanib) plus fosbretabulin tromethamine in patients with relapsed ovarian cancer. The study aims to enroll approximately 120 patients in the Phase 2 portion of the study at sites in the U.K. The primary endpoint of the trial would be progression-free survival (PFS), and secondary endpoints would include safety, overall survival (OS), objective response rate, and CA125 response rate. Subject to approval by U.K. health authorities, appropriate funding by NHS with limited support by GSK and us, and ethics committee approvals, this trial could begin in the second half of 2014.

As in the combination therapy trial of fosbretabulin tromethamine with AVASTIN® (bevacizumab), which was sponsored and substantially funded by the National Cancer Institute, we believe that the potential cooperative relationship between the Christie NHS Foundation Trust and the Hillingdon Hospital NHS Trust, which is sponsored and primarily funded by NHS, with VOTRIENT® supplied by GSK and fosbretabulin tromethamine supplied by us, would help offset our costs associated with this trial. We expect to incur limited costs in supporting certain resources required by the NHS and the participating institutions for the duration of this trial and the costs of supplying fosbretabulin tromethamine for the trial.

Gastrointestinal Neuroendocrine Tumors

We are planning to initiate a Phase 2 monotherapy clinical trial of fosbretabulin tromethamine in patients with recurrent gastrointestinal neuroendocrine tumors (GI-NETs) with elevated biomarkers in the second half of 2014. This trial would include 20 Sandostatin® -refractory GI-NET patients with increased biomarker levels. The primary endpoint of the trial would be reduction of biomarkers and secondary endpoints would include symptom control, tumor shrinkage and changes in quality of life as assessed by validated measures.

Carcinoid syndrome occurs in a sub-population of patients with neuroendocrine tumors who display an array of symptoms, such as flushing, diarrhea and, less frequently, bronchoconstriction and heart failure. These symptoms occur secondary to GI-NETs in approximately 5% of patients. These symptoms are caused by overproduction of biologically active substances such as serotonin and kallikrein, which are released directly into systemic circulation, bypassing hepatic degradation. While drug treatment with somatostatin analogues, such as Sandostatin®, helps to control the symptoms of carcinoid syndrome, patients who are or become unresponsive to somatostatin have limited therapeutic options, and we believe that treatment with fosbretabulin tromethamine, resulting in vascular shutdown and tumor necrosis, may improve outcomes for these patients. Approximately 14,000 people in the United States are diagnosed with carcinoid tumors each year.

A preclinical study of fosbretabulin tromethamine in a transgenic mouse model of pancreatic neuroendocrine tumors (PNETs) was presented at the AACR-NCI-EORTC International Conference on Molecular Targets and Cancer Therapeutics, Boston, MA, in a poster session on October 20, 2013. This placebo-controlled preclinical study was designed to evaluate the activity of systemic administration of fosbretabulin


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tromethamine for the treatment of functional insulinomas in a transgenic mouse model of PNETs. PNETs are highly vascularized tumors which originate in the pancreas. Functional PNETs make hormones that can cause a cascade of disease symptoms, resulting in significant morbidity for the patient. An insulinoma is a PNET that causes the over-secretion of the hormone insulin.

The animals in the treatment group received fosbretabulin tromethamine three times per week for four weeks, and the animals in the control group received a placebo at the same schedule. After four weeks, tumor size, serum insulin levels and other efficacy parameters, including apoptosis (cell death), cell proliferation and effects on tumor vasculature, were assessed. Treatment with fosbretabulin tromethamine in this animal model resulted in a significant and sustained decrease in circulating insulin of more than 90% over four weeks following a single dose of fosbretabulin tromethamine and was accompanied by a significantly reduced tumor size of greater than 80% in the treated group compared to the placebo treated group. Treatment with fosbretabulin tromethamine was shown to be well tolerated, with no obvious toxicity and was shown to disrupt tumor vasculature, induce apoptosis and inhibit tumor cell proliferation.

Anaplastic Thyroid Cancer, or ATC

We continue to explore the possibility of a special marketing approval in the European Union, known as an MAA under "exceptional circumstances," for the treatment of ATC. Based on the results of a Phase 2/3 controlled study in 80 patients with ATC, called the FACT study, comparing standard chemotherapy with and without fosbretabulin tromethamine, the FDA has provided guidance that we would need to conduct one or more large pivotal trials to obtain regulatory approval for fosbretabulin tromethamine in ATC in the United States. We believe these trials would be prohibitively expensive for such a rare indication. The European Union has alternative pathways for potential approval of drugs that are designed to treat life-threatening, extremely rare, orphan diseases such as ATC, without the requirement for large randomized trials. These include the possibility of an MAA under exceptional circumstances, in the case of therapies that address urgent, unmet medical needs. We have received feedback from the Scientific Advice Working Party, or SAWP, of the European Medicines Agency, and from other reviewing countries as part of the SAWP process on our plan to submit an MAA for fosbretabulin tromethamine in ATC. We continue to address this feedback and may ask for further clarification on the feedback we have received from the reviewing countries.

Ophthalmic Indications

In addition to developing fosbretabulin tromethamine as an intravenously administered therapy for a number of solid tumor indications, we believe that fosbretabulin tromethamine may also be useful as a therapy for a variety of ophthalmological diseases and conditions such as wet age-related macular degeneration (AMD) and diabetic retinopathy that are characterized by abnormal blood vessel growth within the eye that result in loss of vision, many of which are currently treated with anti-vascular endothelial growth factor (VEGF) therapies. While we continue to seek partnership or licensing opportunities that will allow this program to continue, we are not actively pursuing development in this area at this time.

Update on Strategy and Status of OXi4503 Development Program

In addition to pursuing development of fosbretabulin tromethamine, we are also pursuing the development of a second product candidate, OXi4503, a novel, dual-mechanism VDA, which not only has been shown to reduce tumor blood flow but which also forms an antiproliferative metabolite.

We believe that this dual mechanism differentiates OXi4503 from other VDAs and may result in enhanced anti-tumor activity in certain tumor types as compared with other VDA drug candidates. Based on preclinical data, we believe that OXi4503 may be particularly active in hepatocellular carcinoma, melanoma, and leukemias of the myeloid lineage, all of which have relatively high levels of the enzymes that facilitate the conversion of OXi4503 into a chemical that directly kills tumor cells. Similar to fosbretabulin tromethamine, OXi4503 has shown potent anti-tumor activity in preclinical studies of solid tumors and acute myelogenous leukemia, and in two clinical studies in advanced solid tumors and liver tumors, both as a single agent and in combination with other antiproliferative agents.

Acute Myelogenous Leukemia, or AML

We continue to support the ongoing investigator-sponsored Phase 1 trial of OXi4503 in patients with acute myelogenous leukemia, or AML, or with myelodysplastic syndrome, or MDS, a disorder of the normal blood formation process, being conducted at the University of Florida and with support by The Leukemia & Lymphoma Society's Therapy Acceleration Program.

This open-label, dose-escalating study for the treatment of up to 36 patients will evaluate the safety profile, maximum tolerated dose and biologic activity of OXi4503 in these patients. New patients are continuing to be enrolled in this study. As of August 4, 2014, 15 patients have been enrolled into this study, and a maximum tolerated dose has not been observed. Based on results to date, an expansion of the study to a second clinical site is being explored, with the goal of increasing the rate of enrollment in the trial.

Updated data from this trial was presented at the December 2013 annual meeting of ASH in New Orleans, Louisiana. Among the first 13 patients treated at the two lowest dose levels, two patients have shown stable disease, one patient had a partial remission and one patient achieved a complete bone marrow response. Side effects included increases in D-dimer, which is a substance in the blood that is released when a blood clot breaks up, bone pain, fever, chills and flu-like symptoms. Accordingly, OXi4503 appears to be well tolerated based on these results to date in patients with relapsed and refractory AML and MDS. Biological activity associated with OXi4503 includes temporary increases in D-dimer which may be related to anti-leukemic activity of the drug. It is estimated that an additional 12 to 15 patients will be required to establish a maximum tolerated dose.


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Financial Resources

We have experienced net losses every year since our inception and, as of June 30, 2014, had an accumulated deficit of approximately $245,067,000. We expect to incur significant additional operating losses over the next several years, principally as a result of our plans to develop and commercialize fosbretabulin tromethamine for the treatment of ovarian cancer, neuroendocrine tumors and potentially ATC in the European Union, continuing and new clinical trials and anticipated research and development expenditures. The principal source of our working capital to date has been the proceeds of private and public equity financings, the exercise of warrants and to a lesser extent the exercise of stock options. We currently have no recurring material amount of income. As of June 30, 2014, we had approximately $36,271,000 in cash.

Currently, we have two potential vehicles for raising additional capital which are not available to us at this time. We have an "at the market" equity offering sales agreement, or the ATM Agreement, with MLV & Co. LLC, or MLV, pursuant to which we may issue and sell shares of our common stock from time to time through MLV who will act as our sales agent and underwriter. We are limited as to how many shares we can sell under the ATM Agreement due to limitations imposed by the Securities and Exchange Commission, or the SEC, on the number of shares issuable pursuant to a Form S-3 registration statement in a primary offering by smaller reporting companies such as us. We are also restricted from making sales under this agreement until December 2014 due to provisions of the securities purchase agreement we entered into with the purchasers in the May 2014 financing. After December 2014, we may be able to sell more shares under this agreement over the following twelve months depending on several factors including our stock price, the number of shares of our common stock outstanding as well as the timing of the occurrence of the sales. Additionally, subject to a minimum purchase price of $6.00 per share and other conditions of the arrangement, we may sell up to a total of $20,000,000 (with a remaining balance of $17,400,000) of our common stock to Lincoln Park Capital Fund, LLC, or LPC, pursuant to a stock purchase agreement which expires on January 11, 2015. However, we are restricted from using this facility until December 2014 due to the terms of the securities purchase agreement we entered into with the purchasers in the May 2014 financing. The price of our common stock as of August 4, 2014 was $2.44 and therefore, combined with the restrictions on using the facility until December 2014, the facility is not available to us at this time.

Based on our ongoing programs, planned new programs and operations, we expect our existing cash to support our operations through approximately the middle of 2016. We expect this level of cash utilization to allow us to continue our ongoing programs, initiate a Phase 2 clinical trial of fosbretabulin tromethamine in patients with recurrent GI-NETs with elevated biomarkers, and, if we finalize an agreement with a non-profit collaborator, support the collaborator in initiating a Phase 1b/2 trial of fosbretabulin tromethamine in relapsed ovarian cancer in combination with Votrient® (pazopanib). While our existing cash will support the planning for a follow-on clinical program in fosbretabulin tromethamine for the treatment of advanced recurrent ovarian cancer, any significant further development of fosbretabulin tromethamine in advanced recurrent ovarian cancer, such as conducting follow-on clinical studies or other capital intensive activities will be contingent upon our ability to raise capital in addition to the capital available to us under our existing financing arrangements or from a collaborative research agreement with a third-party, as to which we can give you no assurance.

We will require significant additional funding to fund operations and to continue the development of our product candidates. Such funding may not be available to us on acceptable terms, or at all. If we are unable to access additional funds when needed, we may not be able to continue the development of our product candidates or we could be required to delay, scale back or eliminate some or all of our development programs and other operations. Any additional equity financing, which may not be available to us or may not be available on favorable terms, most likely will be dilutive to our current stockholders, and debt financing, if available, may involve restrictive covenants. If we access funds through collaborative or licensing arrangements, we may be required to relinquish rights to some of our technologies or product candidates that we would otherwise seek to develop or commercialize on our own, on terms that are not favorable to us. Our ability to access capital when needed is not assured and, if not achieved on a timely basis, will materially harm our business, financial condition and results of operations.

We are committed to a disciplined financial strategy and as such maintain a limited employee and facilities base, with development, scientific, finance and administrative functions, which include, among other things, product development, regulatory oversight and clinical testing. Our research and development team members typically work on a number of research and development projects concurrently. Accordingly, we do not separately track the costs for each of these research and development projects to enable separate disclosure of these costs on a project-by-project basis. We conduct scientific activities pursuant to collaborative arrangements with universities. Regulatory and clinical testing functions are generally contracted out to third-party, specialty organizations.

Results of Operations

Three and Six Months Ended June 30, 2014 and June 30, 2013

Revenue

We recognized no product revenues for the three month periods ended June 30, 2014 and June 30, 2013. We also did not recognize any product revenues in the six month periods ended June 30, 2014 and June 30, 2013. In the past two years we have recognized product revenues under our distribution agreement with a Danish company which we entered into in December 2011. Product revenues were recognized after delivery of fosbretabulin tromethamine to the Danish company and the expiration of the 30 day inspection period at which point the drug was deemed accepted. We do not anticipate any product revenues in 2014.

We anticipate that our future revenues will depend primarily upon our ability to establish collaborations with respect to, and generate revenues from, products currently under development by us. We expect that we will not generate meaningful revenue in the near term future, unless and until we enter into new collaborations providing for funding through the payment of licensing fees and up-front payments.


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Research and development expenses

The table below summarizes the most significant components of our research and development expenses for the periods indicated in thousands and provides the percentage change in these components:

                                         Three months ended               Change                Six months ended               Change
                                              June 30,               2014 versus 2013               June 30,              2014 versus 2013
                                          2014           2013        Amount          %          2014         2013         Amount          %
External services                      $     1,629       $ 242     $    1,387        573 %    $   2,706     $   601     $    2,105        350 %
Employee compensation and related              293         211             82         39 %          515         488             27          6 %
Employee Stock-based compensation               87          12             75        625 %          108          49             59        120 %
Other                                          162         138             24         17 %          229         211             18          9 %


Total research and development         $     2,171       $ 603     $    1,568        260 %    $   3,558     $ 1,349     $    2,209        164 %

The increase in external services expense for the three and six month periods ended June 30, 2014 compared to the same three and six month periods in 2013 is primarily due to costs for the manufacturing of fosbretabulin tromethamine for research and development activities, including for clinical trials and possibly to support any regulatory filings. The increase is also attributable to costs associated with a Phase 2 clinical trial of fosbretabulin tromethamine in patients with recurrent gastrointestinal neuroendocrine tumors (GI-NETs). To a lesser extent, the increase in external service expense is also due to our increased use of consultant services as a result of decreased employee headcount and our use of consultant services related to evaluating our ovarian cancer program and the results from the GOG-0186I Phase 2 clinical trial in ovarian cancer. The increase in external services expense was in part offset by reductions in costs associated with the GOG-0186I ovarian Phase 2 clinical trial in which we shared in some costs.

The increase in employee compensation and related expenses for the three and six month periods ended June 30, 2014 compared to the same three and six month periods in 2013 is due primarily to an employee incentive compensation program established in 2014

Employee stock-based compensation expense increased for the three and six month periods ended June 30, 2014 compared to the same three and six month periods in 2013 due to the timing and vesting of stock option grants.

The increase in other expenses for the three and six month periods ended June 30, 2014 compared to the same three and six month periods in 2013 is due primarily to the timing of various conference expenses.

Based on our business strategy as outlined above and in our Annual Report on Form 10-K for the year ended December 31, 2013, we expect research and development expenses to increase in the year ending December 31, 2014 as compared to the year ended December 31, 2013. We have initiated and may continue to incur costs for the manufacturing of fosbretabulin tromethamine for research and development activities, including for clinical trials and possibly to support any regulatory filings. Additionally, we expect to incur costs associated with our Phase 2 trial of fosbretabulin tromethamine in patients with recurrent GI-NETs with elevated biomarkers, and, if we finalize an agreement with a non-profit collaborator, we expect to share in the costs of initiating a Phase 1b/2 trial of fosbretabulin tromethamine in relapsed ovarian cancer in combination with Votrient® (pazopanib). As of June 30, 2014, we have a balance of unapplied purchase orders for expenditures related to outsourced drug manufacturing and clinical research activities of approximately $2,950,000 of which approximately $110,000 was estimated and accrued at June 30, 2014 for services performed, leaving approximately $2,840,000 to be incurred. Of the $2,840,000 amount to be incurred, we may incur approximately $1,510,000 during the remainder of 2014, of which approximately $530,000 is committed under non-cancelable contracts.

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