Business context and reporting period
This filing is Onconova Therapeutics, Inc.’s unaudited Form 10-Q for the quarter and six months ended June 30, 2016; the filing does not identify Traws Pharma, Inc. as the registrant. Onconova is a clinical-stage oncology company, with most development effort focused on rigosertib. Share and per-share figures reflect a 1-for-10 reverse stock split effective May 31, 2016.
Financial performance and position
| Metric | Q2 2016 | Q2 2015 | Six months 2016 | Six months 2015 |
|---|---|---|---|---|
| Revenue | $2.248 million | $123,000 | $3.722 million | $237,000 |
| Operating expenses | $7.647 million | $9.080 million | $16.640 million | $21.543 million |
| Operating loss | $5.399 million | $8.957 million | $12.918 million | $21.306 million |
| Net loss attributable to Onconova | $5.381 million | $8.955 million | $12.621 million | $21.298 million |
| Basic and diluted loss per share | $1.96 | $4.13 | $4.61 | $9.81 |
Revenue primarily reflects Baxalta’s contractual cost-sharing for the INSPIRE trial, plus recognition of SymBio collaboration revenue—not product sales. The filing does not report operating or gross margin percentages. Research and development expense was $5.564 million in Q2 and $11.386 million for the six months.
At June 30, cash and cash equivalents were $12.818 million, versus $19.799 million at December 31, 2015. Working capital was $6.9 million; total liabilities were $14.155 million and total stockholders’ equity was $2.047 million. The filing reports no conventional borrowings; it records a $287,000 warrant liability. Six-month operating cash use was $8.594 million, financing provided $1.610 million, and cash declined by $6.981 million. Investing cash flow was zero.
Material changes versus comparable periods
- Revenue rose by $2.125 million in Q2 and $3.485 million in the first half, mainly due to Baxalta’s INSPIRE cost-sharing payments.
- First-half operating expenses fell $4.903 million year over year, including a $4.624 million reduction in R&D. Management attributed reductions to lower clinical, preclinical, institutional research, manufacturing, and personnel costs, partly offset by severance and accelerated stock compensation.
- First-half net loss narrowed by $8.721 million. The six-month results included a $279,000 gain from remeasurement of the warrant liability.
- Onconova reduced its workforce by six employees, approximately 17% of its workforce, in February 2016 and recorded a $2.8 million severance-related charge, including $1.6 million of non-cash accelerated stock-option expense.
- On May 31, the company completed a 1-for-10 reverse split and reduced authorized common shares from 75 million to 25 million.
Outlook, risks and unusual items
- Management said cash, expected Baxalta cost-sharing, and proceeds from the July 2016 rights offering were expected to fund ongoing trials and operations into Q4 2017. The filing nevertheless states that substantial doubt exists about the company’s ability to continue as a going concern and that additional financing is required.
- After quarter-end, the July rights offering generated approximately $15.8 million net proceeds. Onconova issued 3,599,786 common shares, 3,192,139 tradable warrants, and 656,400 pre-funded warrants; cash and cash equivalents were approximately $27.6 million at July 31. These proceeds are subsequent events, not June 30 cash.
- Baxalta elected to terminate its European rigosertib agreement effective August 30, 2016. European rights are to revert to Onconova at no cost, but related future funding, pre-commercial milestones, and royalties will end under the agreement. Baxalta had agreed to fund up to 50% of INSPIRE costs, capped at $15 million.
- The Phase 3 INSPIRE trial is testing intravenous rigosertib in higher-risk MDS after HMA failure; management anticipated topline results in 2018. The earlier Phase 3 ONTIME trial did not meet its primary endpoint.
- Interim data from the oral rigosertib-plus-azacitidine Phase 2 study were described as encouraging, but the company said further data collection could affect final results. It requested an FDA end-of-Phase-2 meeting in July 2016.
- Other risks include the need to raise capital on acceptable terms, potential trial delays or reductions, clinical and regulatory uncertainty, and dependence on collaborators and third-party providers. Briciclib’s IND remained on full clinical hold following a drug-product lot testing failure; GBO’s two preclinical programs had not reached clinical stage and the company was discussing their future with GVK.
Important facts for investors to verify
- Whether the rights-offering proceeds and remaining cash support the stated runway, particularly as INSPIRE enrollment and costs increase.
- The amount and timing of any remaining Baxalta cost-sharing payments, and the effect of its termination on European rights and trial funding.
- INSPIRE site activity, enrollment, interim-analysis timing, and any changes to the expected 2018 topline timeline.
- Progress and full safety and efficacy results for oral rigosertib combinations, and the FDA’s response to the requested meeting.
- Potential dilution and warrant terms from the July offering, as well as access to additional financing and any resulting changes to operations.