Business context and reporting period
Onconova Therapeutics, Inc. filed this unaudited Form 10-Q for the quarter and nine months ended September 30, 2017. The filing describes a clinical-stage oncology biopharmaceutical company, with most development efforts focused on rigosertib for myelodysplastic syndromes (MDS). The supplied request identifies Traws Pharma, but the filing itself names Onconova Therapeutics, Inc.
Financial results and liquidity
| Metric | Q3 2017 | Q3 2016 | Nine months 2017 | Nine months 2016 |
|---|---|---|---|---|
| Revenue | $0.11 million | $1.65 million | $0.64 million | $5.37 million |
| Operating expenses | $6.87 million | $5.97 million | $20.26 million | $22.61 million |
| Operating loss | $6.76 million | $4.32 million | $19.62 million | $17.23 million |
| Net loss | $6.96 million | $1.60 million | $17.89 million | $14.22 million |
| Net loss per share | $0.71 | $0.29 | $2.09 | $3.90 |
- Cash and cash equivalents were $7.6 million at September 30, 2017, down from $21.4 million at December 31, 2016. Operating activities used $19.1 million in the first nine months, versus $11.5 million in the comparable 2016 period; financing provided $5.3 million, principally from the 2017 share offering.
- Current assets were $8.7 million and current liabilities $9.0 million, producing negative working capital of about $0.3 million. Total liabilities were $14.9 million; the filing does not disclose conventional borrowings or interest-bearing debt in the presented balance sheet. Stockholders’ deficit was $6.1 million.
- Operating and net margins were negative; the filing does not present a separate margin measure. Research and development expense was $5.1 million in Q3 and $14.6 million for the nine months.
Material changes versus prior periods
- Revenue declined $1.5 million in Q3 and $4.7 million year to date, primarily because Baxalta’s cost-sharing payments for the INSPIRE trial ended when its license agreement terminated in August 2016. 2017 revenue was from SymBio.
- Q3 research and development expense increased $1.2 million, mainly from increased INSPIRE activity and the 09-08 expansion study. Nine-month R&D expense fell $0.7 million, as lower personnel and stock compensation costs more than offset higher clinical spending.
- Q3 net loss widened by $5.4 million. The comparison was also affected by warrant valuation: Q3 2016 included a $2.7 million gain, while Q3 2017 had a $0.2 million expense. For the nine months, the warrant fair-value gain was $1.7 million in 2017 versus $3.0 million in 2016.
- Shares outstanding increased during 2017 through an April/May public offering that generated about $5.3 million net. The balance sheet reports 9,851,164 shares at September 30; the cover page reports 9,851,163 as of October 31.
Outlook, risks and unusual items
- Management said available cash was expected to fund ongoing trials and operations only through the end of 2017. The filing states that substantial doubt exists about the company’s ability to continue as a going concern; additional financing is required, with no assurance it can be obtained on acceptable terms or at all. Without funding, the company may delay, scale back, or eliminate programs or operations.
- The Phase 3 INSPIRE trial of intravenous rigosertib had an interim analysis tied to 88 death events, expected late in Q4 2017 but potentially early the following year. Enrollment was selective; management noted that CRO changes and site additions could delay full enrollment. Two prior safety reviews resulted in continuation per plan. The earlier ONTIME Phase 3 trial did not meet its primary overall-survival endpoint.
- The planned Phase 3 oral rigosertib-plus-azacitidine trial would not begin without additional financing. Further development of oral rigosertib for lower-risk MDS and AML also depended on funding. Briciclib’s IND remained on full clinical hold following a drug-product lot testing failure; other programs were paused, inactive, or minimally resourced.
- Onconova reported failure to meet Nasdaq’s $2.5 million minimum stockholders’ equity requirement and other alternative listing standards. It had submitted a compliance plan and awaited Nasdaq’s decision; delisting could impair trading liquidity and its ability to raise capital.
- Subsequent to quarter-end, the estimated warrant liability increased from $1.686 million at September 30 to approximately $2.260 million at November 8, an estimated $0.574 million increase in net loss. The liability is subject to market-price movements.
- The company reported no pending material legal proceedings. Management concluded disclosure controls were effective and reported no material quarterly change in internal control over financial reporting.
Important facts for investors to verify
- Whether the company secured financing after its stated end-of-2017 cash runway, and the resulting dilution, restrictions, or changes to operations.
- INSPIRE interim-analysis timing and outcome, enrollment progress, and any resulting change to trial design or funding needs.
- Nasdaq’s decision on the compliance plan and the company’s subsequent listing status.
- The financial effects of warrant fair-value changes and the share-count discrepancy between the filing’s balance sheet and cover page.
- Whether the planned oral rigosertib Phase 3 program and other paused development programs received financing or advanced.