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Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-Q

 

 

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2016

OR

 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number: 0-21990

 

 

OXiGENE, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   13-3679168

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

701 Gateway Blvd, Suite 210

South San Francisco, CA 94080

(Address of principal executive offices, including zip code)

(650) 635-7000

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

  ¨    Accelerated filer   ¨
Non-accelerated filer   ¨  (Do not check if a smaller reporting company)    Smaller reporting company   x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

As of May 6, 2016, there were 26,544,934 shares of the Registrant’s Common Stock issued and outstanding.

 

 

 


Table of Contents

OXiGENE, INC.

Cautionary Factors that May Affect Future Results

This report contains “forward-looking statements,” which give management’s current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historic or current facts. They use words, such as “may,” “will,” “should,” “would,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential,” “seek,” “indicate,” or “continue” or the negative of these terms and other words and terms of similar meaning.

Any or all of our forward-looking statements in this report may turn out to be wrong. They can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties. Consequently, no forward-looking statement can be guaranteed. Actual results may vary materially from those set forth in forward-looking statements. Forward-looking statements include, but are not limited to, statements regarding our or our management’s expectations, hopes, beliefs, intentions or strategies regarding the future, such as our estimates regarding anticipated operating losses, future performance, future revenues and projected expenses; our liquidity and our expectations regarding our needs for and ability to raise additional capital; our ability to select and capitalize on commercially desirable product opportunities as a result of limited financial resources; our ability to manage our expenses effectively and raise the funds needed to continue our business; our ability to maintain the listing of our common stock on The NASDAQ Capital Market; our ability to retain the services of our current executive officers, directors and principal consultants; the competitive nature of our industry and the possibility that our product candidates may become obsolete; our ability to obtain and maintain regulatory approval of our product candidates and any future products we may develop; the clinical development of and the process of commercializing CA4P (combretastatin A4 phosphate or fosbretabulin) and OXi4503, the initiation, timing, progress and results of our preclinical and clinical trials, research and development programs; regulatory and legislative developments in the United States and foreign countries; the timing, costs and other limitations involved in obtaining regulatory approval for any product candidate; the further preclinical or clinical development and commercialization of our product candidates; our ability to obtain orphan drug exclusivity for some of our product candidates; the potential benefits of our product candidates over other therapies; our ability to enter into any collaboration with respect to product candidates; the performance of third parties; our ability to obtain and maintain intellectual property protection for our product candidates and any future products we may develop and operate our business without infringing upon the intellectual property rights of others; the potential liability exposure related to our product candidates and any future products we may develop and our insurance coverage for such exposure; the size and growth of the potential markets for our products and our ability to serve those markets; the rate and degree of market acceptance of any future products; the sufficiency of potential proceeds from any financing; the volatility of the price of our common stock; the dilutive effects of potential future equity issuances; our ability to maintain an effective system of internal controls; the payment and reimbursement methods used by private or governmental third-party payers, and other factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2015 filed with the Securities and Exchange Commission (the SEC) on March 25, 2016 or any document incorporated by reference herein or therein.

We will not update forward-looking statements, whether as a result of new information, future events or otherwise, unless required by law. You are advised to consult any further disclosures we make in our reports to the SEC, including our reports on Form 10-Q, 8-K and 10-K. Our filings list various important factors that could cause actual results to differ materially from expected results. We note these factors for investors as permitted by the Private Securities Litigation Reform Act of 1995. You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider any such list to be a complete set of all potential risks or uncertainties.

 

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Table of Contents

INDEX

 

     Page
No.
 

PART I—FINANCIAL INFORMATION

  

Item 1. Financial Statements

     4   

Condensed Balance Sheets

     4   

Condensed Statements of Comprehensive Loss

     5   

Condensed Statements of Cash Flows

     6   

Notes to Condensed Financial Statements

     7   

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

     10   

Item  3. Quantitative and Qualitative Disclosures about Market Risk

     14   

Item 4. Controls and Procedures

     14   

PART II—OTHER INFORMATION

  

Item 1. Legal Proceedings

     14   

Item 1A. Risk Factors

     14   

Item  2. Unregistered Sales of Equity Securities and Use of Proceeds

     14   

Item 3. Defaults Upon Senior Securities

     14   

Item 4. Mine Safety Disclosures

     15   

Item 5. Other Information

     15   

Item 6. Exhibits

     16   

SIGNATURES

     17   

 

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Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

OXiGENE, Inc.

Condensed Balance Sheets

(in thousands, except per share data)

 

     March 31, 2016     December 31, 2015  
     (Unaudited)     (See Note 1)  
ASSETS     

Current assets:

    

Cash and cash equivalents

   $ 10,276      $ 27,285   

Short-term investments

     12,610        —     

Prepaid expenses and other current assets

     1,297        105   
  

 

 

   

 

 

 

Total current assets

     24,183        27,390   

Property and equipment, net

     25        30   

Other assets

     33        33   
  

 

 

   

 

 

 

Total assets

   $ 24,241      $ 27,453   
  

 

 

   

 

 

 
LIABILITIES AND STOCKHOLDERS’ EQUITY     

Current liabilities:

    

Accounts payable

   $ 475      $ 287   

Accrued compensation and employee benefits

     459        636   

Accrued clinical trial expenses

     757        918   

Other accrued liabilities

     333        262   
  

 

 

   

 

 

 

Total current liabilities

     2,024        2,103   
  

 

 

   

 

 

 

Commitments and contingencies

    

Stockholders’ equity:

    

Preferred stock, $0.01 par value, 15,000 shares authorized; No shares issued and outstanding

     —          —     

Common stock, $0.01 par value, 70,000 shares authorized; 26,545 shares issued and outstanding

     265        265   

Additional paid-in capital

     290,086        289,894   

Accumulated deficit

     (268,134     (264,809
  

 

 

   

 

 

 

Total stockholders’ equity

     22,217        25,350   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 24,241      $ 27,453   
  

 

 

   

 

 

 

See accompanying notes.

 

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OXiGENE, Inc.

Condensed Statements of Comprehensive Loss

(in thousands, except per share data)

(unaudited)

 

     Three months ended March 31,  
     2016     2015  

Operating expenses:

    

Research and development

   $ 1,980      $ 1,669   

General and administrative

     1,372        1,108   
  

 

 

   

 

 

 

Total operating expenses

     3,352        2,777   
  

 

 

   

 

 

 

Loss from operations

     (3,352     (2,777

Interest income

     28        3   

Other income (expense), net

     (1     2   
  

 

 

   

 

 

 

Net loss and comprehensive loss

   $ (3,325   $ (2,772
  

 

 

   

 

 

 

Basic and diluted net loss per share attributable to common stock

   $ (0.13   $ (0.13
  

 

 

   

 

 

 

Weighted-average number of common shares outstanding

     26,545        21,095   
  

 

 

   

 

 

 

See accompanying notes.

 

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Table of Contents

OXiGENE, Inc.

Condensed Statements of Cash Flows

(in thousands)

(unaudited)

 

     Three months ended March 31,  
     2016     2015  

Operating activities:

    

Net loss

   $ (3,325   $ (2,772

Adjustments to reconcile net loss to net cash used in operating activities:

    

Depreciation

     5        5   

Stock-based compensation

     192        88   

Changes in operating assets and liabilities:

    

Prepaid expenses and other current assets

     (1,192     (434

Accounts payable and accrued expenses

     (79     (390
  

 

 

   

 

 

 

Net cash used in operating activities

     (4,399     (3,503
  

 

 

   

 

 

 

Investing activities:

    

Purchase of short-term investments

     (12,610     —     
  

 

 

   

 

 

 

Net cash used in investing activities

     (12,610     —     
  

 

 

   

 

 

 

Financing activities:

    

Proceeds from issuance of common stock, net of issuance costs

     —          9,207   
  

 

 

   

 

 

 

Net cash provided by financing activities

     —          9,207   
  

 

 

   

 

 

 

(Decrease) increase in cash and cash equivalents

     (17,009     5,704   

Cash and cash equivalents at beginning of period

     27,285        30,031   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 10,276      $ 35,735   
  

 

 

   

 

 

 

See accompanying notes.

 

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Table of Contents

OXiGENE, Inc.

Notes to Condensed Financial Statements

March 31, 2016

(Unaudited)

 

1. Summary of Significant Accounting Policies

Description of Business

OXiGENE, Inc. (“OXiGENE” or the “Company”) is incorporated in the state of Delaware and is a clinical-stage biopharmaceutical company seeking to realize the full potential of vascular targeted therapy in oncology. Vascular targeted therapy includes vascular disrupting agents (VDAs), such as the investigational drugs that OXiGENE is developing, and anti-angiogenic agents (AAs), a number of which are approved and widely used in oncology indications. OXiGENE’s VDAs selectively obstruct a tumor’s blood supply without obstructing the blood supply to normal tissues, and treatment with OXiGENE’s VDAs has been shown to lead to significant central tumor necrosis. The Company believes that the treatment of cancer would be significantly improved if VDAs and AAs were used together, due to their complementary mechanisms of action. In combination, the VDA would occlude the blood vessels in the interior of a tumor while the AA would prevent the formation of new tumor blood vessels. The Company has two VDA drug candidates currently being tested in clinical trials, CA4P (combretastatin A4 phosphate, or fosbretabulin) and OXi4503.

Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. The financial statements do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management, however, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2016 are not necessarily indicative of the results that may be expected for any other interim period or for the year ending December 31, 2016.

The balance sheet at December 31, 2015 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. For further information, refer to the financial statements and footnotes thereto included in the Annual Report on Form 10-K for the Company for the year ended December 31, 2015.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

Cash Equivalents

Highly liquid investments with original maturities of three months or less at the date of purchase are considered to be cash equivalents. Cash equivalents are stated at fair value.

Short-term Investments

All marketable securities have been classified as “available for sale” and are carried at fair value, based upon quoted market prices. The Company considers its available-for-sale portfolio to be available for use in current operations. Accordingly, the Company classifies certain investments as short-term marketable securities, even though the stated maturity date may be one year or more beyond the current balance sheet date. Unrealized gains and losses, net of any related tax effects, are excluded from earnings and are included in other comprehensive income and reported as a separate component of stockholders’ deficit until realized. Realized gains and losses and declines in value judged to be other than temporary, if any, on available-for-sale securities are included in other income (expense), net. The cost of securities sold is based on the specific-identification method.

 

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2. Cash, Cash Equivalents, and Short-Term Investments

Cash, cash equivalents and short-term investments consisted of the following (in thousands):

 

     March 31, 2016  
     Amortized
Cost
     Unrealized
Gain
     Unrealized
(Loss)
     Estimated Fair
Value
 

Cash

   $ 2,869       $ —         $ —         $ 2,869   

Money market funds

     5,598         —           —           5,598   

U.S. government treasury bills

     2,406         —           —           2,406   

Corporate bonds and commercial paper

     10,811         —           —           10,811   

Asset backed securities

     1,202         —           —           1,202   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 22,886       $ —         $ —         $ 22,886   
  

 

 

    

 

 

    

 

 

    

 

 

 

Reported as:

           

Cash and cash equivalents

            $ 10,276   

Short-term investments

              12,610   
           

 

 

 

Total cash, cash equivalents and short-term investments

            $ 22,886   
           

 

 

 

As of March 31, 2016, the Company’s cash equivalents and short-term investments had a weighted-average time to maturity of less than one year and the Company has the ability to hold its investments through their maturity dates. There have been no significant realized gains or losses on investments for the period presented.

 

3. Fair Value Measurements

Fair value is defined as the price at which an asset could be exchanged or a liability transferred in a transaction between knowledgeable, willing parties in the principal or most advantageous market for the asset or liability. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or parameters are not available, valuation models are applied.

Assets and liabilities recorded at fair value are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities, are as follows:

Level 1—Inputs are unadjusted, quoted prices in active markets for identical assets at the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide reasonably accurate pricing information on an ongoing basis.

Level 2—Inputs, other than quoted prices included in Level 1, that are either directly or indirectly observable for the asset or liability through correlation with market data at the reporting date and for the duration of the instrument’s anticipated life.

The Company utilizes third party pricing services in developing fair value measurements where fair value is based on observable market inputs, including benchmark yields, reported trades, broker/dealer quotes, bids, offers and other reference data. The Company uses quotes from external pricing service providers and other on-line quotation systems to verify the fair value of investments provided by third party pricing service providers.

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities reflect management’s best estimate of what market participants would use in pricing the asset or liability at the reporting date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

 

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Financial assets measured at fair value on a recurring basis are categorized in the tables below based upon the lowest level of significant input to the valuations (in thousands):

 

     March 31, 2016  
     Level 1      Level 2      Level 3      Total  

Money market funds

   $ 5,598       $ —         $ —         $ 5,598   

U.S. government treasury bills

     —           2,406         —           2,406   

Corporate bonds and commercial paper

     —           10,811         —           10,811   

Asset backed securities

     —           1,202         —           1,202   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 5,598       $ 14,419       $ —         $ 20,017   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

4. Stockholders’ Equity

The following is a summary of the Company’s outstanding common stock warrants:

 

Expiration Date

   Exercise
Price
     March 31, 2016      December 31, 2015  
      (in thousands)  

04/16/18

   $ 3.40         1,460         1,460   

09/23/18

   $ 2.80         147         147   

02/18/19

   $ 2.75         1,872         1,872   

02/11/19

   $ 2.56         293         293   

08/28/19

   $ 2.90         2,700         2,700   

06/14/17

   $ 3.70         216         216   

03/25/20

   $ 1.71         2,920         2,920   

03/20/20

   $ 2.13         234         234   
     

 

 

    

 

 

 

Total Warrants Outstanding

        9,842         9,842   
     

 

 

    

 

 

 

The following is a summary of the Company’s stock option activity under its equity incentive plans:

 

     Options
Available
for Grant
    Options
Outstanding
    Weighted
Average
Exercise
Price
     Weighted
Average
Remaining
Contractual
Life
     Aggregate
Intrinsic
Value
 
     (in thousands)            (years)      (in thousands)  

Balance at December 31, 2015

     2,695        2,031      $ 2.01         8.44      

Options granted

     (1,942     1,942      $ 0.73         

Options forfeited

     112        (112   $ 3.32         
  

 

 

   

 

 

         

Balance at March 31, 2016

     865        3,861      $ 1.59         8.98       $ 129   
  

 

 

   

 

 

         

Vested and exercisable at March 31, 2016

       486      $ 3.11         7.41       $ —     

Vested and expected to vest at March 31, 2016

       2,614      $ 1.49         8.71       $ 73   

Unvested at March 31, 2016

       3,375      $ 1.37         

As of March 31, 2016, there was approximately $1.4 million of unrecognized compensation cost related to stock option awards that is expected to be recognized as expense over a weighted average period of approximately 3 years.

 

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The fair values for the stock options granted were estimated at the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions for the periods indicated:

 

     Three months ended March 31,  
     2016     2015  

Risk-free interest rate

     1.53     1.47

Expected life (years)

     6.19        4.00   

Expected volatility

     88.99     94.50

Dividend yield

     0     0

 

5. Net Loss Per Share

Basic and diluted net loss per share was calculated by dividing the net loss per share attributed to the Company’s common shares by the weighted-average number of common shares outstanding during the period. Diluted net loss per share includes the effect of all dilutive, potentially issuable common equivalent shares as defined using the treasury stock method. All of the Company’s common stock equivalents are anti-dilutive due to the Company’s net loss position for all periods presented. Accordingly, common stock equivalents of approximately 3,861,000 stock options and 9,842,000 warrants at March 31, 2016 and 689,000 stock options and 10,599,000 warrants at March 31, 2015, were excluded from the calculation of weighted average shares for diluted net loss per share.

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

The following discussion and analysis should be read together with the audited financial statements and notes, 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, 2015, and also with the unaudited financial statements set forth in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Overview

We are a biopharmaceutical company seeking to realize the full potential of vascular targeted therapy in oncology. Vascular targeted therapy includes vascular disrupting agents, or VDAs, such as the investigational drugs that we are developing, and anti-angiogenic agents, or AAs, a number of which are approved and widely used in oncology indications. Our VDAs selectively obstruct a tumor’s blood supply without obstructing the blood supply to normal tissues, and treatment with our VDAs has been shown to lead to significant central tumor necrosis. We believe that the treatment of cancer would be significantly improved if VDAs and AAs were used together, due to their complementary mechanisms of action. In combination, the VDA would occlude the blood vessels in the interior of a tumor while the AA would prevent the formation of new tumor blood vessels. We have two VDA drug candidates currently being tested in clinical trials, CA4P (combretastatin A4 phosphate, or fosbretabulin) and OXi4503.

CA4P

Our lead investigational drug, CA4P, is a reversible tubulin binding agent that selectively targets endothelial cells that make up the blood vessel walls in most solid cancer tumors, causing the endothelial cells to swell and thus obstruct the flow of blood to the tumor, which starves the tumor of vital nutrients including oxygen. This deprivation, also known as tumor hypoxia, results in rapid downstream tumor cell death.

Our primary focus for 2016 is the development of CA4P for platinum-resistant ovarian cancer. Approximately 22,000 women in the U.S. are diagnosed with ovarian cancer each year. More than 60% of women diagnosed with ovarian cancer are in stage III or IV at the time of their diagnosis, making ovarian cancer difficult to treat and often fatal, with a five-year survival rate of approximately 45% — a rate which is largely unchanged since the 1990s. Overall, approximately 80% of patients diagnosed with ovarian cancer will relapse after first-line platinum-based and taxane-based chemotherapy. One quarter of those who relapse after initial treatment, or more than 4,300 women, will have platinum-resistant cancer, the most difficult-to-treat form of the disease. Additionally, a majority of patients who are not initially platinum-resistant and who may achieve a full remission following first-line therapy will also develop recurrent disease. There are relatively few cancer therapies that have been approved for the treatment of ovarian cancer, including platinum-resistant ovarian cancer, and new treatments are needed. We have been granted orphan drug designation in both the U.S. and the European Union for the use of CA4P in the treatment of ovarian cancer and have received Fast Track designation in the U.S. for use in the treatment of platinum-resistant ovarian cancer.

 

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CA4P in Combination with Bevacizumab – Completed Phase 2 Clinical Trial with Positive Results

Genentech’s bevacizumab (Avastin®) is an anti-vascular endothelial growth factor, or VEGF, monoclonal antibody which has been approved for the treatment of ovarian cancer in the United States and elsewhere. The GOG-0186I clinical trial was conducted by Gynecologic Oncology Group (GOG), part of NRG Oncology, under the sponsorship of the Cancer Therapy Evaluation Program (CTEP) of the National Cancer Institute (NCI), and was a randomized, two-arm phase 2 clinical trial evaluating CA4P plus bevacizumab compared to bevacizumab alone in patients with recurrent ovarian cancer.

The GOG-0186I clinical trial enrolled a total of 107 patients with both platinum-sensitive and platinum-resistant recurrent ovarian cancer at 67 clinical sites in the United States. The results indicated a statistically significant increase in progression-free survival (PFS) in the combination arm, which was the primary endpoint of the trial, with a p-value of 0.049 (pre-specified analysis using a one-sided test; 10% level of significance). The hazard ratio was 0.685, with a 90% 2-sided confidence interval (CI) of 0.47 ~1.00. Median PFS was 7.3 months for CA4P plus bevacizumab (n=54), compared to 4.8 months for bevacizumab alone (n= 53). Patients in both arms were treated until disease progression or adverse effects prohibited further therapy.

In a post-hoc subgroup analysis, data showed that patients who were platinum-resistant had an even greater improvement in PFS with the combination. Among the 27 patients who were platinum-resistant, median PFS was 6.7 months for those receiving CA4P plus bevacizumab compared to 3.4 months for those receiving bevacizumab alone, and the results were statistically significant with a p-value of 0.01 and a hazard ratio of 0.57. These findings suggest that adding CA4P to bevacizumab has a greater effect in the difficult-to-treat platinum-resistant patient group than it does for platinum-sensitive patients. Although the results were stronger for the platinum-resistant patients, a post-hoc subgroup analysis among the 80 patients who were platinum-sensitive still showed a numerical improvement in PFS for the combination therapy, with a median PFS of 7.6 months for those receiving CA4P plus bevacizumab compared to 6.1 months for those receiving bevacizumab alone, although the results were not statistically significant, with a p-value of 0.139 and a hazard ratio of 0.67.

In the clinical trial, patients with measurable disease who received the combination of CA4P and bevacizumab also achieved a higher objective response rate, or ORR, a secondary endpoint in the clinical trial, measured according to RECIST criteria. Although not a statistically significant result, patients receiving the combination had an ORR of 35.7% (n=42; CI 90% 23.5 ~ 49.5%) compared to 28.2% for patients on bevacizumab alone (n=39; CI 90% 16.7 ~ 42.3%). In the subgroup of platinum-resistant patients, the addition of CA4P to bevacizumab increased ORR to 40.0% (n=10) compared to 12.5% (n=8) for bevacizumab alone.

Additional secondary endpoints in the clinical trial included safety and overall survival (OS). All adverse events in the clinical trial were manageable, with one Grade 4 event occurring in each treatment arm. Consistent with prior clinical experience with CA4P, patients in the combination arm experienced an increased incidence of Grade 3 hypertension compared to the control arm (18 cases for the combination compared to 10 cases for bevacizumab alone). One patient on the combination regimen had a Grade 3 thromboembolic event. All cases of hypertension were managed with anti-hypertensive treatments, as specified in the clinical trial protocol.

Patients continue to be followed for OS. A preliminary analysis after 33 events did not demonstrate a statistically significant difference in OS between the clinical trial arms; however, these OS data were not sufficiently mature to yield any meaningful conclusions. Further analyses of this secondary endpoint will be conducted as the data matures.

CA4P in Combination with Bevacizumab and Physician’s Choice Chemotherapy – Phase 2/3 Clinical Trial Planned

Based on the positive overall results from the GOG-0186I clinical trial in recurrent ovarian cancer and also the statistically significant results among the subgroup of platinum-resistant patients, we plan to initiate the FOCUS Study, a phase 2/3 clinical trial of CA4P seeking to demonstrate whether CA4P improves the current standard of care for platinum-resistant ovarian cancer. The current standard of care for platinum-resistant ovarian cancer is treatment with bevacizumab and chemotherapy. The clinical trial is designed with two stages – in the first stage, we plan to enroll up to 80 patients and conduct regular interim analyses in order to verify efficacy and confirm powering assumptions for the second stage. In the second stage, we plan to enroll up to 356 additional patients and do not plan to conduct any interim analyses. The primary endpoint of our phase 2/3 clinical trial will be PFS, and we will also evaluate objective response rate, OS and other parameters. If results from the second stage of the clinical study meet the primary endpoint, we intend to submit a New Drug Application, or NDA, to the U.S. Food and Drug Administration, or FDA. We expect to begin enrolling patients into this clinical trial during the second quarter of 2016.

CA4P in Combination with Pazopanib – Ongoing Phase 1b Clinical Trial moving into Phase 2

Pazopanib is an anti-angiogenic oral tyrosine kinase inhibitor that is currently approved by the FDA for the treatment of renal cell carcinoma (RCC) and soft tissue sarcoma (STS). Pazopanib is also approved for ovarian and other cancers in the European Union, and was initially developed by GlaxoSmithKline, then sold to Novartis in 2015. We believe that using CA4P in combination with pazopanib may provide a clinically active yet potentially better tolerated alternative to the current standard of care, cytotoxic chemotherapy, for relapsed ovarian cancer.

In October 2014, the first patient was enrolled in a phase 1b/2 trial of pazopanib with and without CA4P in advanced recurrent ovarian cancer. We will incur limited costs for this trial, which is sponsored by The Christie Hospital NHS Foundation Trust and coordinated by the Manchester Academic Health Science Centre, Trials Coordination Unit, or MAHSC-CTU, with additional support from The University of Manchester, the Royal Marsden NHS Foundation Trust and Mount Vernon Cancer Centre (part of the East and North Hertfordshire NHS Trust).

The trial design consists of a phase 1b dose escalation portion with the combination of pazopanib and CA4P, which has been completed, and then a randomized phase 2 portion comparing pazopanib alone versus pazopanib plus CA4P in patients with relapsed ovarian cancer. The clinical trial is expected to enroll approximately 128 patients at sites in the U.K. The primary endpoint of the trial is PFS, and secondary endpoints include safety, OS, objective response rate, and CA125 response rate. The phase 2 portion is expected to begin enrolling patients in the second quarter of 2016.

 

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OXi4503 Development Program

In addition to pursuing development of CA4P, we are also pursuing the development of a second product candidate, OXi4503, a novel, dual-mechanism VDA, which has not only been shown to reduce tumor blood flow but which also forms a potentially anti-proliferative metabolite. We believe that this dual mechanism of OXi4503 may result in enhanced anti-tumor activity in certain tumor types. 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 metabolite that directly kills tumor cells. Similar to CA4P, OXi4503 has shown potent anti-tumor activity in preclinical studies of solid tumors and AML, and in two clinical studies in advanced solid tumors and liver tumors, both as a single agent and in combination with other anti-proliferative agents.

Our current development program for OXi4503 is as follows:

Acute Myelogenous Leukemia, or AML

AML is a relatively rare cancer of the myeloid blood cells, with approximately 10,500 new cases each year in the United States and accounting for approximately 1.2% of cancer deaths. AML is characterized by the rapid growth of abnormal white blood cells that pollute bone marrow and interfere with the production of normal blood cells. Due to an unmet need in the treatment of AML and the small size of the indication, we have been granted orphan drug designation in the United States and European Union for the use of OXi4503 for the treatment of AML.

Prior to October 2015, OXi4503 had been in development in an investigator-sponsored phase 1 clinical trial of patients with AML 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. In October 2015, the investigator-sponsored clinical trial was closed, and we brought the clinical trial under our direct management and expanded the number of sites to four, with the goal of enrolling patients faster than had occurred at a single site. In December 2015, we moved this clinical trial into its second stage, whereby OXi4503 is being used in combination with cytarabine, an FDA-approved drug for the treatment of AML.

Data from the investigator-sponsored trial was presented at the December 2013 annual meeting of the American Society of Hematology, or ASH, in New Orleans, Louisiana. Among the first 13 patients treated at the two lowest dose levels, two patients showed stable disease, one patient had a partial remission and one patient achieved a complete bone marrow response. Side effects included increases in D-dimer (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 reasonably 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.

Results of Operations

Three Months Ended March 31, 2016 and March 31, 2015

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 amount and percentage change in these components:

 

     Three months ended March 31,      Change  
     2016      2015      Amount      %  

Clinical studies

   $ 817       $ 632       $ 185         29

Drug manufacturing

     54         149         (95      -64

Consulting and professional services

     229         228         1         0

Employee compensation and related

     709         448         261         58

Employee stock-based compensation

     88         53         35         66

Other

     83         159         (76      -48
  

 

 

    

 

 

    

 

 

    

 

 

 

Total research and development

   $ 1,980       $ 1,669       $ 311         19
  

 

 

    

 

 

    

 

 

    

 

 

 

        The increase in research and development expenses for the three month period ended March 31, 2016 compared to the same period in 2015 is primarily due to additional clinical trial activity for CA4P, our lead investigational drug currently being studied in ovarian cancer and neuroendocrine tumors, and OXi4503, currently being studied in AML. The increased clinical trial activity increased expenses recorded for clinical studies and also increased employee compensation due to our hiring of additional personnel to support the clinical programs. Clinical expenses include costs incurred by contract research organizations who conduct clinical trials on our behalf, patient and clinical site costs, laboratory costs and other services directly related to clinical trials.

 

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Drug manufacturing expenses decreased for the three month period ended March 31, 2016 compared to the same period in 2015 as we have previously completed manufacturing activities related to our CA4P drug supply requirements for 2016. Timing of drug manufacturing costs is variable and is impacted by the timing of when drug product is needed for clinical trials, product expiration or re-test requirements, potential regulatory filings and scheduling of production batches based on the drug manufacturer’s generally long lead time requirements.

Other expenses include facility related expenses and licensing fees which decreased for the three month period ended March 31, 2016 compared to the same period in 2015 due to lower licensing fees paid for rights to our drug product candidates.

We expect research and development expenses to increase in 2016 as compared to 2015 due to additional clinical trial activity and the employees required to support the additional clinical work.

General and administrative expenses

The table below summarizes the most significant components of our general and administrative expenses for the periods indicated, in thousands, and provides the amount and percentage changes in these components:

 

     Three months ended March 31,      Change  
     2016      2015      Amount      %  

Employee compensation and related

   $ 588       $ 403       $ 185         46

Stock-based compensation

     104         35         69         197

Consulting and professional services

     577         516         61         12

Other

     103         154         (51      -33
  

 

 

    

 

 

    

 

 

    

 

 

 

Total general and administrative

   $ 1,372       $ 1,108       $ 264         24
  

 

 

    

 

 

    

 

 

    

 

 

 

General and administrative expenses increased for the first quarter of 2016 compared to the first quarter of 2015 due to higher employee compensation expenses as a result of several positions converting from part time to full time for the 2016 period, as well as higher temporary housing costs associated with employee relocations and increased travel. Stock-based compensation expense also increased for the three month period ended March 31, 2016 compared to the same period in 2015 due to expense for stock options granted during the second quarter of 2015.

Consulting and professional services expenses for the three month period ended March 31, 2016 as compared to the same period in 2015 increased primarily due to market research costs, partially offset by reduced legal and other professional expenses.

Other expenses, which include facility related expenses and insurance expenses, decreased for the three month period ended March 31, 2016 compared to the same period in 2015 due to lower fees paid in several different areas, none of which were individually significant.

We expect general and administrative expenses for 2016 to continue at increased levels compared to 2015 in order to support our planned increase in research and development activities as well as additional business development and investor relations efforts.

LIQUIDITY AND CAPITAL RESOURCES

Our business is developing drugs for the treatment of cancer and we currently have no sources of revenue. We measure liquidity by the cash and other capital we have available to fund our operations, which are primarily focused on the advancement of our VDAs. To date, we have financed our operations principally through proceeds received from the sale of equity and at one point through a strategic development arrangement which concluded in 2009. We have experienced net losses in each year since our inception, and negative cash flow from operations in nearly every year also. As of March 31, 2016, we had an accumulated deficit of over $268 million, including a net loss of approximately $3.3 million for the first three months of 2016 and approximately $13.7 million for the year ended December 31, 2015. At March 31, 2016, we had cash, cash equivalents and short-term investments of approximately $22.9 million, which we expect to be sufficient to fund our operations into the third quarter of 2017. We expect to continue to incur expenses, resulting in losses and negative cash flows from operations, over at least the next several years as we continue to develop our candidate drugs for the treatment of cancer.

We expect to incur significant additional costs over at least the next several years as a result of our plans to develop VDAs for the treatment of cancer, including continuing our existing clinical trials as well as conducting new, additional clinical trials and anticipated research and development expenditures.

We will require additional capital before we can complete all planned clinical trials and development of CA4P and OXi4503. Additional 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 operations. Any additional equity financing, if available, may not be available on favorable terms, would most likely be dilutive to our current stockholders and debt financing, if available, may involve restrictive covenants. If we are able to 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.

 

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We have filed a shelf registration statement on Form S-3 with the SEC, covering the sale from time to time of shares of our common stock and other securities, which may provide us the opportunity to raise funds when we consider it necessary or appropriate, at prices and on terms to be determined at the time of any such offering. However, pursuant to the instructions to Form S-3, we only have the ability to sell shares under the shelf registration statement, during any 12-month period, in an amount less than or equal to one-third of the aggregate market value of our common stock held by non-affiliates. 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. Our ability to raise additional capital could also be further impaired if we are unable to comply with the listing standards of The NASDAQ Capital Market.

Critical Accounting Policies and Significant Judgments and Estimates

There have been no changes to our critical accounting policies and significant judgments and estimates from our Annual Report on Form 10-K for the year ended December 31, 2015.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

There have been no changes to our market risks from our Annual Report on Form 10-K for the year ended December 31, 2015.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The SEC requires that as of the end of the period covered by this Quarterly Report on Form 10-Q, the Chief Executive Officer (CEO) and the Chief Financial Officer (CFO) evaluate the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, and report on the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective, as of March 31, 2016 to ensure that we record, process, summarize and report the information we must disclose in reports that we file or submit under the Exchange Act, within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting, identified in connection with the evaluation of such control that occurred during the last fiscal quarter, which have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Important Considerations

The effectiveness of our disclosure controls and procedures and our internal control over financial reporting is subject to various inherent limitations, including cost limitations, judgments used in decision making, assumptions about the likelihood of future events, the soundness of our systems, the possibility of human error, and the risk of fraud. Moreover, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions and the risk that the degree of compliance with policies or procedures may deteriorate over time. Because of these limitations, there can be no assurance that any system of disclosure controls and procedures or internal control over financial reporting will be successful in preventing all errors or fraud or in making all material information known in a timely manner to the appropriate levels of management.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

Not applicable.

Item 1A. Risk Factors

There have been no material changes to the risk factors as described in our Annual Report on Form 10-K for the year ended December 31, 2015.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

 

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Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

None.

 

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Item 6. Exhibits

 

         

Incorporated by Reference

    

Exhibit
Number

  

Description

  

Form

  

Filing Date

  

Exhibit
Number

  

Filed
Herewith

  31.1    Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a).             x
  31.2    Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a).             x
  32.1    Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.             x
101    The following materials from OXiGENE, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Balance Sheets at March 31, 2016 and December 31, 2015, (ii) Condensed Statements of Comprehensive Loss for the three months ended March 31, 2016 and 2015, (iii) Condensed Statements of Cash Flows for the three months ended March 31, 2016 and 2015, and (iv) Notes to Condensed Financial Statements             x

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

    OXiGENE, INC.
(Registrant)
Date: May 6, 2016     By:  

/s/ William D. Schwieterman

      William D. Schwieterman
     

Chief Executive Officer

(Principal Executive Officer)

Date: May 6, 2016     By:  

/s/ Matthew M. Loar

      Matthew M. Loar
     

Chief Financial Officer

(Principal Financial Officer)

 

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