Business is on Track for MethylGene
Balance Sheet Continues to be Strong
Grant Zeng, CFA
On August 2, MethylGene reported its financial results for the second quarter ended June 30, 2012.
There was no revenue in the second quarter of 2012 compared to $1.3 million for the second quarter of 2011. The decline in revenue was due to the completion of the research component of the agreement with Otsuka Pharmaceutical Co. Ltd. in June of 2011.
Research and development expenditures for the second quarter of 2012 were $3.7 million versus $1.8 million in the second quarter of 2011. This increase was primarily due to increased clinical development activity for both the MGCD290 and MGCD265 programs.
General and administrative expenses in the second quarter of 2012 were $1.1 million, no change versus the second quarter of 2011.
Net loss for the second quarter of 2012 was $4.7 million, or $0.01 per share, compared to a net of $1.5 million, or $0.005 per share, for the same period last year.
We are very pleased to see the Company’s balance sheet continued to be strong at the end of second quarter of 2012. Cash, cash equivalents, marketable securities and restricted cash totaled $22.2 million as at June 30, 2012. According to our model, the cash balance can last into the fourth quarter of 2013.
Clinical Programs are on Track to Advance
In addition to the financial results, MethylGene also provided an update on its clinical programs.
In October 2011, MethylGene initiated a Phase II (Study 290-005) clinical study evaluating MGCD290 in combination with fluconazole vs. fluconazole alone in patients with moderate to severe acute vulvovaginal candidiasis (AVVC).
This study is a multicenter, randomized, double-blinded, placebo-controlled trial. This trial focuses on the most severe infections and therefore patients with mild disease are excluded. The purpose of the trial is to evaluate the safety and efficacy of fluconazole versus fluconazole + MGCD290. The primary endpoint for this trial is the Therapeutic Cure at day 28, which is a composite endpoint of Clinical Cure (resolution of signs and symptoms of the infection) and Mycological Cure (an absence of yeast in culture).
Recruitment is ongoing at sites in the US and Canada with moderate to severe AVVC. The Company expects to enroll approximately 180 patients to get 150 evaluable patients for the primary endpoint. Nineteen sites in the United States are now open for enrolment, and as of August 1, 2012, 74 patients have been enrolled in the trial. Based on the current rate of enrollment, management expects to report top line data from this trial around the end of 2012.
As recurrent VVC patients are now eligible for enrollment in the VVC trial following a protocol amendment, the Company has decided not to proceed with a separate recurrent VVC trial at this time.
MethylGene is preparing for another Phase II trial with MGCD290.
MGCD265 is a rationally designed, orally available Met/VEGF receptor kinase inhibitor in development for oncology indications. At the ASCO Annual Meeting in June, 2012, MethylGene presented data using plasma samples from trial patients demonstrating a dose-response relationship between increased plasma concentration of MGCD265 and inhibition of Met phosphorylation in a novel ex vivo assay system. MGCD265 continues to be well tolerated in both monotherapy and in combination trials.
In the ongoing Phase I monotherapy trials (265-101), grade 3-4 treatment-related adverse events have been infrequent and long-term stable disease has been observed in sarcomatoid bladder, papillary renal, neuroendocrine, thymic and colon cancer.
In the docetaxel arm of the Phase I combination trial, objective responses have been observed in non-small cell lung cancer (NSCLC), prostate cancer and endometrial cancer. Of ten evaluable NSCLC patients in this trial, two achieved partial remission and all ten patients achieved disease control (partial remission or stable disease) at the first tumor assessment. These data compare favorably in the context of historical data (docetaxel monotherapy).
In the erlotinib arm of the Phase I combination trial, prolonged stable disease has been observed in gastric, esophageal, NSCLC and chordoma. MGCD265 has been well tolerated in combination with either full dose docetaxel or erlotinib.
Enrollment of patients continues in the MGCD265 monotherapy and combination trials. The development plan for MGCD265 includes expansion cohorts in select tumor types once the recommended Phase II dose is defined and data from the expansion cohorts will be used to guide randomized Phase II trials.
The Company plans to continue enrolling patients in 265-101 monotherapy and 265-103 combination trials with docetaxel or erlotinib until a maximum tolerated dose (MTD) is reached. Upon reaching the MTD, the Company intends to initiate a series of open label expansion cohorts to better characterize the effects seen in early trials and support the plans for future randomized Phase II trials.
We have an Outperform rating on MethylGene. Please see our full report on August 6, 2012.