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MarketScreener Homepage  >  Equities  >  Nasdaq  >  Onconova Therapeutics Inc    ONTX

ONCONOVA THERAPEUTICS INC

(ONTX)
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ONCONOVA THERAPEUTICS : Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

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08/14/2019 | 05:25pm EDT
The following Management's Discussion and Analysis of Financial Condition and
Results of Operations should be read in conjunction with interim unaudited
condensed consolidated financial statements contained in Part I, Item 1 of this
quarterly report, and the audited consolidated financial statements and notes
thereto for the year ended December 31, 2018 and the related Management's
Discussion and Analysis of Financial Condition and Results of Operations, both
of which are contained in our annual report on Form 10-K filed with the SEC on
April 1, 2019. As used in this report, unless the context suggests otherwise,
"we," "us," "our," "the Company" or "Onconova" refer to Onconova
Therapeutics, Inc. and its consolidated subsidiaries.



All common stock, equity, share and per share amounts have been retroactively
adjusted to reflect a one-for-fifteen reverse stock split which was effective
September 25, 2018.


Cautionary Note Regarding Forward-Looking Statements




This quarterly report on Form 10-Q includes forward-looking statements. We may,
in some cases, use terms such as "believes," "estimates," "anticipates,"
"expects," "plans," "intends," "may," "could," "might," "will," "should,"
"approximately" or other words that convey uncertainty of future events or
outcomes to identify these forward-looking statements. Forward-looking
statements appear in a number of places throughout this report and include
statements regarding our intentions, beliefs, projections, outlook, analyses or
current expectations concerning, among other things, our ongoing and planned
preclinical development and clinical trials, the timing of and our ability to
make regulatory filings and obtain and maintain regulatory approvals for our
product candidates, protection of our intellectual property portfolio, the
degree of clinical utility of our products, particularly in specific patient
populations, our ability to develop commercial and manufacturing functions,
expectations regarding clinical trial data, our results of operations, cash
needs, financial condition, liquidity, collaborations, partnerships, prospects,
growth and strategies, the industry in which we operate and the trends that may
affect the industry or us.



By their nature, forward-looking statements involve risks and uncertainties
because they relate to events, competitive dynamics and industry change, and
depend on the economic circumstances that may or may not occur in the future or
may occur on longer or shorter timelines than anticipated. Although we believe
that we have a reasonable basis for each forward-looking statement contained in
this report, we caution you that forward-looking statements are not guarantees
of future performance and that our actual results of operations, financial
condition and liquidity, and the development of the industry in which we operate
may differ materially from the forward-looking statements contained in this
report. In addition, even if our results of operations, financial condition and
liquidity, and events in the industry in which we operate are consistent with
the forward-looking statements contained in this report, they may not be
predictive of results or developments in future periods.



Actual results could differ materially from our forward-looking statements due to a number of factors, including risks related to:




††††††††††††††††††††† our need for additional financing for our INSPIRE trial
and other operations, and our ability to obtain sufficient funds on acceptable
terms when needed, and our plans and future needs to scale back operations if
adequate financing is not obtained;

††††††††††††††††††††† our ability to continue as a going concern;

††††††††††††††††††††† our estimates regarding expenses, future revenues, capital requirements and needs for additional financing;

†††††††††††††††††††† the success and timing of our preclinical studies and clinical trials, including site initiation and patient enrollment, and regulatory approval of protocols for future clinical trials;


†††††††††††††††††††† our ability to enter into, maintain and perform
collaboration agreements with other pharmaceutical companies, for funding and
commercialization of our clinical product candidates or preclinical compounds,
and our ability to achieve certain milestones under those agreements;

†††††††††††††††††††† the difficulties in obtaining and maintaining regulatory approval of our product candidates, and the labeling under any approval we may obtain;

††††††††††††††††††††† our plans and ability to develop, manufacture and commercialize our product candidates;

††††††††††††††††††††† our failure to recruit or retain key scientific or management personnel or to retain our executive officers;

††††††††††††††††††††† the size and growth of the potential markets for our product candidates and our ability to serve those markets;

††††††††††††††††††††† regulatory developments in the United States and foreign countries;

††††††††††††††††††††† the rate and degree of market acceptance of any of our product candidates;

†††††††††††††††††††† obtaining and maintaining intellectual property protection for our product candidates and our proprietary technology;

††††††††††††††††††††† the successful development of our commercialization capabilities, including sales and marketing capabilities;

††††††††††††††††††††† recently enacted and future legislation and regulation regarding the healthcare system;

††††††††††††††††††††† the success of competing therapies and products that are or become available;

††††††††††††††††††††† our ability to maintain the listing of our common stock on a national securities exchange;

†††††††††††††††††††† the potential for third party disputes and litigation; and

†††††††††††††††††††† the performance of third parties, including contract research organizations ("CROs") and third-party manufacturers.

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Any forward-looking statements that we make in this report speak only as of the
date of such statement, and we undertake no obligation to update such statements
to reflect events or circumstances after the date of this report or to reflect
the occurrence of unanticipated events. Comparisons of results for current and
any prior periods are not intended to express any future trends or indications
of future performance, unless expressed as such, and should only be viewed as
historical data.



You should also read carefully the factors described in the "Risk Factors" in
our most recent annual report on Form 10-K and quarterly reports on Form 10-Q,
to better understand significant risks and uncertainties inherent in our
business and underlying any forward-looking statements. As a result of these
factors, actual results could differ materially and adversely from those
anticipated or implied in the forward-looking statements in this report and you
should not place undue reliance on any forward-looking statements.



Overview



We are a clinical-stage biopharmaceutical company focused on discovering and
developing novel small molecule product candidates primarily to treat cancer.
Using our proprietary chemistry platform, we have created a library of targeted
agents designed to work against cellular pathways important to cancer cells. We
believe that the product candidates in our pipeline have the potential to be
efficacious in a variety of cancers. We have one Phase 3 clinical-stage product
candidate and two other clinical-stage product candidates (one of which has been
studied for treatment of acute radiation syndromes) and several preclinical
programs. Substantially all of our current effort is focused on our lead product
candidate, rigosertib. Rigosertib has been tested in an intravenous formulation
as a single agent for patients with higher-risk myelodysplastic syndromes
("MDS"), and an oral formulation in lower risk MDS as a single agent or in
combination with azacitidine for patients with higher-risk MDS.



In December 2015, we enrolled the first patient into our INSPIRE trial, a
randomized controlled Phase 3 clinical trial of intravenous rigosertib
("rigosertib IV") in a population of patients with higher-risk MDS after failure
of hypomethylating agent ("HMA") therapy. The primary endpoint of INSPIRE is
improvement in overall survival. An interim analysis of the trial was performed
in January 2018. During March 2019, we exceeded 75 percent completion of INSPIRE
enrollment. Our goal is to complete enrollment by the end of 2019 and we
anticipate reporting survival top-line data in the first half of 2020 following
full enrollment and 288 death events. We are planning to open new trial sites in
Brazil in the third quarter of 2019 and China thereafter.  We believe the
addition of sites in Brazil, China, and other additional new sites could
contribute significantly to achieving our timelines for completing enrollment
and for reporting survival top-line data.



Our net losses were $11.2 million and $9.4 million for the six months ended
June 30, 2019 and 2018, respectively. As of June 30, 2019, we had an accumulated
deficit of $393.1 million. We expect to incur significant expenses and operating
losses for the foreseeable future as we continue the development and clinical
trials of, and seek regulatory approval for, our product candidates, even if
milestones under our license and collaboration agreements may be met. As of
June 30, 2019, we had $5.9 million in cash and cash equivalents.



In January 2016, we completed a sale of common stock and warrants for net
proceeds of approximately $1.6 million. In July 2016, we completed a rights
offering of units of common stock and warrants for net proceeds of $15.8
million. In December 2016, we entered into a sales agreement with FBR Capital
Markets & Co. ("FBR") to create an at-the-market equity program under which we
from time to time may offer and sell shares of common stock through FBR. Sales
under this sales agreement in 2017 were 1,367 shares for net proceeds of
approximately $64,000. The sales agreement was terminated effective April 19,
2017. There were no sales of common stock under this program during the year
ended December 31, 2016.



In April 2017, we closed on an underwritten public offering of 165,079 shares of
common stock. In May 2017, we sold an additional 24,239 shares as a result of
the underwriter's exercise of its over-allotment option. Net proceeds from these
transactions were approximately $5.3 million. In November 2017, we closed on a
registered direct offering to select accredited investors of 61,333 shares of
common stock. Net proceeds were approximately $1.1 million. In February 2018, we
closed on an offering of units of common stock and warrants. We issued 467,000
shares of common stock, pre-funded warrants to purchase 196,167 shares of common
stock, and preferred stock warrants to purchase shares of Series A convertible
preferred stock convertible into 696,325 shares of common stock. Net proceeds
were approximately $8.7 million. In May 2018, we closed on an offering of units
of common stock and warrants. We issued 3,694,118 shares of common stock,
pre-funded warrants to purchase 815,686 shares of common stock, and preferred
stock warrants to purchase shares of Series B convertible preferred stock
convertible into 4,509,804 shares of common stock. Net proceeds were
approximately $25.6 million.



On March 21, 2018, we amended our certificate of incorporation to increase the
number of authorized shares of common stock from 25,000,000 to 100,000,000. On
June 7, 2018, we amended our certificate of incorporation to increase the number
of authorized shares of common stock from 100,000,000 to 250,000,000.



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On September 25, 2018, we amended our certificate of incorporation to effect a one-for-fifteen reverse stock split of our common stock.




On January 15, 2019, Steven Fruchtman, M.D. was appointed as a director and the
Chief Executive Officer of the Company and successor to Ramesh Kumar, Ph.D., who
resigned as a director and the Chief Executive Officer of the Company on the
same date.



On May 10, 2019, we entered into a License and Collaboration Agreement (the
"HanX License Agreement") with HanX and two Securities Purchase Agreements (the
"HanX Securities Purchase Agreements") one with HanX and the other with an
affiliate of HanX.  Under the terms of the agreements, the Company granted to
HanX an exclusive, royalty bearing license to study and commercialize rigosertib
in greater China. In exchange for these rights, HanX agreed to make upfront
payments to the Company totaling $4 million, including a $2 million fee and an
investment totaling $2 million to purchase shares of the Company at a premium to
market. In May 2019, in accordance with one of the HanX Securities Purchase
Agreements, the Company issued 103,520 shares to the affiliate of HanX for an
aggregate purchase price of approximately $0.5 million.  In August 2019, the
Company received the $2.0 million upfront fee, net of applicable taxes.  HanX is
in the process of attaining Chinese regulatory authority approval for the
remaining upfront payments. In addition, HanX agreed to dedicate $2 million in
local currency, to be placed in escrow, for clinical development expenses in
greater China.  In addition, the Company could receive regulatory, development
and sales-based milestone payments to Onconova of up to $45.5 million and
receive tiered royalties up to double digits on net sales in greater China. The
Company will supply the finished product for sale in the licensed territories.
HanX will also support the Company's clinical trial initiatives in the
territory. On July 9, 2019, the Company extended the deadline for payments under
the HanX License Agreement and the HanX Securities Purchase Agreements.  On
August 8, 2019 Onconova received the non-refundable license fee from HanX.  On
August 14, 2019, the Company further extended the deadline of HanX' remaining
upfront payments relating to the its equity investment in the Company while HanX
continues to seek Chinese regulatory approval for such equity investment.



We believe that our cash and cash equivalents of $5.9 million, at June 30, 2019,
will be sufficient to fund our operations and ongoing trials into the fourth
quarter of 2019. We also believe that the remaining $3.5 million outstanding at
June 30, 2019 of the $4.0 million due to us under the HanX Biopharmaceuticals,
Inc. rigosertib agreements, of which $2.2 million has been received by early
August 2019, would provide sufficient funding to extend our operations and
ongoing trials late into the fourth quarter of 2019. We do not have a recurring
source of revenue to fund our operations and will need to raise additional funds
to continue to develop and apply for regulatory approval for our drug
candidates; therefore, there is substantial doubt about our ability to continue
as a going concern.



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We are exploring various sources of funding for development and applying for
regulatory approval of rigosertib as well as for our ongoing operations. If we
raise additional funds through strategic collaborations and alliances or
licensing arrangements with third parties, which may include existing
collaboration partners, we may have to relinquish valuable rights to our
technologies or product candidates, including rigosertib, or grant licenses on
terms that are not favorable to us. There can be no assurance, however, that we
will be successful in obtaining such financing in sufficient amounts, on terms
acceptable to us, or at all.  In addition, there can be no assurance that we
will obtain approvals necessary to market our product candidates or achieve
profitability or sustainable, positive cash flow. If we are unable to
successfully raise sufficient additional capital, through future financings or
through strategic and collaborative arrangements, we will not have sufficient
cash to fund our ongoing trials and operations.



Rigosertib



Rigosertib is a small molecule which we believe, as reported in the journal Cell
(Athuluri-Divakar et al., 2016, Cell 165, 643-655) blocks cellular signaling by
targeting RAS effector pathways. This is believed to be mediated by the
interaction of rigosertib to the RAS-binding domain ("RBD"), found in many RAS
effector proteins, including the Raf and PI3K kinases. This mechanism of action
provides a new approach to block the interactions between RAS and its targets
containing RBD sites. Rigosertib is currently being tested in clinical trials as
a single agent, and in combination with azacitidine, in patients with MDS. We
have enrolled more than 1,300 patients in rigosertib clinical trials for MDS and
other conditions. We are party to a collaboration agreement with SymBio, which
grants SymBio certain rights to commercialize rigosertib in Japan and Korea. We
are party to a license agreement with Pint Pharma International SA ("Pint"),
which grants Pint certain rights to commercialize rigosertib in certain
countries in Latin America. We are a party to a license agreement with HanX,
which grants HanX certain rights to study, manufacture, and commercialize
rigosertib in the People's Republic of China, Hong Kong, Macau, and Taiwan. 

We

have retained development and commercialization rights to rigosertib in the rest
of the world, including in the United States and Europe, although we could
consider licensing commercialization rights to other territories as we continue
to seek additional funding.


The table below summarizes our rigosertib clinical stage programs.



                                                                                        Potential Market Opportunity
Disease        Formulation      Indication        Stage        Expected Timelines               (US)/Benefit

MDS            Intravenous     HR -            Phase 3         Phase 3 completion    ~ 5,000 patients    No directly
                               following       Interim         of enrollment and                         competing FDA
                               HMA failure     analysis        reporting of                              approved
                                               completed       survival top-line                         product in the
                                                               data 1H 2020                              market

               Oral - in       HR - prior      Phase 2         -Phase 3 protocol     ~ 18,000            No oral NCE
               combination     to HMAs                         and SPA submitted                         approved since
               with AZA                                        to the FDA in                             2005
                                                               2018, FDA decision
                                                               expected before
                                                               the end of 2019

                                                               -Phase 3 trial
                                                               expected in 2019
                                                               pending funding

               Oral            Lower Risk      Phase 2         Determine target      > 10,000            Longer
                                                               patient population                        potential
                                                               in 2019                                   duration of
                                                                                                         treatment

RASopathies    Intravenous     JMML/other      Preclinical     -NIH CRADA signed     Rare disease        Pediatric
               and oral        RAS Cancer                      -Proof of concept                         clinical trial
                               Pathway                         2019
                               diseases



Rigosertib IV for higher-risk MDS




We are developing the IV formulation of rigosertib for the treatment of
higher-risk MDS following the failure of HMA therapy. In early 2014, we
announced topline survival results from our "ONTIME" trial, a multi-center
Phase 3 clinical trial of rigosertib IV as a single agent versus best supportive
care including low dose Ara-C. The ONTIME trial did not meet its primary
endpoint of an improvement in overall survival in the intent-to-treat
population, although improvements in median overall survival were observed in
various pre-specified and exploratory subgroups of higher-risk MDS patients. As
a result of these analyses, a new pivotal trial referred to as INSPIRE is
on-going to study what we believe is a more homogenous population in higher-risk
MDS.



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During 2014 and 2015, we held meetings with the U.S. Food and Drug
Administration ("FDA"), European Medicines Agency ("EMA"), and several European
national regulatory authorities to discuss and seek guidance on a path for
approval of rigosertib IV in higher-risk MDS patients whose disease had failed
HMA therapy. After discussions with the FDA and EMA, we refined our patient
eligibility criteria by defining what we believe is a more homogenous
higher-risk patient population. After regulatory feedback, input from key
opinion leaders in the U.S. and Europe and based on learnings from the ONTIME
study, we designed a new randomized controlled Phase 3 trial, referred to as
INSPIRE. The INSPIRE trial is enrolling higher-risk MDS patients under 82 years
of age who have progressed on, relapsed, or failed to respond to, previous
treatment with HMAs within nine months or nine cycles over the course of one
year after initiation of HMA therapy, and had their last dose of HMA within six
months prior to enrollment in the trial. Patients are randomized to either
rigosertib with best supportive care, or the physician's choice of therapy with
best supportive care. The primary endpoint of this study is the sequential
analysis of overall survival of all randomized patients in the intent-to-treat
("ITT") population and the International Prognostic Scoring System- Revised
(IPSS-R) Very High Risk ("VHR") subgroup. The first patient in the INSPIRE trial
was enrolled at the MD Anderson Cancer Center in December 2015, the first
patient in Europe was enrolled in March, 2016, and the first patient in Japan
was enrolled in July, 2016.



Enrollment for the INSPIRE Phase 3 trial for second-line higher-risk MDS
patients is highly selective with stringent entry criteria as outlined above.
The INSPIRE study currently has more than 140 trial sites in 24 countries across
four continents open, including sites open in Japan by our partner, SymBio
Pharmaceuticals. In the first quarter of 2019, we opened 19 new clinical trial
sites in six countries already participating in the INSPIRE trial to support
completion of enrollment of 360 patients in the Phase 3 INSPIRE study. We expect
to open trial sites in additional geographic areas during the coming months to
add approximately 25 more sites. The selection of countries and trial sites is
carefully undertaken to ensure availability of appropriate patients meeting
eligibility criteria. Since these criteria are purposely designed to be narrow
and selective, extensive site screening and education is integral to our plan.



The INSPIRE trial included a pre-planned interim analysis triggered by 88 events
(deaths), which occurred in December 2017. The statistical analysis plan ("SAP")
for the INSPIRE trial featured an adaptive trial design, permitting several
options following the interim analysis, which included continuation of the trial
as planned, discontinuation of the trial for futility or safety, trial expansion
using pre-planned sample size re-estimation, or trial continuation for only the
pre-defined treatment subgroup of patients classified as VHR based on the
IPSS-R.



After review of the interim data, in January 2018 the Independent Data
Monitoring Committee ("DMC") recommended continuation of the trial with a
one-time expansion in enrollment, using a pre-planned sample size re-estimation,
consistent with the SAP. As recommended by the DMC, the expanded INSPIRE study
will continue to enroll eligible patients based on the current trial criteria of
the overall ITT population and will increase enrollment by adding 135 patients
to the original target to reach a total expected enrollment of 360 patients,
with the aim of increasing the power of the trial. The targeted number of death
events required for analyzing the results of the trial was increased from 176 to
288 events. Due to the adaptive trial design and the DMC's assessment of the
interim data, the INSPIRE trial will continue to sequentially analyze the ITT
and the VHR population for the primary endpoint of overall survival. The design
of the trial with the expanded study enrollment will be identical to the current
study design and will include the sequential analysis of the overall survival
endpoint in the ITT population and if required the pre-specified VHR subgroup.
The Company remains blinded to the interim analysis results. Following the
interim analysis, we have expanded the INSPIRE Phase 3 trial to new sites in
previously participating countries and anticipate expanding the study into new
geographical regions. We continue to evaluate potential new sites and countries
to enhance enrollment, while adhering to the stringent entry criteria to ensure
that only appropriate patients are enrolled. During March 2019, we exceeded 75
percent completion of enrollment and are focused on our goal to complete
enrollment by the end of 2019 and to report top-line data following full
enrollment and 288 death events. We anticipate reporting top-line data in the
first half of 2020. We believe the addition of sites in Brazil in the third
quarter of 2019 and China thereafter could contribute significantly to achieving
our timelines for completing enrollment and for reporting top-line data.



Safety and Tolerability of rigosertib in MDS and other hematologic malignancies




A comprehensive analysis of rigosertib IV and rigosertib oral safety in patients
with Myelodysplastic Syndromes (MDS) and Acute Myeloid Leukemia (AML) was
presented in December 2016 at the American Society of Hematology (ASH) Annual
Meeting. The most commonly reported treatment-emergent adverse events (TEAEs) in
> 10% of patients with MDS/AML (n= 335) receiving rigosertib intravenous
(IV) monotherapy were fatigue (33%), nausea (33%), diarrhea (27%), constipation
(25%), anaemia (24%) and pyrexia (24%). The most common > Grade 3 AEs were
anaemia (21%), febrile neutropenia (13%), pneumonia (12%) and thrombocytopenia
(11%). The most common serious AEs were febrile neutropenia (10%), pneumonia
(9%), and sepsis (7%). The most common AEs leading to discontinuation of IV
rigosertib were sepsis and pneumonia (3% each).



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Rigosertib oral in combination with azacitidine for higher-risk MDS




We are developing rigosertib oral for use in combination with azacitidine prior
to treatment with HMA therapy for higher risk MDS. In December 2018, at the
American Society of Hematology (ASH) Annual Meeting and in June 2019, at the
Congress of the European Hematology Association Meeting (EHA), we presented
results from a Phase 1/2, multi-institutional trial of data from the initial
portion of an ongoing rigosertib oral and azacitidine combination trial in
higher-risk MDS. 55 of 74 HR-MDS patients enrolled and treated with > 840 mg/day
oral rigosertib were evaluable for response at the time of the analysis. An
Overall Response Rate (ORR) of 90% and Complete Remission (CR) rate (primary
endpoint) of 34% was reported in this multi-institutional Phase 1/2 study in HMA
naïve patients. HMA naïve patients are patients that had not previously received
either azacitidine or decitabine. Such patients were not necessarily treatment
naïve patents in that they may have received other therapies used for MDS. An
ORR of 54% and CR/Partial Response (PR) of 8% in HMA failed patients was also
reported. In total, 46 (62%) patients (HMA-naive and HMA-failures) were
transfusion dependent prior to starting rigosertib and azacitdine combination
treatment. Of these patients, 10 (22%) became transfusion-independent (TI). In a
prior study, oral rigosertib monotherapy (1120 mg daily) in patients with low
risk (LR) MDS was also associated with TI (44%). Achievement of TI is an
important clinical benefit for these patients.



The median age of patients was 69, with 59% being male and 41% being female..
The IPSS-R distribution was: 7.5% Low, 12.5% Intermediate, 37.5% High, 32.5%
Very High and 10% unknown. 76% of patients responded per 2006 International
Working Group (IWG) criteria. Responses were as follows:



                                       Overall    No prior   Prior HMA
                                      Evaluable     HMA      (failures)
                                       (N=55)      (N=29)      (N=26)
Complete remission (CR)                  11(20) %   10(34) %       1(4) %
Marrow CR + hematologic improvement      10(18) %    5(17) %      5(19) %
Marrow CR alone                          13(24) %    8(28) %      5(19) %
Hematologic improvement alone              5(9) %    3(10) %       2(8) %
Stable disease                           10(18) %    3(10) %      7(27) %
Overall IWG response                     40(73) %   26(90) %     14(54) %



The median duration of response for patients with HMA naïve MDS was 12.2 months

The median time to initial/best response for HMA naïve patients, was 1 cycle and 4 cycles, respectively

The median duration of response for the HMA failed patients was 10.8 months

The median time to initial/best response for patients with HMA failure MDS, was 2 cycles and 5 cycles of treatment, respectively

Safety/Tolerability of the Combination:




Based upon safety results from a comprehensive analysis of patients receiving
oral rigosertib in combination with azacitidine that was presented during ASH in
2018, the combination of rigosertib oral (> 840 mg/day) and azacitidine was well
tolerated. The most common TEAEs in >  30% of patients with MDS/AML (n=74)
receiving rigosertib oral and azacitidine were hematuria (45%), constipation
(43%), diarrhea (42%), fatigue (42%), dysuria (38%) , pyrexia(36%), nausea
(35%), neutropenia (31%) thrombocytopenia (30%), fatigue (39%), diarrhea (37%),
constipation (37%) and dysuria (28%). The most common serious AEs were pneumonia
(11%) and febrile neutropenia (7%). The most common AEs leading to
discontinuation were AML (4%) and pneumonia (4%).



Next steps for rigosertib oral in combination with azacitidine for higher-risk MDS




Following an end of Phase 2 meeting with the Food and Drug Administration (FDA)
in September 2016, we began development of a Phase 3 protocol. The Phase 3 trial
will be designed as a global 1:1 randomized, placebo-controlled trial of
rigosertib oral plus azacitidine compared to azacitidine plus oral placebo.
Based on the results of the Phase 1/2 Study, full dose of azacitidine will be
used in combination with rigosertib oral, as defined in the product insert for
azacitidine. The patient population studied in this trial will be first-line
(HMA naïve) higher-risk MDS patients. The primary endpoint for assessment of
efficacy will be the composite Response Rate of complete remission
(CR) + partial remission (PR,) as per the IWG 2006 Response Criteria. We will
not commence the Phase 3 trial without additional financing.



While the Phase 3 trial was being designed, we expanded the Phase 1/2 trial
cohort by up to 40 evaluable subjects. Under a protocol expansion, we explored
dose optimization by increasing the dose of rigosertib oral to a total of 1120
mg in combination with full dose azacitidine and varying the dose administration
scheme of rigosertib oral to identify an optimal dose and schedule. After
amendments were filed with the regulatory agencies, we started the expansion
phase of this trial in the U.S. sites that participated in the initial trial.
The trial is currently closed to new accrual and is continuing.



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In June 2017, at the Congress of the European Hematology Association Meeting, we
updated the data from the Phase 1/2 trial and highlighted results in AML
patients included in this study. Response data was presented on eight evaluable
patients with AML who were tested with the rigosertib and azacitidine
combination. For the eight evaluable patients with AML, the combination was well
tolerated and the safety profile was similar to single-agent azacitidine, based
on safety information in the azacitidine FDA approved label. Based on the
presented results of the combination studies, the authors concluded that
continued study in AML was warranted. We will not commence further development
of rigosertib oral in combination with azacitidine for AML without additional
financing.


Rigosertib oral for lower-risk MDS




We have studied rigosertib oral as a single agent treatment for lower risk MDS.
Higher-risk MDS patients suffer from a shortfall in normal circulating blood
cells, or cytopenias, as well as elevated levels of cancer cells, or blasts in
their bone marrow and sometimes in their peripheral blood with a significant
rate of transformation to acute leukemia. Lower-risk MDS patients suffer mainly
from cytopenias, that is low levels of red blood cells, white blood cells or
platelets. Thus, lower-risk MDS patients depend on transfusions and growth
factors or other therapies to improve their low blood counts; but have a lower
rate of acute leukemic transformation.



We have explored single agent rigosertib oral as a treatment for lower-risk MDS
in two Phase 2 clinical trials, 09-05 and 09-07. In December 2017, we presented
data at the Annual ASH Meeting from the 09-05 Phase 2 trial. This data
demonstrated a 44% rate of achieving transfusion independence in the cohort of
Lower-risk MDS patients treated with rigosertib oral at a dose of 560 mg BID
(1120 mg over 24 hrs) two out of three weeks. To date, Phase 2 clinical data has
indicated that further study of single agent rigosertib oral in
transfusion-dependent, lower-risk MDS patients is warranted. Rigosertib has been
generally well tolerated, except for urinary side effects at higher dose levels.
Future clinical trials will be needed to evaluate dosing and schedule
modifications and their impact on efficacy and safety results of rigosertib oral
in lower-risk MDS patients.



Data presented from the 09-05 trial also suggested the potential of a genomic
methylation assessment of bone marrow cells to prospectively identify lower-risk
MDS patients likely to respond to rigosertib oral. We therefore expanded the
09-05 trial by adding an additional cohort of 20 patients to advance the
development of this genomic methylation test. To date, a biomarker which would
predict response has not been identified. Further testing and development of
rigosertib oral for lower-risk MDS will be required. We will not commence
further development of rigosertib oral for lower-risk MDS without additional
financing.



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Safety and Tolerability of rigosertib oral in MDS and other hematologic malignancies

Rigosertib oral as monotherapy was evaluated in 4 Onconova Phase 1 and 2 studies in MDS and other hematologic malignancies. In studies of oral rigosertib as monotherapy for the treatment of MDS and other hematologic malignancies:




†   Drug-related TEAEs that were > Grade 3 in severity occurred in 21% of
patients. The most frequently reported (> 2% of patients) drug-related TEAEs
that were > Grade 3 were neutropenia (7%); thrombocytopenia and cystitis (3%
each); and leukopenia, dysuria, and hematuria (2% each).



† Among the 8% of patients with SAEs that were considered drug related, the events were mostly urinary related. The most frequent drug-related SAE was cystitis (3%).

In addition to the above described clinical trials, we are continuing the preclinical and chemistry, manufacturing, and control work for IV and rigosertib oral.

Rare Disease Program in "RASopathies"




Based on the mechanism of action data published last year, we have initiated a
collaborative development program focusing on a group of rare diseases with a
well-defined molecular basis in expression or defects involving the Ras Effector
Pathways. Since "RASopathies" are rare diseases affecting young children, we are
embarking on a multifaceted collaborative program involving patient advocacy,
government and academic organizations. The RASopathies are a group of rare
diseases which share a well-defined molecular basis in expression or defects
involving Ras Effector Pathways. They are usually caused by germline mutations
in genes that alter the RAS subfamily and mitogen-activated protein kinases that
control signal transduction, and are among the most common genetic syndromes.
Together, this group of diseases can impact more than 1 in 1000 individuals,
according to RASopathiesNet.



In January 2018, we entered into a Cooperative Research and Development
Agreement (CRADA) with the National Cancer Institute (NCI), part of the National
Institutes of Health (NIH). Under the terms of the CRADA, the NCI will conduct
preclinical laboratory studies on rigosertib in pediatric cancer associated
RASopathies.



As part of the CRADA, we will provide rigosertib supplies and initial funding
towards non-clinical studies. The NCI has completed PK/PD and dose escalation
studies in preclinical models of rhabdomyosarcoma.



In addition, pre-clinical studies are being conducted at the University of California San Francisco and funded through the Leukemia Lymphoma Society. The focus will be on Juvenile Myelomonocytic Leukemia (JMML), a well-described RASopathy affecting children which is incurable without an allogenic hematopoietic stem cell transplant.



Other Programs



The vast majority of the Company's efforts are now devoted to the advanced stage
development of rigosertib for unmet medical needs of MDS patients. Other
programs are either paused, inactive or require only minimal internal resources
and efforts. Based on the mechanism of action of rigosertib, in an investigator
initiated study, we plan to study rigosertib in combination with an
immuno-oncology agent in K-Ras mutated non small cell lung cancer where K-Ras
mutations are frequently found.



Briciclib



Briciclib, another of our product candidates, is a small molecule targeting an
important intracellular regulatory protein, Cyclin D1, which is often found at
elevated levels in cancer cells. Cyclin D1 expression is regulated through a
process termed cap-dependent translation, which requires the function of
eukaryotic initiation factor 4E protein. In vitro evidence indicates briciclib
binds to eukaryotic initiation factor 4E protein, blocking cap-dependent
translation of Cyclin D1 and other cancer proteins, such as c-MYC, leading to
tumor cell death. We have been conducting a Phase 1 multi-site dose-escalation
trial of briciclib in patients with advanced solid tumors refractory to current
therapies. Safety and efficacy assessments are complete in six of the seven
dose-escalation cohorts of patients in this trial. As of December 2015, the
Investigational New Drug ("IND") for briciclib is on full clinical hold
following a drug product lot testing failure. We will be required to undertake
appropriate remedial actions prior to re-initiating the clinical trial and
completing the final dose-escalation cohort.



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Recilisib



Recilisib is a product candidate being developed in collaboration with the U.S.
Department of Defense for acute radiation syndromes. We have completed four
Phase 1 trials to evaluate the safety and pharmacokinetics of recilisib in
healthy human adult subjects using both subcutaneous and oral formulations. We
have also conducted animal studies of recilisib under the FDA's Animal Rule,
which permits marketing approval for new medical countermeasures for which
conventional human efficacy studies are not feasible or ethical, by relying on
evidence from adequate and well-controlled studies in appropriate animal models
to support efficacy in humans when the results of those studies establish that
the drug is reasonably likely to produce a human clinical benefit. Human safety
data, however, is still required. Ongoing studies of recilisib, focusing on
animal models and biomarker development to assess the efficacy of recilisib are
being conducted by third parties with government funding. We anticipate that any
future development of recilisib beyond these ongoing studies would be conducted
solely with government funding or by collaboration. Use of government funds to
finance the research and development in whole or in part means any future effort
to commercialize recilisib will be subject to federal laws and regulations on
U.S. government rights in intellectual property. Additionally, we are subject to
laws and regulations governing any research contracts, grants, or cooperative
agreements under which government funding was provided.



Preclinical Product Candidates




In addition to our three clinical-stage product candidates, we have several
product candidates that target kinases, cellular metabolism or cell division in
preclinical development. We may explore additional collaborations to further the
development of these product candidates as we focus internally on our more
advanced programs.



Positive preclinical data was announced at the American Association for Cancer
Research (AACR) annual meeting, which took place April 1-5, 2017 in Washington,
DC, for ON 123300, a first-in-class dual inhibitor of CDK4/6 + ARK5, and for ON
150030, a novel Type 1 inhibitor of FLT3 and Src pathways. We believe our CDK
inhibitor is differentiated from other agents in the market (Palbociclib,
Ribociclib and Abemaciclib) or in development by its dual inhibition of
CDK4/6 + ARK5.



In a preclinical Rb+ve xenograft model for breast cancer, ON 123300 activity was
shown to be similar to Palbociclib (Pfizer's Ibrance ® ). Moreover, based on the
same preclinical model, ON 123300 may have the potential advantage of reduced
neutropenia when compared to Palbociclib. Whereas both compounds resulted in
decreased RBC and platelet counts in this preclinical model system, Palbociclib
was found to have a more prominent and statistically significant (P< 0.05)
inhibitory effect on neutrophil counts when compared to ON 123300.



In December 2017, we entered into a license and collaboration agreement with
HanX, a company focused on development of novel oncology products, for the
further development, registration and commercialization in China of ON 123300.
This compound has the potential to overcome the limitations of current
generation CDK 4/6 inhibitors. Under the terms of the agreement, we will receive
an upfront payment, regulatory and commercial milestone payments, as well as
royalties on Chinese sales. The key feature of the collaboration is that HanX
will provide all funding required for Chinese IND enabling studies performed for
Chinese Food and Drug Administration IND approval. We and HanX also intend for
these studies to comply with the FDA standards. Accordingly, such studies may be
used by us for an IND filing with the FDA. We and HanX will oversee the IND
enabling studies. We will maintain global rights outside of China. We plan to
file an IND related to 123300.



Some of our studies are ongoing and results may change as data becomes available.




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Critical Accounting Policies and Significant Judgments and Estimates




This management's discussion and analysis of our financial condition and results
of operations is based on our interim unaudited consolidated financial
statements, which have been prepared in accordance with GAAP. The preparation of
these financial statements requires us to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenues and expenses and
the disclosure of contingent assets and liabilities in our consolidated
financial statements. On an ongoing basis, we evaluate our estimates and
judgments, including those related to accrued expenses, revenue recognition,
deferred revenue and stock-based compensation. We base our estimates on
historical experience, known trends and events and various other factors that we
believe to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from
these estimates under different assumptions or conditions.  We believe there
have been no significant changes in our critical accounting policies as
discussed in our annual report on Form 10-K filed with the SEC on April 1, 2019,
with the exception of the adoption of ASC 842, as described further in the
footnotes to the quarterly financial information contained in this filing.



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Results of Operations


Comparison of the Three Months Ended June 30, 2019 and 2018



                                               Three Months ended June 30,
                                                  2019              2018           Change
Revenue                                      $     2,022,000$    485,000$  1,537,000
Operating expenses:
General and administrative                         1,760,000       2,054,000         294,000
Research and development                           3,895,000       4,070,000         175,000
Total operating expenses                           5,655,000       6,124,000         469,000
Loss from operations                              (3,633,000 )    (5,639,000 )     2,006,000
Gain on dissolution of GBO                                 -         693,000        (693,000 )
Change in fair value of warrant liability             32,000         513,000        (481,000 )
Other income (expense), net                           40,000         112,000         (72,000 )
Net loss                                     $    (3,561,000 )$ (4,321,000 )$    760,000




Revenues



Revenues increased by $1.5 million, or 317%, for the three months ended June 30,
2019 when compared to the same period in 2018 as a result of the recognition of
revenue from the HanX license agreement for rigosertib in the 2019 period.



General and administrative expenses




General and administrative expenses decreased by $0.3 million, or 14%, to $1.8
million for the three months ended June 30, 2019 from $2.1 million for the three
months ended June 30, 2018. The decrease was attributable to $0.2 million less
spending on investor relations and public relations consultants, and by $0.1
million lower stock compensation expense during the 2019 period.



Research and development expenses




Research and development expenses decreased by $0.2 million, or 4%, to $3.9
million for the three months ended June 30, 2019 from $4.1 million for the three
months ended June 30, 2018. This decrease was caused primarily by $0.4 million
lower bonus expense accrual in the 2019 period, which was partially offset by
$0.2 million higher clinical development costs on our INSPIRE study during the
2019 period.



Gain on dissolution of GBO


Gain on dissolution of GBO decreased by $0.7 million due to the gain on dissolution of our GBO preclinical collaboration in the 2018 period.

Change in fair value of warrant liability




The fair value of the warrant liability decreased $32,000 for the three months
ended June 30, 2019, compared to a decrease of $0.5 million for the three months
ended June 30, 2018. This change was caused by the decrease in the fair market
value of the warrants issued in our rights offering in 2016.



Other income (expense), net



Other income (expense), net, was $40,000 for the three months ended June 30,
2019 and $0.8 million for the three months ended June 30, 2018.  The change of
$0.8 million was due to the gain on GBO dissolution of $0.7 million in the 2018
period and $0.1 higher interest income in the 2018 period.



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Comparison of the Six Months Ended June 30, 2019 and 2018



                                               Six Months ended June 30,
                                                  2019             2018           Change
Revenue                                      $    2,090,000$  1,049,000$  1,041,000
Operating expenses:
General and administrative                        4,994,000       3,943,000      (1,051,000 )
Research and development                          7,969,000       8,647,000         678,000
Total operating expenses                          12,93,000      12,590,000        (373,000 )
Loss from operations                            (10,873,000 )   (11,541,000 )       668,000
Gain on dissolution of GBO                                -         693,000        (693,000 )
Change in fair value of warrant liability          (395,000 )     1,325,000      (1,721,000 )
Other income (expense), net                         107,000         112,000          (4,000 )
Net loss                                     $  (11,161,000 )$ (9,411,000 )$ (1,750,000 )




Revenues



Revenues increased by $1.0 million, or 99%, for the six months ended June 30,
2019 when compared to the same period in 2018 as a result of revenue recognized
from the HanX rigosertib license agreement in the 2019 period



General and administrative expenses




General and administrative expenses increased by $1.1 million, or 27%, to $5.0
million for the six months ended June 30, 2019 from $3.9 million for the six
months ended June 30, 2018. The increase was attributable to severance and stock
option vesting acceleration expenses of $1.6 million related to personnel
reductions during the 2019 period.  These increases were partially offset by
$0.4 million lower investor relations and public relations expenses and $0.1
million lower bonus accrual in the 2019 period.



Research and development expenses




Research and development expenses decreased by $0.7 million, or 8%, to $7.9
million for the six months ended June 30, 2019 from $8.6 million for the six
months ended June 30, 2018. This decrease was caused primarily by $0.7 million
lower expenses on the 09-08 combination study partially offset by $0.3 million
higher expenses on the INSPIRE study in the 2019 period. These decreases were
also a result of $0.3 million lower bonus accrual in the 2019 period.



Gain on dissolution of GBO


Gain on dissolution of GBO decreased by $0.7 million due to the gain on dissolution of our GBO preclinical collaboration in the 2018 period.

Change in fair value of warrant liability




The fair value of the warrant liability increased $0.4 million for the six
months ended June 30, 2019, compared to a decrease of $1.3 million for the six
months ended June 30, 2018. This change was caused by the increase, during the
2019 period, in the fair market value of the warrants issued in our rights
offering in 2016.



Other income (expense), net


Other income (expense), net, was $107,000 for the six months ended June 30, 2019, which was consistent with $112,000 for the six months ended June 30, 2018.




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Liquidity and Capital Resources




Since our inception, we have incurred net losses and experienced negative cash
flows from our operations. We incurred net losses of $11.2 million and $9.4
million for the six months ended June 30, 2019 and 2018, respectively.  Our
operating activities used $11.5 million and $10.1 million of net cash during the
six months ended June 30, 2019 and 2018, respectively. At June 30, 2019, we had
an accumulated deficit of $393.1 million, a working capital deficit of
$0.3 million, and cash and cash equivalents of $5.9 million. We believe that our
cash and cash equivalents of $5.9 million, at June 30, 2019, will be sufficient
to fund our operations and ongoing trials into the fourth quarter of 2019. We
also believe that the $4.0 million due to us under the HanX
Biopharmaceuticals, Inc. rigosertib agreements, $2.2 million of which has been
received by August 14, 2019, would provide sufficient funding to extend our
operations and ongoing trials late into the fourth quarter of 2019.



Cash Flows



The following table summarizes our cash flows for the six months ended June 30,
2019 and 2018:



                                                         Six Months Ended June 30,
                                                           2019            2018
Net cash (used in) provided by:
Operating activities                                   $ (11,510,000 )$ (10,133,000 )
Investing activities                                               -               -
Financing activities                                         424,000      35,657,000
Effect of foreign currency translation                        (2,000 )      

(8,000 ) Net (decrease) increase in cash and cash equivalents $ (11,088,000 )$ 25,516,000

Net cash used in operating activities




Net cash used in operating activities was $11.5 million for the six months ended
June 30, 2019 and consisted primarily of a net loss of $11.2 million, including
an increase in fair value of warrant liability of $0.4 million, and $0.8 million
of noncash stock-based compensation and depreciation expense. Changes in
operating assets and liabilities resulted in a net decrease in cash of $1.6
million. Significant changes in operating assets and liabilities included an
increase in receivables of $1.7 million, an increase in prepaid expenses and
other current assets of $0.1 million, and an increase in accounts payable and
accrued liabilities of $0.3 million due to timing of invoices and payments to
our vendors, and a decrease in deferred revenue of $0.1 million due to
recognition of the unamortized portion of the upfront payment under our
collaboration agreement with SymBio. The $1.7 million increase in receivables
was the result of a payment due under the HanX license agreement and was
received in August 2019.



Net cash used in operating activities was $10.1 million for the six months ended
June 30, 2018 and consisted primarily of a net loss of $9.4 million, including a
favorable change in fair value of warrant liability of $1.3 million, partially
offset by $0.6 million of noncash stock-based compensation and depreciation
expense. Changes in operating assets and liabilities resulted in a net increase
in cash of $0.7 million. Significant changes in operating assets and liabilities
included a decrease in prepaid expenses and other current assets of $0.3 million
as a result of prepayments of fees to our vendors relating to clinical trial
contracts.  Accounts payable and accrued liabilities increased by $0.7 million
as a result of the timing of receipt and payment of vendor invoices and the
write-off of liabilities of our GBO preclinical collaboration.  Deferred revenue
decreased $0.2 million due to recognition of the unamortized portion of the
upfront payment under our collaboration agreement with SymBio.



Net cash provided by investing activities

There was no net cash provided by or used in investing activities for the three months ended June 30, 2019 or 2018.

Net cash provided by financing activities




There was $0.4 million of net cash provided by financing activities for the six
months ended June 30, 2019, related to the issuance of stock in connection with
the HanX rigosertib license transaction and the exercise of warrants.  Net cash
provided by financing activities for the six months ended June 30, 2018 was
$35.7 million, which resulted from the proceeds received from the sale of common
stock and exercise of warrants.



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Operating and Capital Expenditure Requirements




We believe that our cash and cash equivalents of $5.9 million, at June 30, 2019,
will be sufficient to fund our operations and ongoing trials into the fourth
quarter of 2019. We also believe that the remaining $3.5 million outstanding at
June 30, 2019 of the $4.0 million due to us under the HanX
Biopharmaceuticals, Inc. rigosertib agreements, of which $2.2 million has been
received by early August 2019, would provide sufficient funding to extend our
operations and ongoing trials late into the fourth quarter of 2019.  We are
exploring various dilutive and non-dilutive sources of funding, including equity
and debt financings, strategic alliances, business development and other
sources. If we are unable to obtain additional funding, we may not be able to
continue as a going concern and may be forced to curtail all of our activities
and, ultimately, potentially cease operations. If we are unable to raise
sufficient additional funding, we will not have sufficient cash flows and
liquidity to fund our planned business operations, and may be forced to limit
many, if not all, of our programs and consider other means of creating value for
our stockholders, such as licensing to others the development and
commercialization of products that we consider valuable and would otherwise
likely develop ourselves. Even if we are able to raise additional capital, such
financings may only be available on unattractive terms, or could result in
significant dilution of stockholders' interests. The consolidated financial
statements do not include any adjustments relating to recoverability and
classification of recorded asset amounts or the amounts and classification of
liabilities that might be necessary should we be unable to continue in
existence.



We have not achieved profitability since our inception and we expect to continue
to incur net losses for the foreseeable future. We expect our net cash
expenditures in 2019 to be comparable to 2018. We will incur substantial costs
beyond the present and planned clinical trials in order to file a New Drug
Application (NDA) for rigosertib. The nature, design, size and cost of further
studies will depend in large part on the outcome of preceding studies and
discussions with regulators.



For additional risks, please see "Risk Factors" previously disclosed in our most recent annual report on Form 10-K.

© Edgar Online, source Glimpses

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