We are a development-stage pharmaceutical company that develops therapeutics for the treatment of cancer. Our research and product development activities to date have consisted primarily of conducting preclinical trials of product candidates, obtaining regulatory approval for clinical trials, conducting clinical trials, preparing to file for regulatory approval of our lead product candidate, Onrigintm (laromustine) Injection, conducting pre-commercialization activities, negotiating and obtaining collaborative agreements, and obtaining financing in support of these activities. Since inception, we have generated minimal revenues and have incurred substantial operating losses from our activities. We currently have no material source of revenue and we expect to incur substantial operating losses for the next several years due to expenses associated with our activities. We will have to raise additional capital to operate the Company after the first quarter of 2010.
We have two small molecule anticancer agents in clinical development. Clinical development of a product candidate generally involves a three-phase process. In Phase I, clinical trials are conducted with a small number of subjects to determine the tolerated drug dose, early safety profile, proper scheduling and the pattern of drug distribution, absorption and metabolism. In Phase II, clinical trials are conducted with groups of patients afflicted with a specific disease in order to determine efficacy, dose-response relationships and expanded evidence of safety. In Phase III, large-scale, multi-center, controlled clinical trials are conducted in order to: (i) provide enough data for statistical proof of safety and efficacy; (ii) compare the experimental therapy to existing therapies; (iii) uncover unexpected safety problems, such as previously unobserved side-effects; and (iv) generate product labeling.
Most of our resources are focused on the development of Onrigintm for the treatment of acute myeloid leukemia (AML). In February 2009, we filed a New Drug Application (NDA) for Onrigintm with the U.S. Food and Drug Administration (FDA) based on our pivotal Phase II trial of the drug as a single agent in elderly patients with de novo poor-risk AML, supplemented by data from a previous Phase II trial of Onrigintm in elderly AML. In October 2005, Onrigintm was designated a fast track product for the treatment of patients over 60 years of age with poor-risk AML and accordingly we have requested priority review of our NDA filing. Within several months after the NDA filing date, the FDA will determine whether the application will be accepted for filing based on the agency’s threshold determination that it is sufficiently complete to permit substantive review. Although preliminary data from the pivotal trial indicated that we met the criteria for a successful trial based on the primary endpoint, the overall response rate, there can be no assurance that the NDA will be: (i) accepted for filing or (ii) reviewed and/or approved on a priority or timely basis by the FDA, if at all.
In May 2007, our Phase III trial of Onrigintm in combination with Ara-C (also known as cytarabine) in relapsed AML was put on clinical hold by the FDA after accrual of 268 patients. This decision was based on a planned interim analysis of clinical data by the trial’s data safety monitoring board (DSMB) that resulted in a recommendation that enrollment and further treatment of patients on study be suspended. The DSMB’s recommendation was based on their evaluation that any advantage in the overall response rate (the trial’s primary endpoint) was being compromised by the mortality observed on the study. In January 2008, we announced that the FDA had lifted the clinical hold on this trial, and that we had reached initial agreement with the FDA on modifications to our original Phase III study protocol resulting in the requirement to conduct a new Phase III trial in relapsed AML if we pursue regulatory approval in this indication. The original Phase III trial is now closed. There can be no assurance that we will start a new Phase III trial in relapsed AML at any time in the future.
We have limited resources to allocate to additional clinical trials of Onrigintm. Onrigintm is being evaluated in four clinical trials at this time: (i) a continuation of our pivotal Phase II trial to collect certain electrocardiogram data; and (ii) three trials sponsored by clinical investigators. We have also entered into an agreement to conduct one additional investigator-sponsored trial of Onrigintm in AML.
We have limited resources to apply to our second product candidate, Triapine®. Triapine® is under evaluation in four clinical trials sponsored by the National Cancer Institute’s (NCI) Cancer Therapy Evaluation Program. We provide Triapine® drug products to support these trials.
We have two additional anticancer technologies that are in the preclinical development stage: (i) a small molecule that targets hypoxic or low-oxygen areas of tumors (VNP40541) and (ii) a drug delivery technology (TAPET®). We are not developing these technologies with our own resources at this time, and are seeking development partners for these product candidates. ‘Preclinical development’ or ‘preclinical studies’ indicate that the product candidates selected for development are being evaluated for potency, specificity, manufacturability and pharmacologic activity in vitro, or cell culture, and in vivo, or animal models.
Our product development programs are based primarily on technologies that we license from Yale University (Yale) and other cancer research centers or that we have developed ourselves. We have largely engaged in product development with respect to anticancer therapeutics through in-house preclinical and clinical development and through collaboration with academic, research and governmental institutions. As our product candidates advance through trials, depending on financial and pharmaceutical market conditions and the resources required for development, we will determine the best method and/or partnership to develop, and eventually market, our products.
We were incorporated in March 1992 as a Delaware corporation and began operations on May 1, 1994. We have no material source of revenues. We have incurred operating losses since our inception. As of December 31, 2008, we had an accumulated deficit of approximately $239.0 million. We expect to incur substantial operating losses for the next several years due to expenses associated with product development, clinical testing, regulatory activities, manufacturing development, scale-up and commercial-scale manufacturing, pre-commercialization activities, developing a sales and marketing force, and other infrastructure support costs. We will need to obtain additional financing to cover these costs.
For the years ended December 31, 2008, 2007 and 2006, we spent $17.5 million, $24.2 million and $21.5 million, respectively, on company-sponsored research and development activities.
Status of Common Stock
On February 20, 2008, we effected a one-for-ten reverse split of all outstanding shares of our common stock and a corresponding decrease in the number of shares of authorized common stock. As of that date, each ten of our shares were automatically combined, converted and exchanged into one share of our common stock. All share amounts, per share amounts and common stock prices included in this Annual Report on Form 10-K are provided on a post-reverse stock split basis.
On August 15, 2008, we announced that we had been delisted from the Nasdaq Capital Market®. Our common stock is now quoted on the OTC Bulletin Board® under the symbol “VION.”
Onrigintm in Solid Tumors
Although our primary focus has been to develop Onrigintm for the treatment of AML, we have also conducted clinical trials in solid tumors, and have provided product and financial support for three investigator-sponsored clinical trials of Onrigintm in pediatric and adult brain tumors.
In January 2008, our Phase II trial of Onrigintm as a single agent in small cell lung cancer was closed to patient enrollment due to a reallocation of resources. The trial had accrued 67 out of a planned total of 87 patients. Final data from this trial has not yet been presented at a clinical conference or published.
There is one trial of Onrigintm in a solid tumor underway at this time. An investigator-sponsored Phase I/II trial of Onrigintm in combination with temozolomide in adult brain tumors was initiated in September 2007.
Triapine® is a small molecule that in preclinical models inhibits the enzyme ribonucleotide reductase and therefore prevents the replication of tumor cells by blocking a critical step in DNA synthesis. Ribonucleotide reductase inhibition is believed to arrest the growth of, or kill, cancer cell lines, by blocking a critical step in DNA synthesis in cancer cells. Inhibition of this enzyme has also been shown in vitro and in vivo to enhance the anti-tumor activity of several standard anticancer agents. Accordingly, we believe Triapine® has potential to be used as a single agent and in combination with anticancer drugs to prevent damaged anticancer cells from regenerating.
We have evaluated an intravenous formulation of Triapine® in five single agent Phase I trials, three single agent Phase II trials, four Phase I combination trials, and two Phase II combination trials. All our other trials of Triapine® are closed to accrual or completed.
Clinical trials of Triapine® are being sponsored by the NCI’s Cancer Therapy Evaluation Program under a clinical trials agreement with the NCI’s Division of Cancer Treatment and Diagnosis for the clinical development of Triapine®. We provide the product used in these trials. There are currently three trials open to recruiting new patients sponsored by the NCI to evaluate an intravenous formulation of Triapine®: (i) a trial of Triapine® in combination with gemcitabine; (ii) a trial of Triapine® in combination with radiation; and (iii) a trial of Triapine® in combination with fludarabine. An additional thirteen trials are closed to accrual or completed.
Clinical testing of new single agent administration schedules may be possible with the oral form of Triapine®, which to date has been studied in a small number of patients to determine its absorption in the bloodstream following a single dose. A Phase I trial sponsored by the NCI of an oral formulation of Triapine® is ongoing.
In October 2003, we entered into a license with Beijing Pason Pharmaceuticals, Inc. (Pason) whereby we granted Pason the exclusive rights to develop, manufacture and market Triapine® in the People’s Republic of China, Taiwan, Hong Kong and Macao. To date, Pason has not conducted clinical trials of Triapine®. See “— License and Research Agreements,” below.
Other Products and Product Candidates for Conditions Other than Cancer
Melanin is a pigment formed by cells in the skin that gives skin its color and protects it from sun damage by absorbing ultraviolet rays. MELASYN® is a patented, water-soluble, synthetic version of melanin, making it a potentially useful ingredient for formulation of skin care products and cosmetics. Our MELASYN® patent and technology are licensed from Yale. We have one non-exclusive sublicense for MELASYN® with a sublicensee.
Novel Nucleoside Analogs
We have licensed patents and patent applications related to a nucleoside analog, or synthetic molecule, known as elvucitabine (ß-L-Fd4C) from Yale. In February 2000, we entered into a sublicense agreement for elvucitabine with a sublicensee. Under the terms of the sublicense agreement, the sublicense has funded the development of elvucitabine which is currently in Phase II clinical trials as an antiviral drug for the treatment of human immunodeficiency virus (HIV).
License and Research Agreements
Agreements with Yale University
We license various compounds from Yale, including Onrigintm and Triapine®, which were developed in the laboratory of Dr. Sartorelli, one of our directors, through research funded in part by us. The license agreements with Yale, which are described below, grant us exclusive licenses to make, use, sell and practice the inventions covered by various patents and patent applications relating to our primary product candidates as described below. Each license agreement requires us to pay royalties and, in some cases, milestone payments to Yale. Yale has retained the right to make, use and practice the inventions for non-commercial purposes. Under the license agreements we are required to exercise due diligence in commercializing the licensed technologies. The licenses may be terminated by Yale in the event that we fail to make a payment when due, we commit a material breach of the license, we become insolvent or file a petition in bankruptcy, or we fail to exercise due diligence in commercializing the licensed products, subject to certain cure periods. In the event that the license agreement dated August 1994, described below, is terminated for breach, all rights under licenses previously granted terminate. Accordingly, a default as to one product could affect our rights in other products. We may terminate the licenses in the event of Yale’s material breach of the licenses if such breach remains uncured for 30 days. Under the license agreements, we are also required to defend and indemnify Yale for any damages arising out of the use or sale of the licensed products by us or our sublicensees.
Subsequent to entering into a license agreement with Yale in August 1994, described below, we have paid approximately $10.8 million through December 31, 2008 to fund research activities at Yale.
License Agreement with Yale — September 1990
Under this agreement, we have an exclusive license to a U.S. patent related to a synthetic form of melanin named MELASYN®. Under the terms of the amended license agreement, we pay a license fee to Yale based on a percentage of net sales and sublicensing revenues. The term of the license is dictated by the expiration of any patents relating to any invention or, with respect to non-patented inventions or research, 24 years from 1990 (i.e. through 2014).
We have a non-exclusive sublicense agreement for MELASYN® with a sublicensee. Under the terms of the sublicense agreement, we receive reimbursement for certain costs and, if products including our technology are commercialized, we would receive a royalty based on a percentage of sales in the U.S. related to our issued patent.
License Agreement with Yale — August 1994
Under this amended agreement, we have a non-transferable worldwide exclusive license to make, have made, use, sell and practice inventions under certain patents and patent applications for therapeutic and diagnostic purpose. The patents and patent applications under this amended license cover Onrigintm and other sulfonylhydrazine compounds, Triapine® and elvucitabine (ß-L-Fd4C). The term of the license is dictated by the expiration of any patents relating to any inventions or, with respect to non-patented inventions or research, 17 years from 1994 (i.e. through 2011). This amended agreement provides that if Yale, as a result of its own research, identifies potential commercial opportunities for the licensed inventions, we will have the first option to negotiate a commercial license for the commercial opportunities. Yale is entitled to royalties on sales, if any, of resulting products, sublicensing revenues and, with regard to several patents, milestone payments based on the status of clinical trials and/or regulatory approvals.
We have granted a sublicense for elvucitabine (ß-L-Fd4C) to a sublicensee. Under the terms of the sublicense agreement, we received a small equity payment and, when and if a product including our technology is developed and commercialized, we could receive payments based on development milestones and royalties based on product revenue.
We have also granted a sublicense to Pason granting them the exclusive rights to develop, manufacture and market Triapine® in the People’s Republic of China, Taiwan, Hong Kong and Macao. Under the terms of the sublicense agreement, the Company received an upfront technology license fee and is entitled to receive potential milestone payments and potential royalties based on a percentage of Triapine® revenues in those countries. Pason is required to fund the preclinical and clinical development necessary for regulatory approval of Triapine® in those countries. To date, Pason has not conducted trials of Triapine®.
License Agreements with Yale — December 1995
Under this amended agreement, we have a non-transferable worldwide exclusive license, expiring over the lives of the licensed patents, to three inventions relating to gene therapy for melanoma. Technology licensed by us under this agreement relates to TAPET®. We have another license agreement with Yale pursuant to which we have a non-transferable worldwide exclusive license, expiring over the lives of the patents, to an invention relating to whitening skin. Under these licensing agreements, Yale is entitled to potential milestone payments based on the status of clinical trials and regulatory approvals. In addition, Yale is entitled to royalties on sales, if any, of resulting products and sublicense revenues.