Onconova Therapeutics (ONTX)

FORM 10-Q | Quarterly Report
May. 15, 2018 4:32 PM
|
About: Onconova Therapeutics (ONTX)View as PDF
Onconova Therapeutics, Inc. (Form: 10-Q, Received: 05/15/2018 16:38:16)

Table of Contents

 

 

 

UNITED STATES SECURITIES AND EXCHANGE

COMMISSION

WASHINGTON, DC 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, 2018

 

Or

 

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

 

Commission file number: 001-36020

 

Onconova Therapeutics, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware

 

22-3627252

(State or other jurisdiction of

 

(I.R.S. Employer

incorporation or organization)

 

Identification No.)

 

 

 

375 Pheasant Run, Newtown, PA

 

18940

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code: (267) 759-3680

 

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.        x   Yes       o   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 for such shorter period that the registrant was required to submit and post such files).      x   Yes       o   No

 

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

 

Large accelerated filer     o

 

Accelerated filer     o

 

 

 

Non-accelerated filer     o

 

Smaller reporting company     x

(Do not check if a smaller reporting company)

 

 

 

 

Emerging growth company      x

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    o

 

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

 

The number of outstanding shares of the registrant’s Common Stock, par value $0.01 per share, as of May 7, 2018 was 77,607,812.

 

 

 



Table of Contents

 

ONCONOVA THERAPEUTICS, INC.

 

TABLE OF CONTENT S FOR QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED MARCH 31, 2018

 

 

Page

PART I — FINANCIAL INFORMATION

 

 

 

Item 1. Financial Statements (Unaudited)

 

Condensed Consolidated Balance Sheets

2

Condensed Consolidated Statements of Operations

3

Condensed Consolidated Statements of Comprehensive Loss

4

Consolidated Statement of Stockholders’ Equity (Deficit)

5

Condensed Consolidated Statements of Cash Flows

6

Notes to Condensed Consolidated Financial Statements

7

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

32

Item 3. Quantitative and Qualitative Disclosures About Market Risk

43

Item 4. Controls and Procedures

44

 

 

PART II — OTHER INFORMATION

 

 

 

Item 1. Legal Proceedings

45

Item 1A. Risk Factors

45

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

45

Item 3. Defaults Upon Senior Securities

46

Item 4. Mine Safety Disclosures

46

Item 5. Other Information

46

Item 6. Exhibits

47

SIGNATURES

49

 

1



Table of Contents

 

PART I — FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

Onconova Therapeutics, Inc.

Condensed Consolidated Balance Sheets

 

 

 

March 31,

 

December 31,

 

 

 

2018

 

2017

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

7,264,000

 

$

4,024,000

 

Receivables

 

477,000

 

59,000

 

Prepaid expenses and other current assets

 

814,000

 

820,000

 

Total current assets

 

8,555,000

 

4,903,000

 

Property and equipment, net

 

48,000

 

64,000

 

Other non-current assets

 

12,000

 

12,000

 

Total assets

 

$

8,615,000

 

$

4,979,000

 

 

 

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

7,034,000

 

$

6,186,000

 

Accrued expenses and other current liabilities

 

3,063,000

 

3,335,000

 

Deferred revenue

 

455,000

 

455,000

 

Total current liabilities

 

10,552,000

 

9,976,000

 

Warrant liability

 

961,000

 

1,773,000

 

Deferred revenue, non-current

 

3,977,000

 

4,091,000

 

Total liabilities

 

15,490,000

 

15,840,000

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ (deficit) equity:

 

 

 

 

 

Preferred stock, $0.01 par value, 5,000,000 authorized at March 31, 2018 and December 31, 2017, none issued and outstanding at March 31, 2018 and December 31, 2017

 

 

 

Common stock, $0.01 par value, 100,000,000 and 25,000,000 authorized at March 31, 2018 and December 31, 2017, 19,426,163 and 10,771,163 shares issued and outstanding at March 31, 2018 and December 31, 2017

 

194,000

 

108,000

 

Additional paid in capital

 

359,496,000

 

350,514,000

 

Accumulated other comprehensive income

 

11,000

 

3,000

 

Accumulated deficit

 

(367,406,000

)

(362,316,000

)

Total Onconova Therapeutics, Inc. stockholders’ (deficit) equity

 

(7,705,000

)

(11,691,000

)

Non-controlling interest

 

830,000

 

830,000

 

Total stockholders’ (deficit) equity

 

(6,875,000

)

(10,861,000

)

 

 

 

 

 

 

Total liabilities and stockholders’ (deficit) equity

 

$

8,615,000

 

$

4,979,000

 

 

See accompanying notes to condensed consolidated financial statements.

 

2



Table of Contents

 

Onconova Therapeutics, Inc.

Condensed Consolidated Statements of Operations (unaudited)

 

 

 

Three months ended March 31,

 

 

 

2018

 

2017

 

 

 

 

 

 

 

Revenue

 

$

564,000

 

$

210,000

 

Operating expenses:

 

 

 

 

 

General and administrative

 

1,889,000

 

2,116,000

 

Research and development

 

4,577,000

 

4,886,000

 

Total operating expenses

 

6,466,000

 

7,002,000

 

Loss from operations

 

(5,902,000

)

(6,792,000

)

 

 

 

 

 

 

Change in fair value of warrant liability

 

812,000

 

(1,549,000

)

Net loss

 

(5,090,000

)

(8,341,000

)

Net loss attributable to non-controlling interest

 

 

 

Net loss attributable to Onconova Therapeutics, Inc.

 

(5,090,000

)

(8,341,000

)

Net loss per share of common stock, basic and diluted

 

$

(0.34

)

$

(1.23

)

Basic and diluted weighted average shares outstanding

 

15,138,663

 

6,771,383

 

 

See accompanying notes to condensed consolidated financial statements.

 

3



Table of Contents

 

Onconova Therapeutics, Inc.

Condensed Consolidated Statements of Comprehensive Loss (unaudited)

 

 

 

Three months ended March 31,

 

 

 

2018

 

2017

 

 

 

 

 

 

 

Net loss

 

$

(5,090,000

)

$

(8,341,000

)

Other comprehensive income (loss), before tax:

 

 

 

 

 

Foreign currency translation adjustments, net

 

8,000

 

5,000

 

Other comprehensive income (loss), net of tax

 

8,000

 

5,000

 

Comprehensive loss

 

(5,082,000

)

(8,336,000

)

Comprehensive loss attributable to non-controlling interest

 

 

 

Comprehensive loss attributable to Onconova Therapeutics, Inc.

 

$

(5,082,000

)

$

(8,336,000

)

 

See accompanying notes to condensed consolidated financial statements.

 

4



Table of Contents

 

Onconova Therapeutics, Inc.

Consolidated Statement of Stockholders’ (Deficit) Equity (unaudited)

 

 

 

Stockholders’ Equity (Deficit)

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

other

 

 

 

 

 

 

 

Common Stock

 

Paid in

 

Accumulated

 

comprehensive

 

Non-controlling

 

 

 

 

 

Shares

 

Amount

 

Capital

 

deficit

 

income (loss)

 

interest

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2017

 

10,771,163

 

$

108,000

 

$

350,514,000

 

$

(362,316,000

)

$

3,000

 

$

830,000

 

$

(10,861,000

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

(5,090,000

)

 

 

(5,090,000

)

Other comprehensive loss

 

 

 

 

 

8,000

 

 

8,000

 

Exercise of stock options

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

327,000

 

 

 

 

327,000

 

Issuance of common stock and pre-funded warrants, net

 

7,005,000

 

70,000

 

8,655,000

 

 

 

 

8,725,000

 

Issuance of common stock upon exercise of warrants

 

1,650,000

 

16,000

 

 

 

 

 

16,000

 

Issuance of common stock, net

 

 

 

 

 

 

 

 

Balance at March 31, 2018

 

19,426,163

 

$

194,000

 

$

359,496,000

 

$

(367,406,000

)

$

11,000

 

$

830,000

 

$

(6,875,000

)

 

See accompanying notes to condensed consolidated financial statements.

 

5



Table of Contents

 

Onconova Therapeutics, Inc.

Condensed Consolidated Statements of Cash Flows (unaudited)

 

 

 

Three months ended March 31,

 

 

 

2018

 

2017

 

Operating activities:

 

 

 

 

 

Net loss

 

$

(5,090,000

)

$

(8,341,000

)

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

 

 

 

 

 

Depreciation and amortization

 

16,000

 

23,000

 

Change in fair value of warrant liabilities

 

(812,000

)

1,549,000

 

Stock compensation expense

 

278,000

 

458,000

 

Changes in assets and liabilities:

 

 

 

 

 

Receivables

 

(418,000

)

(95,000

)

Prepaid expenses and other current assets

 

6,000

 

740,000

 

Accounts payable

 

848,000

 

84,000

 

Accrued expenses and other current liabilities

 

(223,000

)

(361,000

)

Deferred revenue

 

(114,000

)

(113,000

)

Net cash used in operating activities

 

(5,509,000

)

(6,056,000

)

 

 

 

 

 

 

Investing activities:

 

 

 

 

 

Net cash provided by investing activities

 

 

 

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

Proceeds from the sale of common stock and warrants, net of costs

 

8,725,000

 

40,000

 

Proceeds from the exercise of warrants

 

16,000

 

 

Net cash provided by financing activities

 

8,741,000

 

40,000

 

Effect of foreign currency translation on cash

 

8,000

 

5,000

 

Net increase (decrease) in cash and cash equivalents

 

3,240,000

 

(6,011,000

)

Cash and cash equivalents at beginning of period

 

4,024,000

 

21,400,000

 

Cash and cash equivalents at end of period

 

$

7,264,000

 

$

15,389,000

 

 

See accompanying notes to condensed consolidated financial statements.

 

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Table of Contents

 

Onconova Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

1. Nature of Business

 

The Company

 

Onconova Therapeutics, Inc. (the “Company”) was incorporated in the State of Delaware on December 22, 1998 and commenced operations on January 1, 1999. The Company’s headquarters are located in Newtown, Pennsylvania. The Company is a clinical-stage biopharmaceutical company focused on discovering and developing novel small molecule product candidates primarily to treat cancer. Using its proprietary chemistry platform, the Company has created an extensive library of targeted anti-cancer agents designed to work against specific cellular pathways that are important to cancer cells. The Company believes that the product candidates in its pipeline have the potential to be efficacious in a variety of cancers. The Company has three clinical-stage product candidates and several preclinical programs. In 2011, the Company entered into a license agreement, as subsequently amended, with SymBio Pharmaceuticals Limited (“SymBio”), which grants SymBio certain rights to commercialize rigosertib in Japan and Korea. On March 2, 2018, the Company entered into a License, Development and Commercialization Agreement with Pint International SA (which, together with its affiliate Pint Pharma GmbH, are collectively referred to as “Pint”).  Under the terms of the agreement, the Company granted Pint an exclusive, royalty-bearing license, with the right to sublicense, under certain Company patent rights and know-how to develop and commercialize any pharmaceutical product containing rigosertib in all uses of rigosertib in certain Latin America countries. In 2012, the Company entered into a development and license agreement with Baxter Healthcare SA, the predecessor in interest to Baxalta GmbH (together with its affiliates, “Baxalta”), pursuant to which the Company granted an exclusive, royalty-bearing license for the research, development, commercialization and manufacture (in specified instances) of rigosertib in all therapeutic indications in Europe. The Baxalta agreement terminated effective August 30, 2016, at which time the rights the Company licensed to Baxalta reverted to the Company at no cost. The Company has retained development and commercialization rights to rigosertib in the rest of the world, including the United States. During 2012, Onconova Europe GmbH was established as a wholly owned subsidiary of the Company for the purpose of further developing business in Europe. In April 2013, GBO, LLC, a Delaware limited liability company, (“GBO”) was formed pursuant to an agreement with GVK Biosciences Private Limited, a private limited company located in India, (“GVK”) to collaborate and develop two programs using the Company’s technology platform. The two preclinical programs sublicensed to GBO have not been developed to clinical stage as initially hoped, and the Company is in discussions with GVK regarding the future of GBO.

 

On March 21, 2018, the Company amended its certificate of incorporation to increase the number of authorized shares of common stock par value $0.01 per share from 25,000,000 to 100,000,000.

 

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Table of Contents

 

Onconova Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Liquidity

 

The Company has incurred recurring operating losses since inception. For the three months ended March 31, 2018, the Company incurred a net loss of $5,090,000 and as of March 31, 2018 the Company had generated an accumulated deficit of $367,406,000. The Company anticipates operating losses to continue for the foreseeable future due to, among other things, costs related to research, development of its product candidates and its preclinical programs, strategic alliances and its administrative organization. At March 31, 2018, the Company had cash and cash equivalents of $7,264,000. The Company will require substantial additional financing to fund its ongoing clinical trials and operations, and to continue to execute its strategy.

 

From its inception through July 2013, the Company raised capital through the private issuance of preferred stock. On July 30, 2013, the Company completed its initial public offering (the “IPO”) of 594,167 shares of Common Stock, at a price of $150.00 per share. The Company received net proceeds of $79,811,000 from the sale, net of underwriting discounts and commissions and other estimated offering expenses. Immediately prior to the consummation of the IPO, all outstanding shares of preferred stock automatically converted into shares of Common Stock at the applicable conversion ratio then in effect. From the IPO through December 31, 2016, the Company closed on several offerings which included Common Stock and warrants. Total net proceeds from these offerings was approximately $24.9 million

 

On April 26, 2017 the Company closed on an underwritten public offering of 2,476,190 shares of Common Stock. On May 17, 2017, the Company sold an additional 363,580 shares as a result of the underwriter’s exercise of its over-allotment option. Net proceeds from these transactions were approximately $5.3 million. (See Note 13)

 

On November 14, 2017 the Company closed on a registered direct offering to select accredited investors of 920,000 shares of common stock. Net proceeds were approximately $1.1 million. (See Note 13)

 

On February 12, 2018 the Company closed on an offering of units of common stock and warrants. The Company issued 7,005,000 shares of common stock, pre-funded warrants to purchase 2,942,500 share of common stock, and preferred stock warrants to purchase 1,044,487.5 shares of Series A convertible preferred stock. Each share of Series A convertible preferred stock is convertible into ten shares of common stock. Net proceeds were approximately $8.7 million. (See Note 13)

 

On May 1, 2018 the Company closed on an offering of units of common stock and warrants. The Company issued 55,411,763 shares of common stock, pre-funded warrants to purchase 12,235,295 shares of common stock, and preferred stock warrants to purchase 1,691,176.450 shares of Series B convertible preferred stock. Each share of Series B convertible preferred stock is convertible into 40 shares of common stock. Net proceeds were approximately $25.6 million. (See Note 13)

 

The Company has and may continue to delay, scale-back, or eliminate certain of its research and development activities and other aspects of its operations until such time as the Company is successful in securing additional funding. The Company continues to explore various dilutive and non-dilutive sources of funding, including equity financings, strategic alliances, business development and other sources. The future success of the Company is dependent upon its ability to obtain additional funding. There can be no assurance, however, that the Company will be successful in obtaining such funding in sufficient amounts, on terms acceptable to the Company, or at all. The Company currently anticipates that current cash and cash equivalents will be sufficient to meet its anticipated cash requirements into the fourth quarter of 2019.

 

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Table of Contents

 

Onconova Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

 

2. Summary of Significant Accounting Policies

 

Basis of Presentation

 

The condensed consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States (“GAAP”) for interim financial information. Certain information and footnotes normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The financial statements include the consolidated accounts of the Company, its wholly-owned subsidiary, Onconova Europe GmbH, and GBO. All significant intercompany transactions have been eliminated.

 

Unaudited Interim Financial Information

 

The accompanying condensed consolidated balance sheet as of March 31, 2018, the condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2018 and 2017, the consolidated statement of stockholders’ (deficit) equity for the three months ended March 31, 2018 and the condensed consolidated statements of cash flows for the three months ended March 31, 2018 and 2017 are unaudited. The interim unaudited condensed consolidated financial statements have been prepared on the same basis as the annual audited consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of March 31, 2018, the results of its operations for the three months ended March 31, 2018 and 2017, and its cash flows for the three months ended March 31, 2018 and 2017. The financial data and other information disclosed in these notes related to the three months ended March 31, 2018 and 2017 are unaudited. The results for the three months ended March 31, 2018 are not necessarily indicative of results to be expected for the year ending December 31, 2018, any other interim periods, or any future year or period.  These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto for the year ended December 31, 2017 included in the Company’s annual report on Form 10-K filed with the SEC on March 16, 2018.

 

Segment Information

 

Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company views its operations and manages its business in one segment, which is the identification and development of oncology therapeutics.

 

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Table of Contents

 

Onconova Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

 

2. Summary of Significant Accounting Policies (Continued)

 

Significant Accounting Policies

 

The Company’s significant accounting policies are disclosed in the audited consolidated financial statements for the year ended December 31, 2017 included in the Company’s annual report on Form 10-K filed with the SEC on March 16, 2018. Since the date of such financial statements, there have been no changes to the Company’s significant accounting policies.

 

Fair Value Measurements

 

The carrying amounts reported in the accompanying consolidated financial statements for cash and cash equivalents, accounts payable, and accrued liabilities approximate their respective fair values because of the short-term nature of these accounts. The fair value of the warrant liability is discussed in Note 7, “Fair Value Measurements.”

 

Revenue Recognition

 

The Company recognizes revenue in accordance with Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (ASC 606), which the Company adopted effective January 1, 2018 using the modified retrospective method. There was no material impact to our financial position and results of operations as a result of the adoption. The Company applies ASC 606 to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments. In accordance with ASC 606, the Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that it will collect the consideration it is entitled to in exchange for the goods and services it transfers to the customer. At contract inception, the Company assesses the goods or services promised within each contract that falls under the scope of ASC 606, determines those that are performance obligations and assesses whether each promised good or service is distinct.  The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

 

The Company derives revenue from collaboration and licensing agreements and the sale of products associated with material transfer, collaboration and supply agreements.

 

License, Collaboration and Other Revenues

 

The Company enters into licensing and collaboration agreements, under which it licenses certain of its product candidates’ rights to third parties.  The Company recognizes revenue related to these agreements in accordance with ASC 606. The terms of these arrangements typically include payment of one or more of the following: non-refundable, up-front license fees; development, regulatory and commercial milestone payments; and royalties on net sales of the licensed product.

 

In determining the appropriate amount of revenue to be recognized as it fulfills its obligation under each of its agreements, the Company performs the five steps described above. As part of the accounting for these arrangements, the Company must develop assumptions that require judgment to determine the stand-alone selling price, which may include forecasted revenues, development timelines, reimbursement of personnel costs, discount rates and probabilities of technical and regulatory success.

 

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Table of Contents

 

Onconova Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

 

2. Summary of Significant Accounting Policies (Continued)

 

Licensing of Intellectual Property: If the license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenue from non-refundable, up-front fees allocated to the license when the license is transferred to the licensee and the licensee is able to use and benefit from the license. For licenses that are bundled with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, up-front-fees. The Company evaluates the measure of progress each reporting period, and, if necessary, adjusts the measure of performance and related revenue recognition.

 

Milestone Payments : At the inception of each arrangement that includes development milestone payments, the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method.  If it is probable that a significant revenue reversal will not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within the control of the Company or the licensees, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. The transaction price is then allocated to each performance obligation on a relative stand-alone selling price basis, for which the Company recognizes revenue as or when the performance obligations under the contract are satisfied. At the end of each subsequent reporting period, the Company re-evaluates the probability of achievement of such development milestones and any related constraint and, if necessary, adjusts its estimate of the overall transaction price.  Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenues and earnings in their period of adjustment.

 

Manufacturing supply services. Arrangements that include a promise for future supply of drug substance or drug product for either clinical development or commercial supply at the customer’s discretion are generally considered as options. The Company assesses if these options provide material rights to the licensee and if so, they are accounted for as separate performance obligations. If the Company is entitled to additional payments when the customer exercises these options, any additional payments are recorded when the customer obtains control of the goods, which is upon shipment.

 

Royalties : For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and for which the license is deemed to be the predominant item to which royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some of all of the royalty has been allocated has been satisfied (or partially satisfied).  To date, the Company has not recognized any royalty revenue from its license agreements.

 

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Table of Contents

 

Onconova Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

 

2. Summary of Significant Accounting Policies (Continued)

 

Recent Accounting Pronouncements

 

In February 2016, the FASB issued guidance which supersedes much of the current guidance for leases. The new standard requires lessees to recognize a right-of-use asset and a lease liability on their balance sheets for all the leases with terms greater than twelve months. Based on certain criteria, leases will be classified as either financing or operating, with classification affecting the pattern of expense recognition in the income statement. For leases with a term of twelve months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term. The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those years, with early adoption permitted. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The modified retrospective approach includes a number of optional practical expedients primarily focused on leases that commenced before the effective date of the new guidance, including continuing to account for leases that commence before the effective date in accordance with previous guidance, unless the lease is modified. The Company is evaluating the impact of the adoption of the standard on its consolidated financial statements.

 

12



Table of Contents

 

Onconova Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

 

2. Summary of Significant Accounting Policies (Continued)

 

In March 2016, the FASB issued guidance that addresses the income tax effects of stock-based payments and eliminates the windfall pool concept, as all of the tax effects related to stock-based payments will now be recorded at settlement (or expiration) through the income statement. The new guidance also permits entities to make an accounting policy election for the impact of forfeitures on the recognition of expense for stock-based payment awards. Forfeitures can be estimated or recognized when they occur. The standard was effective for annual periods beginning after December 15, 2016 and interim periods within that reporting period. Early adoption was permitted in any interim or annual period, with any adjustment reflected as of the beginning of the fiscal year of adoption. The Company adopted the new guidance as of January 1, 2017. The adoption did not have a material impact on the Company’s consolidated financial statements and related disclosures.

 

In November 2016, the FASB issued guidance requiring that amounts generally described as restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The guidance is effective for interim and annual periods beginning in 2018 and should be applied using a retrospective transition method to each period presented. Early adoption is permitted. The Company adopted this guidance effective December 31, 2017. Restricted Cash was $50,000 at December 31 2017, 2016 and 2015. The adoption did not have a material impact on the Company’s consolidated financial statements and related disclosures.

 

3.  Revenue

 

The Company’s revenue during the three months ended March 31, 2018 and 2017 was from its license and collaboration agreements with SymBio and HanX (See Note 10).

 

Deferred revenue is as follows:

 

 

 

Symbio

 

 

 

Upfront Payment

 

 

 

 

 

Deferred balance at December 31, 2017

 

$

4,546,000

 

Recognition to revenue

 

114,000

 

 

 

 

 

Deferred balance at March 31, 2018

 

$

4,432,000

 

 

See Note 10, “License and Collaboration Agreements,” for a further discussion of the agreements with SymBio and HanX.

 

13



Table of Contents

 

Onconova Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

 

4.  Net Loss Per Share of Common Stock

 

The following potentially dilutive securities outstanding at March 31, 2018 and 2017 have been excluded from the computation of diluted weighted average shares outstanding, as they would be antidilutive (reflects the number of common shares as if the dilutive securities had been converted to common stock):

 

 

 

March 31,

 

 

 

2018

 

2017

 

Warrants

 

15,232,146

 

3,525,771

 

Stock options

 

1,118,849

 

891,518

 

 

 

16,350,995

 

4,417,289

 

 

5.  Warrants

 

Common Stock warrants are accounted for in accordance with applicable accounting guidance provided in ASC Topic 815, Derivatives and Hedging — Contracts in Entity’s Own Equity (ASC Topic 815), as either derivative liabilities or as equity instruments depending on the specific terms of the warrant agreement. Some of the Company’s warrants are classified as liabilities because in certain circumstances they could require cash settlement.

 

Warrants outstanding and warrant activity (reflects the number of common shares as if the warrants were converted to common stock) for the three months ended March 31, 2018 is as follows:

 

 

 

 

 

 

 

 

 

Balance

 

 

 

 

 

 

 

Balance

 

 

 

 

 

Exercise

 

Expiration

 

Decemeber 31,

 

Warrants

 

Warrants

 

Warrants

 

March 31,

 

Description

 

Classification

 

Price

 

Date

 

2017

 

Issued

 

Exercised

 

Expired

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-tradable warrants

 

Liability

 

$

11.50

 

July 2021

 

96,842

 

 

 

 

96,842

 

Tradable warrants

 

Liability

 

$

4.92

 

July 2021

 

3,192,022

 

 

 

 

3,192,022

 

Non-tradable pre-funded warrants

 

Equity

 

$

0.01

 

July 2023

 

5,907

 

 

 

 

5,907

 

Non-tradable warrants

 

Equity

 

$

0.45

 

*

 

 

9,947,500

 

 

 

9,947,500

 

Non-tradable warrants

 

Equity

 

$

1.2625

 

*

 

 

497,375

 

 

 

497,375

 

Non-tradable warrants

 

Equity

 

$

0.9400

 

March 2021

 

 

75,000

 

 

 

75,000

 

Non-tradable warrants

 

Equity

 

$

1.4100

 

March 2021

 

 

125,000

 

 

 

125,000

 

Non-tradable pre-funded warrants

 

Equity

 

$

0.01

 

none

 

 

2,942,500

 

(1,650,000

)

 

1,292,500

 

 

 

 

 

 

 

 

 

3,294,771

 

13,587,375

 

(1,650,000

)

 

15,232,146

 

 


* These preferred stock warrants expire on the earlier of (A) the one-month anniversary of the date on which the Company publically releases topline results of the INSPIRE Pivotal phase 3 that compare the overall survival (OS) of patients in the rigosertib group vs the Physician’s Choice group, in all patients and in a subgroup of patients with IPSS-R very high risk and (B) December 31, 2019. These preferred stock warrants may be exercised on a cashless basis in certain circumstances specified therein.

 

14



Table of Contents

 

Onconova Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

 

6. Balance Sheet Detail

 

Prepaid expenses and other current assets:

 

 

 

March 31,

 

December 31,

 

 

 

2018

 

2017

 

 

 

 

 

 

 

Research and development

 

$

394,000

 

$

514,000

 

Manufacturing

 

33,000

 

48,000

 

Insurance

 

162,000

 

181,000

 

Other

 

225,000

 

77,000

 

 

 

$

814,000

 

$

820,000

 

 

Property and equipment:

 

 

 

March 31,

 

December 31,

 

 

 

2018

 

2017

 

 

 

 

 

 

 

Property and equipment

 

$

2,228,000

 

$

2,228,000

 

Accumulated depreciation

 

(2,180,000

)

(2,164,000

)

 

 

$

48,000

 

$

64,000

 

 

Accrued expenses and other current liabilities:

 

 

 

March 31,

 

December 31,

 

 

 

2018

 

2017

 

 

 

 

 

 

 

Research and development

 

$

1,884,000

 

$

1,912,000

 

Employee compensation

 

1,055,000

 

1,258,000

 

Professional fees

 

124,000

 

165,000

 

 

 

$

3,063,000

 

$

3,335,000

 

 

15



Table of Contents

 

Onconova Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

 

7. Fair Value Measurements

 

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

 

The Company utilizes a valuation hierarchy for disclosure of the inputs to the valuations used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on the Company’s own assumptions used to measure assets and liabilities at fair value. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

 

On January 5, 2016, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with an institutional investor providing for the issuance and sale by the Company of 193,684 shares of Common Stock, at a purchase price of $9.50 per share and warrants to purchase up to 96,842 shares of Common Stock (the “Warrants”) for aggregate gross proceeds of $1,840,000 (see Note 13). The Company has classified the warrants as a liability (see Note 5). The fair value was estimated using the Black-Scholes pricing model.

 

On July 29, 2016 the Company closed on a Rights Offering, issuing 3,599,786 shares of Common Stock, 3,192,022 Tradable Warrants and 656,400 Pre-Funded Warrants. The Tradable Warrants are exercisable for a period of five years for one share of Common Stock at an exercise price of $4.92 per share. After the one-year anniversary of issuance, the Company may redeem the Tradable Warrants for $0.001 per Tradable Warrant if the volume weighted average price of its Common Stock is above $12.30 for each of 10 consecutive trading days (see Note 13). The Company has classified the Tradable Warrants as a liability (see Note 5). The Tradable Warrants have been listed on the NASDAQ Capital Market since issuance and the Company regularly monitors the trading activity. During the period from issuance on July 29, 2016 through March 31, 2017 the Company determined that trading volume was insufficient to use the NASDAQ Capital Market value to determine the fair value of the warrant liability. The fair value was estimated using the Black-Scholes pricing model. During the quarter ended June 30, 2017, the Company determined that an active and orderly market for the Tradable Warrants had developed and that the NASDAQ Capital Market price was the best indicator of fair value of the warrant liability. Consequently, the Company changed its valuation technique from the Black-Scholes pricing model to the quoted market price, effective April 1, 2017. The change in valuation technique resulted in a reclassification of the liability within the valuation hierarchy form Level 3 to Level 1. The quoted market price was used to determine the fair value at December 31, 2017 and March 31, 2018.

 

The Company estimated the fair value of the non-tradable warrant liability at March 31, 2018, using the Black-Scholes option pricing model with the following weighted-average assumptions:

 

Risk-free interest rate

 

2.39

%

Expected volatility

 

74.07

%

Expected term

 

3.29 years

 

Expected dividend yield

 

0

%

 

Expected volatility is based on the historical volatility of the Company’s Common Stock since its IPO in July 2013.

 

16



Table of Contents

 

Onconova Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

 

7. Fair Value Measurements (Continued)

 

The following fair value hierarchy table presents information about the Company’s financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2018 and December 31, 2017:

 

 

 

Fair Value Measurement as of:

 

 

 

March 31, 2018

 

December 31, 2017

 

 

 

Level 1

 

Level 2

 

Level 3

 

Balance

 

Level 1

 

Level 2

 

Level 3

 

Balance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tradable warrants liability

 

$

957,000

 

$

 

$

 

$

957,000

 

$

1,755,000

 

$

 

$

 

$

1,755,000

 

Non-tradable warrants liability

 

 

 

4,000

 

4,000

 

 

 

18,000

 

18,000

 

Total

 

$

957,000

 

$

 

$

4,000

 

$

961,000

 

$

1,755,000

 

$

 

$

18,000

 

$

1,773,000

 

 

The following table presents a reconciliation of the Company’s liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended March 31, 2018:

 

 

 

Warrant Liability

 

Balance at December 31, 2017

 

$

18,000

 

Issuance of warrants

 

 

Change in fair value upon re-measurement

 

14,000

 

Balance at March 31, 2018

 

$

4,000

 

 

There were no transfers between Level 1 and Level 2 in any of the periods reported.

 

17



Table of Contents

 

Onconova Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

 

8.  Stock-Based Compensation

 

The 2007 Equity Compensation Plan as amended (the “2007 Plan”), amended, restated and renamed the Company’s 1999 Stock Based Compensation Plan (the “1999 Plan”), which provided for the granting of incentive and nonqualified stock options and restricted stock to its employees, directors and consultants at the discretion of the board of directors.

 

The 2013 Equity Compensation Plan (the “2013 Plan”), amended, restated and renamed the 2007 Plan. Under the 2013 Plan, the Company may grant incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, deferred share awards, performance awards and other equity-based awards to employees, directors and consultants. The Company initially reserved 610,783 shares of Common Stock for issuance, subject to adjustment as set forth in the 2013 Plan. The 2013 Plan includes an evergreen provision, pursuant to which the maximum aggregate number of shares that may be issued under the 2013 Plan is increased on the first day of each fiscal year by the lesser of (a) a number of shares equal to four percent (4%) of the issued and outstanding Common Stock of the Company, without duplication, (b) 200,000 shares and (c) such lesser number as determined by the Company’s board of directors, subject to specified limitations. At March 31, 2018, there were 33,779 shares available for future issuance.

 

Stock-based compensation expense includes stock options granted to employees and non-employees and has been reported in the Company’s statements of operations and comprehensive loss in either research and development expenses or general and administrative expenses depending on the function performed by the optionee. No net tax benefits related to the stock-based compensation costs have been recognized since the Company’s inception. The Company recognized stock-based compensation expense as follows for the three months ended March 31, 2018 and 2017:

 

 

 

Three Months ended March 31,

 

 

 

2018

 

2017

 

General and administrative

 

$

158,000

 

$

265,000

 

Research and development

 

120,000

 

193,000

 

 

 

$

278,000

 

$

458,000

 

 

18



Table of Contents

 

Onconova Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

 

8.  Stock-Based Compensation (Continued)

 

A summary of stock option activity for the three months ended March 31, 2018 is as follows:

 

 

 

 

 

Options Outstanding

 

 

 

Shares
Available
for Grant

 

Number of
Shares

 

Weighted-
Average
Exercise
Price

 

Weighted
Average
Remaining
Contractual
Term (in years)

 

Aggregate
Intrinsic
Value

 

Balance, December 31, 2017

 

57,632

 

894,996

 

$

57.02

 

6.72

 

$

0

 

Authorized

 

200,000

 

 

 

 

 

 

 

 

Granted

 

(330,849

)

330,849

 

$

1.41

 

 

 

 

 

Exercised

 

 

 

$

 

 

 

 

 

Forfeitures

 

106,996

 

(106,996

)

$

80.97

 

 

 

 

 

Balance, March 31, 2018

 

33,779

 

1,118,849

 

$

25.00

 

8.03

 

$

0

 

Vested or expected to vest, March 31, 2018

 

 

 

1,098,389

 

$

42.02

 

7.16

 

$

0

 

Exercisable at March 31, 2018

 

 

 

624,116

 

$

42.02

 

7.16

 

$

0

 

 

Information with respect to stock options outstanding and exercisable at March 31, 2018 is as follows:

 

Exercise Price

 

Shares

 

Exercisable

 

$1.09 - $6.50

 

802,214

 

336,045

 

$14.80 - $15.00

 

29,775

 

19,445

 

$23.20 - $39.80

 

75,369

 

59,635

 

$43.40 - $75.30

 

87,343

 

84,843

 

$132.80 - $151.20

 

118,798

 

118,798

 

$277.10 - $291.40

 

5,350

 

5,350

 

 

 

1,118,849

 

624,116

 

 

Options granted after April 23, 2013

 

The Company accounts for all stock-based payments made after April 23, 2013 to employees and directors using an option pricing model for estimating fair value. Accordingly, stock-based compensation expense is measured based on the estimated fair value of the awards on the date of grant, net of forfeitures.  Compensation expense is recognized for the portion that is ultimately expected to vest over the period during which the recipient renders the required services to the Company using the straight-line single option method. In accordance with authoritative guidance, the fair value of non-employee stock-based awards is re-measured as the awards vest, and the resulting increase in fair value, if any, is recognized as expense in the period the related services are rendered.

 

19



Table of Contents

 

Onconova Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

 

8.  Stock-Based Compensation (Continued)

 

The Company uses the Black-Scholes option-pricing model to estimate the fair value of stock options at the grant date. The Black-Scholes model requires the Company to make certain estimates and assumptions, including estimating the fair value of the Company’s Common Stock, assumptions related to the expected price volatility of the Common Stock, the period during which the options will be outstanding, the rate of return on risk-free investments and the expected dividend yield for the Company’s stock.

 

As of March 31, 2018, there was $1,074,000 of unrecognized compensation expense related to the unvested stock options issued from April 24, 2013 through March 31, 2018, which is expected to be recognized over a weighted-average period of approximately 1.95 years.

 

The weighted-average assumptions underlying the Black-Scholes calculation of grant date fair value include the following:

 

 

 

Three Months ended March 31,

 

 

 

2018

 

2017

 

Risk-free interest rate

 

2.60

%

2.07

%

Expected volatility

 

74.13

%

79.38

%

Expected term

 

5.78 years

 

6.00 years

 

Expected dividend yield

 

0

%

0

%

Weighted average grant date fair value

 

$

0.84

 

$

1.86

 

 

The weighted-average valuation assumptions were determined as follows:

 

·                   Risk-free interest rate: The Company based the risk-free interest rate on the interest rate payable on U.S. Treasury securities in effect at the time of grant for a period that is commensurate with the assumed expected option term.

 

·                   Expected term of options: Due to its lack of sufficient historical data, the Company estimates the expected life of its employee stock options using the “simplified” method, as prescribed in Staff Accounting Bulletin (SAB) No. 107, whereby the expected life equals the arithmetic average of the vesting term and the original contractual term of the option.

 

·                   Expected stock price volatility:  Expected volatility is based on the historical volatility of the Company’s Common Stock since its IPO in July 2013.

 

·                   Expected annual dividend yield: The Company has never paid, and does not expect to pay, dividends in the foreseeable future.  Accordingly, the Company assumed an expected dividend yield of 0.0%.

 

·                   Estimated forfeiture rate: The Company’s estimated annual forfeiture rate on stock option grants was 4.14% in 2018 and 2017, based on the historical forfeiture experience.

 

20



Table of Contents

 

Onconova Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

 

9. Research Agreements

 

The Company has entered into various licensing and right-to-sublicense agreements with educational institutions for the exclusive use of patents and patent applications, as well as any patents that may develop from research being conducted by such educational institutions in the field of anticancer therapy, genes and proteins. Results from this research have been licensed to the Company pursuant to these agreements. Under one of these agreements with Temple University (“Temple”), the Company is required to make annual maintenance payments to Temple and royalty payments based upon a percentage of sales generated from any products covered by the licensed patents, with minimum specified royalty payments. As no sales had been generated through March 31, 2018 under the licensed patents, the Company has not incurred any royalty expenses related to this agreement. In addition, the Company is required to pay Temple a percentage of any sublicensing fees received by the Company.

 

21



Table of Contents

 

Onconova Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

 

10. License and Collaboration Agreements

 

SymBio Agreement

 

In July 2011, the Company entered into a license agreement with SymBio, which has been subsequently amended, granting SymBio an exclusive, royalty-bearing license for the development and commercialization of rigosertib in Japan and Korea. Under the SymBio license agreement, SymBio is obligated to use commercially reasonable efforts to develop and obtain market approval for rigosertib inside the licensed territory and the Company has similar obligations outside of the licensed territory. The Company has also entered into an agreement with SymBio providing for it to supply SymBio with development-stage product. Under the SymBio license agreement, the Company also agreed to supply commercial product to SymBio under specified terms that will be included in a commercial supply agreement to be negotiated prior to the first commercial sale of rigosertib. The supply of development-stage product and the supply of commercial product will be at the Company’s cost plus a defined profit margin. Sales of development-stage product have been de minimis. The Company has additionally granted SymBio a right of first negotiation to license or obtain the rights to develop and commercialize compounds having a chemical structure similar to rigosertib in the licensed territory.

 

Under the terms of the SymBio license agreement, the Company received an upfront payment of $7,500,000 in 2011. The Company is eligible to receive milestone payments of up to an aggregate of $22,000,000 from SymBio upon the achievement of specified development and regulatory milestones for specified indications. Of the regulatory milestones, $5,000,000 is due upon receipt of marketing approval in the United States for rigosertib IV in higher-risk MDS patients, $3,000,000 is due upon receipt of marketing approval in Japan for rigosertib IV in higher-risk MDS patients, $5,000,000 is due upon receipt of marketing approval in the United States for rigosertib oral in lower-risk MDS patients, and $5,000,000 is due upon receipt of marketing approval in Japan for rigosertib oral in lower-risk MDS patients. Furthermore, upon receipt of marketing approval in the United States and Japan for an additional specified indication of rigosertib, which the Company is currently not pursuing, an aggregate of $4,000,000 would be due. In addition to these pre-commercial milestones, the Company is eligible to receive tiered milestone payments based upon annual net sales of rigosertib by SymBio of up to an aggregate of $30,000,000.

 

Further, under the terms of the SymBio license agreement, SymBio will make royalty payments to the Company at percentage rates ranging from the mid-teens to 20% based on net sales of rigosertib by SymBio.

 

Royalties will be payable under the SymBio agreement on a country-by-country basis in the licensed territory, until the later of the expiration of marketing exclusivity in those countries, a specified period of time after first commercial sale of rigosertib in such country, or the expiration of all valid claims of the licensed patents covering rigosertib or the manufacture or use of rigosertib in such country. If no valid claim exists covering the composition of matter of rigosertib or the use of or treatment with rigosertib in a particular country before the expiration of the royalty term, and specified competing products achieve a specified market share percentage in such country, SymBio’s obligation to pay the Company royalties will continue at a reduced royalty rate until the end of the royalty term. In addition, the applicable royalties payable to the Company may be reduced if SymBio is required to pay royalties to third-parties for licenses to intellectual property rights necessary to develop, use, manufacture or commercialize rigosertib in the licensed territory. The license agreement with SymBio will remain in effect until the expiration of the royalty term. However, the SymBio license agreement may be terminated earlier due to the uncured material breach or bankruptcy of a party, or force majeure. If SymBio terminates the license agreement in these circumstances, its licenses to rigosertib will survive, subject to SymBio’s milestone and royalty obligations, which SymBio may elect to defer and offset against any damages that may be determined to be due from the Company. In addition, the Company may terminate the license agreement in the event that SymBio brings a challenge against it in relation to the licensed patents, and SymBio may terminate the license agreement without cause by providing the Company with written notice within a specified period of time in advance of termination.

 

22



Table of Contents

 

Onconova Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

 

10. License and Collaboration Agreements (Continued)

 

The Company assessed the SymBio arrangement in accordance with ASC 606 and determined that its performance obligations under the SymBio agreement include the exclusive, royalty-bearing, sublicensable license to rigosertib, the research and development services to be provided by the Company and its obligation to serve on a joint committee. The Company concluded that the license was not distinct since it was of no benefit to SymBio without the ongoing research and development services and that, as such, the license and the research and development services should be bundled as a single performance obligation. Since the provision of the license and research and development services, are considered a single performance obligation; the $7,500,000 upfront payment is being recognized as revenue ratably through December 2027, the expected period over which the Company expects the research and development services to be performed as the services are performed.

 

SymBio’s purchases of rigosertib as development-stage product or for commercial requirements represent options under the agreement and revenues are therefore recognized when control of the product is transferred, which is typically when shipped. If SymBio orders the supplies from the Company, the Company expects the pricing for this supply to equal its third-party manufacturing cost plus a pre-negotiated percentage, which will not result in a significant incremental discount to market rates.

 

23



Table of Contents

 

Onconova Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

 

10. License and Collaboration Agreements (Continued)

 

HanX Agreement

 

In December 2017, the Company entered into a license and collaboration agreement with HanX Biopharmaceuticals, Inc. (“HanX”), a company focused on development of novel oncology products, for the further development, registration and commercialization of ON 123300 in Greater China. ON 123300 is a preclinical compound which the Company believes has the potential to overcome the limitations of current generation CDK 4/6 inhibitors. The key feature of the collaboration is that HanX will provide all funding required for future Chinese IND enabling studies necessary for filing an IND with the Chinese Food and Drug Administration.  The studies would be conducted to meet the Good Laboratory Practice (“GLP”) requirements of the FDA such that the Company could simultaneously file an IND with the US FDA. The Company and HanX will oversee the IND enabling studies. The Company will maintain global rights outside of China.

 

Pursuant to the agreement, the Company received a $450,000 upfront payment on April 11, 2018. If the compound receives regulatory approval and is commercialized, the Company would receive regulatory and commercial milestone payments, as well as royalties on sales in the Greater China territory.

 

The Company assessed the HanX arrangement for revenue recognition in accordance with ASC 606 and determined that the license was distinct and that control of the license had been transferred during the first quarter of 2018. As such, the Company recognized the $450,000 allocated to the license in the quarter ended March 31, 2018. Accordingly, the revenue is included in the consolidated statement of operations for the period ended March 31, 2018 and the amount receivable from HanX is included in receivables in the balance sheet at March 31, 2018.

 

Pint Agreement

 

On March 2, 2018, the Company entered into a License, Development and Commercialization Agreement (the “License Agreement”) and a Securities Purchase Agreement (the “Securities Purchase Agreement”) with Pint.

 

Under the terms of the License Agreement, the Company granted Pint an exclusive, royalty-bearing license, with the right to sublicense, under certain Company patent rights and know-how to develop and commercialize any pharmaceutical product (the “Product”) containing rigosertib in all uses of rigosertib in humans in Latin American countries (the “Territory,” including Argentina, Belize, Bolivia, Brazil, Chile, Colombia, Costa Rica, Cuba, Dominican Republic, Ecuador, El Salvador, French Guiana, British Guiana, Suriname, Guatemala, Haiti, Honduras, Mexico, Nicaragua, Panama, Paraguay, Peru, Uruguay and Venezuela).

 

Pint agreed to make an upfront equity investment in the Company’s common stock. In addition, the Company could receive up to $41.5 million in additional regulatory, development and sales-based milestone payments, an additional equity investment, as well as tiered, double digit royalties based on net aggregate net sales in the Territory.  Pint and the Company have also agreed to enter into a supply agreement providing for Pint purchasing rigosertib and the Product from the Company within 90 days of the FDA approval of an a New Drug Application (“NDA”) for the Product.

 

Pint may terminate the License Agreement in whole (but not in part) at any time upon 45 days’ prior written notice.  The License Agreement also contains certain provisions for termination by either party in the event of breach of the License Agreement by the other party, subject to a cure period, or bankruptcy of the other party.

 

Under the terms of the Securities Purchase Agreement Pint agreed to make an upfront equity investment in the Company at a specified premium to the Company’s share price. Pursuant to the Securities Purchase Agreement, closing of the upfront equity investment occurred on April 4, 2018 and Pint purchased 816,945 shares of common stock for $1,250,000.

 

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Onconova Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

 

10. License and Collaboration Agreements (Continued)

 

In addition, under the Securities Purchase Agreement, if the FDA approves the NDA for the Product, Pint will reimburse the Company for certain research and development expenses.  Half of the reimbursement amount will be paid in cash, the other half of the amount  will be by an equity investment at a premium to the average of the volume weighted average price of common stock for the ten consecutive trading days ended on the day the FDA approves the NDA.

 

Pursuant to the Securities Purchase Agreement, the common stock purchased by Pint is subject to certain lock-up restrictions and Pint is entitled to certain registration and participation rights.

 

The Company assessed the Pint arrangement in accordance with ASC 606 and determined that the requirements to recognize revenue were not met as of March 31, 2018.

 

11. Preclinical Collaboration

 

In December 2012, the Company agreed to form GBO, an entity owned by the Company and GVK. The purpose of GBO is to collaborate on and develop two programs through filing of an investigational new drug application and/or conducting proof of concept studies using the Company’s technology platform. If a program failure occurs for one or both programs, the Company may contribute additional assets to GBO to establish a replacement program or programs.

 

During 2013, GVK made an initial capital contribution of $500,000 in exchange for a 10% interest in GBO, and the Company made an initial capital contribution of a sublicense to all the intellectual property controlled by the Company related to the two specified programs in exchange for a 90% interest. Under the terms of the agreement, GVK may make additional capital contributions. The GVK percentage interest in GBO may change from the initial 10% to up to 50%, depending on the amount of its total capital contributions. During November 2014, GVK made an additional capital contribution of $500,000 which increased its interest in GBO to 17.5%. The Company evaluates its variable interests in GBO on a quarterly basis and has determined that it is the primary beneficiary.

 

For thirty days following the 15-month anniversary of the commencement of either of the two programs, the Company will have an option to (i) cancel the license and (ii) purchase all rights in and to that program. There are three of these buy-back scenarios depending on the stage of development of the underlying assets. In addition, upon the occurrence of certain events, namely termination of the Company’s participation in the programs either with or without a change in control, GVK will be entitled to purchase or obtain the Company’s interest in GBO. GVK will have operational control of GBO and the Company will have strategic and scientific control.

 

The two preclinical programs sublicensed to GBO have not been developed to clinical stage as initially hoped, and the Company is in discussions with GVK regarding the future of GBO. There was no activity in GBO during the three months ended March 31, 2018 and 2017.

 

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Onconova Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

 

12. Related-Party Transactions

 

The Company has entered into a research agreement, as subsequently amended, with the Mount Sinai School of Medicine (“Mount Sinai”), with which a member of its board of directors and a significant stockholder is affiliated. Mount Sinai is undertaking research on behalf of the Company on the terms set forth in the agreements. Mount Sinai, in connection with the Company, will prepare applications for patents generated from the research. Results from all projects will belong exclusively to Mount Sinai, but the Company will have an exclusive option to license any inventions. Payments to Mount Sinai under this research agreement for the three months ended March 31, 2018 and 2017 were $88,000 and $88,000, respectively. At March 31, 2018 and December 31, 2017, the Company had $614,000 and $526,000, respectively, payable to Mount Sinai under this agreement.

 

The Company has entered into a consulting agreement with a member of its board of directors, who is also a significant stockholder of the Company. The board member provides consulting services to the Company on the terms set forth in the agreement. Payments to this board member for the three months ended March 31, 2018 and 2017 were $33,000 and $33,000, respectively. At March 31, 2018 and December 31, 2017, the Company had $33,000 and $33,000, respectively, payable under this agreement.

 

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Onconova Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

 

13. Securities Registrations and Sales Agreements

 

On October 8, 2015, the Company entered into a Purchase Agreement, and a registration rights agreement with Lincoln Park. A registration statement (Form S-1 No. 333-207533), relating to the shares, which was filed with the SEC became effective on November 3, 2015.

 

Subject to the terms and conditions of the purchase agreement, including the effectiveness of a registration statement covering the resale of the shares, the Company may sell additional shares of its Common Stock, having an aggregate offering price of up to $15,000,000 to Lincoln Park from time to time until December 1, 2018.

 

Upon execution of the Lincoln Park purchase agreement, Lincoln Park made an initial purchase of 84,676 shares of the Company’s Common Stock for $1,500,000. Subject to the terms and conditions of the purchase agreement, including the effectiveness of a registration statement covering the resale of the shares, the Company has the right to sell to and Lincoln Park is obligated to purchase up to an additional $15,000,000 of shares of Common Stock, subject to certain limitations, from time to time until December 1, 2018. The Company may direct Lincoln Park, at its sole discretion and subject to certain conditions, to purchase up to 10,000 shares of Common Stock on any business day, increasing to up to 25,000 shares depending upon the closing sale price of the Common Stock (such purchases, “Regular Purchases”). However, in no event shall a Regular Purchase be more than $1,000,000. The purchase price of shares of Common Stock related to the future funding will be based on the prevailing market prices of such shares at the time of sales. In addition, the Company may direct Lincoln Park to purchase additional amounts as accelerated purchases if on the date of a Regular Purchase the closing sale price of the Common Stock is not below the threshold price as set forth in the Purchase Agreement. The Company’s sales of shares of Common Stock to Lincoln Park under the Purchase Agreement were limited to no more than the number of shares that would result in the beneficial ownership by Lincoln Park and its affiliates, at any single point in time, of more than 4.99% of the then-outstanding shares of the Common Stock, which limit increased to 9.99% on May 1, 2016.

 

Pursuant to the terms of the Lincoln Park purchase agreement and to comply with the listing rules of the NASDAQ Stock Market, the number of shares issued to Lincoln Park thereunder shall not exceed 19.99% of the Company’s shares outstanding on October 8, 2015 unless the approval of the Company’s stockholders is obtained. This limitation shall not apply if the average price paid for all shares issued and sold under the purchase agreement is equal to or greater than $15.56. The Company is not required or permitted to issue any shares of Common Stock under the Lincoln Park purchase agreement if such issuance would breach the Company’s obligations under the listing rules of the NASDAQ Stock Market.

 

As consideration for entering into the purchase agreement, the Company issued to Lincoln Park 20,000 shares of Common Stock. Lincoln Park represented to the Company, among other things, that it was an “accredited investor” (as such term is defined in Rule 501(a) of Regulation D under the Securities Act of 1933, as amended (the “Securities Act”), and the Company sold the securities in reliance upon an exemption from registration contained in Section 4(2) under the Securities Act. The securities sold may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

 

The net proceeds to the Company under the Lincoln Park purchase agreement will depend on the frequency and prices at which the Company may sell shares of Common Stock to Lincoln Park. The Company expects that the proceeds received from the initial purchase and any additional proceeds from future sales to Lincoln Park will be used to fund the development of the Company’s clinical and preclinical programs, for other research and development activities and for general corporate purposes.

 

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Onconova Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

 

13. Securities Registrations and Sales Agreements (continued)

 

In December 2016, the Company entered into a sales agreement (the “Sales Agreement”) with FBR Capital Markets & Co. (“FBR”) to create an at-the-market equity program (“ATM Program”) under which the Company from time to time may offer and sell shares of its common stock through FBR. The Shares to be sold under the Sales Agreement were issued and sold pursuant to the Company’s shelf registration statement on Form S-3 (File No 333-199219), previously filed with the SEC on October 8, 2014 and declared effective by the SEC on November 20, 2014. A prospectus supplement related to the Company’s ATM Program was filed with the SEC on December 5, 2016. Sales under the Sales Agreement were 12,764 shares for net proceeds of approximately $40,000. The Sales Agreement was terminated effective April 19, 2017.

 

On April 20, 2017, the Company entered into an underwriting agreement with Laidlaw & Company (UK) Ltd. (“Laidlaw”), with respect to the issuance and sale in an underwritten public offering by the Company of 2,476,190 shares of Common Stock, at a price to the public of $2.10 per share. Pursuant to the underwriting agreement, the Company granted Laidlaw a 45-day option to purchase up to an additional 363,580 shares. The underwriting agreement contained customary representations, warranties and agreements by the Company, customary conditions to closing, indemnification obligations of the Company and Laidlaw, including for liabilities under the Securities Act of 1933, as amended (the “Securities Act”), other obligations of the parties and termination provisions. The offering closed on April 26, 2017 and the proceeds to the Company, net of expenses, were approximately $4.6 million. On May 12, 2017, Laidlaw exercised their option to purchase 363,580 additional shares. Closing on the additional shares was May 17, 2017 and the proceeds to the Company, net of expenses, were approximately $0.7 million.

 

On November 9, 2017, the Company entered into a placement agency agreement with Laidlaw relating to the Company’s registered direct offering, issuance and sale to select accredited investors of 920,000 shares of the Company’s common stock at a price of $1.50 per share on a best efforts basis. These shares are registered under the Securities Act on the Company’s Registration Statement on Form S-3 (File No. 333-199219). The offering closed on November 14, 2017. The net proceeds to the Company from the offering, after deducting placement agent fees and other expenses, were approximately $1,082,000. The Company intends to use the net proceeds from this offering to fund the development of its clinical and preclinical programs, for other research and development activities and for general corporate purposes, which may include capital expenditures and funding its working capital needs.

 

On February 8, 2018, the Company entered into an underwriting agreement (the “February 2018 Underwriting Agreement”) with H.C. Wainwright & Co., LLC (“HCW”), relating to the public offering (the “February 2018 Offering”) of 5,707,500 shares of the Company’s common stock, pre-funded warrants (the “February 2018 Pre-Funded Warrants”) to purchase an aggregate of 2,942,500 shares of common stock and preferred stock warrants (the “February 2018 Preferred Stock Warrants”) to purchase up to an aggregate of 865,000 shares of the Company’s Series A Convertible Preferred Stock, par value $0.01 per share (the “Series A Preferred Stock”). Each share of common stock or February 2018 Pre-Funded Warrant, as applicable, was sold together with a February 2018 Preferred Stock Warrant to purchase a 0.1 share of Series A Preferred Stock at a combined public offering price of $1.01 per share of common stock or $1.00 per February 2018 Pre-Funded Warrant, as applicable, and accompanying February 2018 Preferred Stock Warrant.

 

The Company also granted HCW a 30-day option to purchase up to 1,297,500 additional shares of common stock at a purchase price of $1.00 per share and February 2018 Preferred Stock Warrants to purchase up to an aggregate of 129,750 shares of Series A Preferred Stock at a purchase price of $0.01 per February 2018 Preferred Stock Warrant, less the underwriting discounts and commissions. Prior to closing, HCW exercised this option in full to purchase 1,297,500 additional shares of common stock and February 2018 Preferred Stock Warrants to purchase 129,750 shares of Series A convertible preferred stock.

 

The offering closed on February 12, 2018. Net proceeds from the offering were approximately $8.7 million after deducting underwriting discounts and commissions and other estimated offering expenses payable by the Company. The Company intends to use the net proceeds from the offering to fund the development of its clinical and preclinical programs, for other research and development activities and for general corporate purposes, which may include capital expenditures and funding its working capital needs.

 

The February 2018 Pre-Funded Warrants are exercisable immediately at an exercise price of $0.01 per share, may be exercised until they are exercised in full, and may be exercised on a cashless basis in certain circumstances specified therein.

 

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Onconova Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

 

13. Securities Registrations and Sales Agreements (continued)

 

The February 2018 Preferred Stock Warrants are exercisable immediately at an exercise price of $1.01 per 0.1 share of Series A Preferred Stock and will expire on the earlier of (A) the one-month anniversary of the date on which the Company publically releases topline results of the INSPIRE Pivotal phase 3 that compare the overall survival (OS) of patients in the rigosertib group vs the Physician’s Choice group, in all patients and in a subgroup of patients with IPSS-R very high risk and (B) December 31, 2019. The February 2018 Preferred Stock Warrants may be exercised on a cashless basis in certain circumstances specified therein.

 

Each 0.1 share of Series A Preferred Stock will be convertible into one share of common stock. A holder of Series A Preferred Stock will be prohibited from converting Series A Preferred Stock into shares of common stock if, as a result of such conversion, the holder, together with its affiliates, would own more than 4.99% of the shares of the Company’s shares of common stock then issued and outstanding, which may be increased to 9.99% in certain circumstances. Shares of Series A Preferred Stock will generally have no voting rights, except as required by law and except that the consent of holders of a majority of the outstanding Series A Preferred Stock will be required to (i) alter or change adversely the powers, preferences or rights given to the Series A Preferred Stock or alter or amend the Certificate of Designation of the Series A Preferred Stock, (ii) amend any provision of the Company’s certificate of incorporation that would have a materially adverse effect on the rights of the holders of the Series A Preferred Stock, (iii) increase the number of authorized shares of Series A Preferred Stock, or (iv) enter into any agreement with respect to the foregoing. Shares of Series A Preferred Stock will not be entitled to receive any dividends, unless and until specifically declared by the Company’s board of directors, and will rank (i) on parity with the Company’s common stock on an as-converted basis, (ii) senior to any class or series of the Company’s capital stock created thereafter specifically ranking by its terms junior to the Series A Preferred Stock, (iii) on parity to any class or series of the Company’s capital stock created thereafter specifically, (iv) ranking by its terms on parity with the Series A Preferred Stock; and (v) junior to any class or series of the Company’s capital stock created thereafter specifically ranking by its terms senior to the Series A Preferred Stock.

 

The exercise price and number of shares of common stock or Series A Preferred Stock issuable upon exercise of the Pre-Funded Warrants or Preferred Stock Warrants, as the case may be, and the conversion price and number of shares of common stock issuable upon the conversion of Series A Preferred Stock, is subject to adjustment in the event of any stock split, reverse stock split, stock dividend, recapitalization, reorganization or similar transaction, as described in the Pre-Funded Warrants, Preferred Stock Warrants and the Certificate of Designation of the Series A Preferred Stock, as applicable. The shares of common stock or Pre-Funded Warrants, as applicable, and the accompanying Preferred Stock Warrants could only be purchased together as a unit in the offering but were issued as separate securities.

 

HCW acted as sole book-running manager for the offering, which was a firm commitment underwritten public offering pursuant to a registration statement on Form S-1 (Registration No. 333-222374) that was declared effective by the SEC on February 7, 2018. The offering was made only by means of a prospectus forming a part of the effective registration statement. The Company paid HCW a commission equal to 7.0% of the gross proceeds of the offering, a management fee equal to 1.0% of the gross proceeds of the offering and other expenses. As additional compensation, the Company issued warrants to HCW exercisable for 49,737.5 shares of Series A Preferred Stock, which are convertible into 497,375 shares of common stock subject to the terms of the Series A Preferred Stock. These warrants have substantially the same terms as the February 2018 Preferred Stock Warrants except that the exercise price per share is equal to $1.2625 per 0.1 share of Series A Preferred Stock.

 

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Onconova Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

 

14. Subsequent Events

 

Securities Offering

 

On April 27, 2018, the Company entered into an underwriting agreement with HCW relating to the public offering (the “April 2018 Offering”) of 46,588,234 shares of the Company’s common stock, pre-funded warrants (the “May 2018 Pre-Funded Warrants”) to purchase an aggregate of 12,235,295 shares of common stock and preferred stock warrants (the “May 2018 Preferred Stock Warrants”) to purchase up to an aggregate of 1,470,588.225 shares of the Company’s Series B Convertible Preferred Stock, par value $0.01 per share (the “Series B Preferred Stock”). Each share of common stock or April 2018 Pre-Funded Warrant, as applicable, was sold together with a May 2018 Preferred Stock Warrant to purchase a 0.025 share of Series B Preferred Stock at a combined public offering price of $0.425 per share of common stock or $0.415 per May 2018 Pre-Funded Warrant, as applicable, and accompanying May 2018 Preferred Stock Warrant.

 

The Company also granted HCW a 30-day option to purchase up to 8,823,529 additional shares of common stock at a purchase price of $0.415 per share and May 2018 Preferred Stock Warrants to purchase up to an aggregate of 220,588.225 shares of Series B Preferred Stock at a purchase price of $0.01 per May 2018 Preferred Stock Warrant, less the underwriting discounts and commissions. Prior to closing, HCW exercised this option in full to purchase 8,823,529 additional shares of common stock and May 2018 Preferred Stock Warrants to purchase 220,588.225 shares of Series B convertible preferred stock.

 

The offering closed on May 1, 2018. Net proceeds from the offering were approximately $25.6 million after deducting underwriting discounts and commissions and other estimated offering expenses payable by the Company. The Company intends to use the net proceeds from the offering to fund the development of its clinical and preclinical programs, for other research and development activities and for general corporate purposes, which may include capital expenditures and funding its working capital needs.

 

The May 2018 Pre-Funded Warrants are exercisable immediately at an exercise price of $0.01 per share, may be exercised until they are exercised in full, and may be exercised on a cashless basis in certain circumstances specified therein.

 

The May 2018 Preferred Stock Warrants are exercisable immediately at an exercise price of $0.425 per 0.025 share of Series B Preferred Stock (convertible into one share of Common Stock) and will expire on the 18-month anniversary of the date (the “New Charter Amendment Date”) on which the Company publicly announces through the filing of a Current Report on Form 8-K that the New Charter Amendment (defined below) has been filed with the Secretary of State of the State of Delaware. The May 2018 Preferred Stock Warrants may be exercised on a cashless basis in certain circumstances specified therein.

 

Each 0.025 share of Series B Preferred Stock will be convertible into one share of common stock. The Company does not currently have a sufficient number of authorized shares of common stock to cover the shares issuable upon the conversion of Series B Preferred Stock. As a result, before any shares of Series B Preferred Stock can be converted, the Company needs to receive stockholder approval of an amendment (the “New Charter Amendment”) to its Tenth Amended and Restated Certificate of Incorporation, as amended, to sufficiently increase the authorized shares of common stock to cover the conversion of all outstanding shares of Series B Preferred Stock into common stock. The Company intends to seek such approval at a special meeting of stockholders on June 7, 2018. The Series B Preferred Stock is not convertible until the next business day after the Company files the New Charter Amendment with the Secretary of State of the State of Delaware. In addition, a holder of Series B Preferred Stock will be prohibited from converting Series B Preferred Stock into shares of common stock if, as a result of such conversion, the holder, together with its affiliates, would own more than 4.99% of the shares of the Company’s shares of common stock then issued and outstanding, which may be increased to 9.99% in certain circumstances. Shares of Series B Preferred Stock will generally have no voting rights, except as required by law and except that the consent of holders of a majority of the outstanding Series B Preferred Stock will be required to (i) alter or change adversely the powers, preferences or rights given to the Series B Preferred Stock or alter or amend the Certificate of Designation of the Series B Preferred Stock, (ii) amend any provision of the Company’s certificate of incorporation that would have a materially adverse effect on the rights of the holders of the Series B Preferred Stock, (iii) increase the number of authorized shares of Series B Preferred Stock, or (iv) enter into any agreement with respect to the foregoing. Shares of Series B Preferred Stock will not be entitled to receive any dividends, unless and until specifically declared by the Company’s board of directors, and will rank (i) on parity with the Company’s common stock on an as-converted basis, (ii) senior to any class or series of the Company’s capital stock created thereafter specifically ranking by its terms junior to the Series B Preferred Stock, (iii) on parity to any class or series of the Company’s capital stock created thereafter specifically, (iv) ranking by its terms on parity with the Series B Preferred Stock; and (v) junior to any class or series of the Company’s capital stock created thereafter specifically ranking by its terms senior to the Series B Preferred Stock.

 

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Onconova Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

 

The exercise price and number of shares of common stock or Series B Preferred Stock issuable upon exercise of the Pre-Funded Warrants or Preferred Stock Warrants, as the case may be, and the conversion price and number of shares of common stock issuable upon the conversion of Series B Preferred Stock, is subject to adjustment in the event of any stock split, reverse stock split, stock dividend, recapitalization, reorganization or similar transaction, as described in the May 2018 Pre-Funded Warrants, May 2018 Preferred Stock Warrants and the Certificate of Designation of the Series B Preferred Stock, as applicable. The shares of common stock or May 2018 Pre-Funded Warrants, as applicable, and the accompanying May 2018 Preferred Stock Warrants could only be purchased together as a unit in the offering but were issued as separate securities.

 

HCW acted as sole book-running manager for the offering, which was a firm commitment underwritten public offering pursuant to a registration statement on Form S-1 (Registration No. 333-224315) that was declared effective by the SEC on April 26, 2018. The offering was made only by means of a prospectus forming a part of the effective registration statement. The Company paid HCW a commission equal to 8.0% of the gross proceeds of the offering, a management fee equal to 1.0% of the gross proceeds of the offering and other expenses.

 

In connection with the February 2018 Offering, the Company agreed to certain restrictions (the “Company Lock-Up”) set forth in Section 5(j) of the February 2018 Underwriting Agreement. The Company Lock-Up, among other items, prohibited the Company, during a period of one hundred and thirty-five (135) days from February 8, 2018, without the prior written consent of HCW, from offering or selling any Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock. In order to received HCW’s waiver of the Company Lock-Up, in connection with the April 2018 Offering, on April 16, 2018, the Company entered into a Lock-Up Waiver Agreement (the “Lock-Up Waiver Agreement”) with HCW and certain holders of the February 2018 Preferred Stock Warrants, pursuant to which (i) HCW waived the Company Lock-Up solely with respect to the April 2018 Offering, and (ii) the Company agreed to reduce the exercise price of the February 2018 Preferred Stock Warrants such that the exercise price of the February 2018 Preferred Stock Warrants shall be equal to 105% of the public offering price of common stock sold in the April 2018 Offering (but only to the extent that such public offering price is lower than the current exercise price of the February 2018 Preferred Stock Warrants) and that such repricing shall be effective concurrently with the closing of the April 2018 Offering. In accordance with the Lock-Up Waiver Agreements, the exercise price of the February 2018 Preferred Stock Warrants was repriced from $1.01 per 0.1 share of Series A Convertible Preferred Stock to $0.44625 per 0.1 share of Series A Convertible Preferred Stock when the April 2018 Offering closed on May 1, 2018.

 

Special Meeting of Stockholders on June 7, 2018

 

On May 7, 2018, The Company filed with the SEC a preliminary proxy statement on Schedule 14A relating to the Special Meeting of Stockholders the Company intends to hold on June 7, 2018 to seek stockholders’ approval of an amendment to the Company’s Tenth Amended and Restated Certificate of Incorporation, as amended, to increase the number of authorized shares of capital stock from 105,000,000 shares to 255,000,000 shares in order to increase the number of authorized shares of common stock from 100,000,000 shares to 250,000,000 shares.

 

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

 

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, 2017 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 March 16, 2018. 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.

 

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;

 

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·            the potential for third party disputes and litigation; and

·            the performance of third parties, including contract research organizations (“CROs”) and third-party manufacturers.

 

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 is being developed 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 is being tested in an intravenous formulation as a single agent, and an oral formulation in combination with azacitidine, in clinical trials for patients with higher-risk myelodysplastic syndromes (“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 overall survival. An interim analysis of the trial was performed in January 2018 and we anticipate reporting topline data from the INSPIRE trial in the first half of 2019.

 

Our net losses were $5.1 million and $8.3 million for the three months ended March 31, 2018 and 2017, respectively. As of March 31, 2018, we had an accumulated deficit of $367.4 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 March 31, 2018, we had $7.3 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 20,499 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 2,476,190 shares of common stock. In May 2017, we sold an additional 363,580 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 920,000 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 7,005,000 shares of common stock, pre-funded warrants to purchase 2,942,500 share of common stock, and preferred stock warrants to purchase 1,044,487.5 shares of Series A convertible preferred stock. Each share of Series A convertible preferred stock is convertible into ten 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 55,411,763 shares of common stock, pre-funded warrants to purchase 12,235,295 share of common stock, and preferred stock warrants to purchase 1,691,176.450 shares of Series B convertible preferred stock. Each share of Series B convertible preferred stock is convertible into forty 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.

 

We believe that our cash and cash equivalents will be sufficient to fund our ongoing trials 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 obtain regulatory approval for our

 

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drug candidates; therefore, there is substantial doubt about our ability to continue as a going concern.

 

We are exploring various sources of funding for development and obtaining 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 products 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 that we believe 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. We believe 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 were a party to a license and development agreement with Baxalta (as defined below), which granted Baxalta certain rights to commercialize rigosertib in Europe. The Baxalta agreement was terminated on August 30, 2016, at which time the European rights reverted to us at no cost. 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 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. Previously we were a party to a license and development agreement with Baxalta (as defined below), which granted Baxalta certain rights to commercialize rigosertib in Europe. The Baxalta agreement was terminated on August 30, 2016, at which time the European rights reverted to us at no cost.

 

The table below summarizes our rigosertib clinical stage programs.

 

Click to enlarge

 

Rigosertib IV for higher-risk MDS

 

We are developing an IV version 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, additional clinical work is on-going.

 

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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 to be a more homogenous 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. Currently, the INSPIRE study has opened approximately 175 trial sites in 22 countries across four continents, and has enrolled more than 170 patients. Our partner, SymBio Pharmaceuticals, has opened more than 30 sites in Japan. 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. At launch, the INSPIRE trial was expected to enroll 225 patients and the outcome is measured by overall survival.

 

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, and 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 enrollment of 360 patients, with the aim of increasing the power of the trial. Due to the adaptive trial design and the DMC’s assessment, the INSPIRE trial will continue to analyze both 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 specific interim analysis results. We anticipate reporting topline data from the INSPIRE trial in the first half of 2019.

 

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 2016, at the American Society of Hematology (ASH) Annual Meeting, we presented Phase 1/2 data from the initial portion of an ongoing rigosertib oral and azacitidine combination trial in higher-risk MDS. 33 of 40 MDS patients enrolled were evaluable for response at the time of the analysis. The median age of patients was 66, with 73% being male. 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
Evaluable
(N=33)

 

No prior
HMA
(N-20)

 

Prior
HMA
(N=13)

 

Complete remission (CR)

 

8(24

)%

7(35

)%

1(8

)%

Marrow CR + hematologic improvement

 

10(30

)%

6(30

)%

4(31

)%

Marrow CR alone

 

6(18

)%

3(15

)%

3(23

)%

Hematologic improvement alone

 

1(3

)%

1(5

)%

0

 

Stable disease

 

8(24

)%

3(15

)%

5(38

)%

Overall IWG response

 

25(76

)%

17(85

)%

8(62

)%

Clinical benefit response

 

19(58

)%

14(70

)%

5(38

)%

 

The median duration of response was 8 months for CR, 12.3 months for marrow CR.

 

Safety/Tolerability of the Combination:

 

Based upon a comprehensive analysis of patients receiving oral rigosertib in combination with azacitidine that was presented in 2016, the combination of rigosertib oral and azacitidine was well tolerated. The most common TEAEs in  >   10% of patients with MDS/AML (n=54) receiving rigosertib oral and azacitidine were nausea (41%), 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. The trial will be under the review of a DMC. Formal FDA review may be sought via the Special Protocol Assessment (SPA) mechanism. We will not commence the Phase 3 trial without additional financing.

 

While the Phase 3 trial is being designed, we have expanded the Phase 1/2 trial cohort by enrolling 45 additional patients. Under a protocol expansion, we are using the expanded cohorts to explore 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 (560 mg before breakfast and 560 mg after lunch or 840 mg before breakfast and 280 mg after lunch) to identify an optimal dose and schedule. During this expansion, we also instituted risk-mitigation strategies, as further described below, in order to address a prior urinary adverse event of interest, hematuria. 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. Since the trial initiation, we have added additional US sites to complete enrollment of the expanded trial. The first patient was enrolled in April 2017 and as of April 2018, complete enrollment of 45 patients was achieved in the expansion trial; and the trial is ongoing.

 

In March 2018, at the 6 th International Bone Marrow Failure Disease Symposium, we presented data on the incidence of hematuria in 37 higher-risk MDS patients receiving rigosertib oral in combination with azacitidine as part of the Phase 1/2 expanded cohort. In the first part of the Phase 1/2 study, prior to the study expansion, of 42 patients studied with oral rigosertib 840 mg total and azacitidine, the incidence of hematuria was 48%. In 37 patients studied with oral rigosertib 1120 mg total and azacitidine in the Phase 1/2 expanded cohort, with the use of risk-mitigating strategies to minimize hematuria, the incidence of hematuria was 11% at the time of the presentation.  The study is ongoing. The risk-mitigating strategies employed are as follows:

 

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2nd RIGO dose must be administered at 3 PM (±1 hour) at least 2 hours after lunch to avoid a nocturnal bladder dwell time

 

Oral hydration of at least two liters of fluid per day is encouraged

 

Mandatory bladder emptying prior to bedtime

 

Urine pH approximately 2 hrs after AM dose. Sodium bicarbonate suggested administration of 650 TID if pH tests < 7.5

 

The comparison of the hematuria results from the two parts of this study are presented below:

 

Hematuria Comparison Between Rigosertib Combination Therapy Parts 1 and 2:

 

All Patients on Combination Part 1 (Rigosertib 840 mg total & Azacitidine)

 

42     

 

Patients with hematuria

 

20(48

)%

Patients with grade 1 or 2 hematuria

 

17(40

)%

Patients with grade > 3 hematuria

 

5(12

)%

 

 

 

 

All Patients on Combination Part 2 (Rigosertib 1120 mg total) & Azacitidine) with risk-mitigation strategies

 

37     

 

Patients with hematuria

 

4(11

)%

Patients with grade 1 or 2 hematuria

 

4(11

)%

Patients with grade > 3 hematuria

 

0(0

)%

 

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.

 

Upon completion of our Phase 1/2 study, we will submit the study results to the applicable regulatory authorities.  The final results of this study may differ from the results presented above and the applicable regulatory authorities may not agree with our analyses. We will not commence the Phase 3 trial of oral rigosertib in combination with azacitidine for higher-risk MDS or AML without additional financing.

 

Rigosertib oral for lower-risk MDS

 

We are also developing 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). 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

 

As presented at the December 2016 ASH Annual Meeting, rigosertib oral as a monotherapy was evaluated in four Phase 1 and 2 studies in MDS and other hematologic malignancies. One study is completed and a clinical study report is available. The most common TEAEs in  >   10% of patients with MDS/AML (n=168) were pollakiuria (increased urinary frequency) (35%), fatigue (32%), diarrhea (26%), dysuria (29%) and haematuria (24%). The most common  >   Grade 3 AEs were anaemia (17%), thrombocytopenia (5%), haematuria (4%) and urinary tract infection (4%). The most common serious AE was pneumonia (6%). The most common AEs leading to discontinuation of patients receiving rigosertib oral as monotherapy were dysuria (8%), urinary tract pain (7%), haematuria (5%) and urinary frequency (5%).

 

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 new mechanism of action data published last year, we are initiating a collaborative development program focusing on a group of rare diseases with a well-defined genetic 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 genetic 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 research, including preclinical laboratory studies and a clinical trial, 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 will fund the majority of the research, including the cost of the clinical trial, which is expected to start in 2018. A clinical trial protocol has been developed and will be reviewed by the Institutional Review Board.

 

While the NCI will conduct a trial for RASopathy related cancers in pediatric patients, Onconova will focus on initiating a trial as well in 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.

 

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 and clinical trials 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 Abemaciclig) or in development (such as the compounds being developed by G1 Therapeutics) by its dual inhibition of CDK4/6 + ARK5. We are party to a license and collaboration agreement with HanX Biopharmaceuticals, Inc. (“HanX”), which grants HanX certain rights to commercialize ON 123300 in China. We continue to carry out research to enhance the pre-clinical data package for this compound in an attempt to seek additional partners outside of China for co-development of this novel compound.

 

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 of ON 123300 in Greater China. Under the terms of the agreement, we received an upfront payment, and would receive regulatory and commercial milestone payments, as well as royalties on sales in the Greater China territory. The key feature of the collaboration is that HanX will provide all funding required for Chinese IND enabling studies necessary for filing an IND with the Chinese Food and Drug Administration.  The studies would be conducted to meet the Good Laboratory Practice (“GLP”) requirements of FDA such that we could simultaneously file an IND with the US FDA.  We and HanX will oversee the IND enabling studies. We will maintain global rights outside of China.

 

In March 2018, Onconova and HanX completed the pre-Investigational New Drug, or pre-IND, consultation with FDA. These discussions provided guidance for the manufacturing of ON 123300 and the pre-clinical development plan for the submission of an IND application.

 

In April 2018, at the American Association for Cancer Research 2018 Annual Meeting, we announced an advance in pre-clinical development and the presentation of new pre-clinical data for ON 123300.  The data from preclinical studies demonstrates that there is a differential metabolism of ON 123300 in male versus female rodents. As a result, the drug exposure is almost 2-3 fold higher in female rats. Based upon preclinical animal liver microsome studies, this differential effect appears to be limited to rodents, and is not observed in preclinical studies with human liver microsomes. Based on the preclinical liver microsome metabolism data from other species, relevant species have been selected along with the dosing strategy to be implemented in GLP toxicological studies to be conducted by HanX.

 

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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 March 16, 2018, with the exception of the adoption of ASC 606, 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 March 31, 2018 and 2017

 

 

 

Three Months ended March 31,

 

 

 

 

 

2018

 

2017

 

Change

 

Revenue

 

$

564,000

 

$

210,000

 

$

354,000

 

Operating expenses:

 

 

 

 

 

 

 

General and administrative

 

1,889,000

 

2,116,000

 

227,000

 

Research and development

 

4,557,000

 

4,886,000

 

309,000

 

Total operating expenses

 

6,466,000

 

7,002,000

 

536,000

 

Loss from operations

 

(5.902,000

)

(6,792,000

)

890,000

 

Change in fair value of warrant liability

 

812,000

 

(1,549,000

)

2,361,000

 

Other income (expense), net

 

 

 

 

Net loss before income taxes

 

(5,090,000

)

(8,341,000

)

(3,251,000

)

Income taxes

 

 

 

 

Net loss

 

$

(5,090,000

)

$

(8,341,000

)

$

3,251,000

 

 

Revenues

 

Revenues increased by $0.4 million for the three months ended March 31, 2018 when compared to the same period in 2017 primarily as a result of the recognition of HanX revenue in the 2018 period, partially offset by less clinical supply revenue from SymBio in the 2018 period.

 

General and administrative expenses

 

General and administrative expenses decreased by $0.2 million, or 11%, to $1.9 million for the three months ended March 31, 2018 from $2.1 million for the three months ended March 31, 2017. The decrease was attributable primarily to a decrease of $0.1 million in professional and consulting fees in the 2018 period, as the 2017 period included costs related to stock offerings which were not completed.  The decrease was also caused by lower stock compensation expense in the 2018 period due to fewer options being outstanding and contributing to expense in the 2018 period and the impact of a lower stock price in the 2018 period compared to the 2017 period in stock compensation expense calculations.

 

Research and development expenses

 

Research and development expenses decreased by $0.3 million, or 6%, to $4.6 million for the three months ended March 31, 2018 from $4.9 million for the three months ended March 31, 2017. This decrease was caused primarily by a $0.7 million decrease in manufacturing cost in the 2018 period due to the timing of drug substance and drug product manufacturing activities and a $0.2 million decrease in consulting expenses in the 2018 period.  These decreases were partially offset by a $0.5 million increase in clinical expenses in the 2018 period related to our INSPIRE trial and our 09-08 expansion study, as well as a $0.2 million increase in personnel costs related to higher personnel costs in the 2018 period.

 

Change in fair value of warrant liability

 

The fair value of the warrant liability decreased by $0.8 million for the three months ended March 31, 2018, compared to an increase of $1.5 million for the three months ended March 31, 2017.  This change was caused primarily by the decrease in the fair market value of the warrants issued in our rights offering in 2016.

 

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Financial Condition

 

Total assets increased $3.6 million, or approximately 73%, from $5.0 million at December 31, 2017 to $8.6 million at March 31, 2018.  The increase in total assets was due primarily to increases in cash, cash equivalents, and receivables.  Total liabilities decreased from $15.8 million at December 31, 2017 to $15.5 million at March 31, 2018, a decrease of $0.4 million, primarily as a result of the decrease in the warrant liability since December 31, 2017 and our continuing recognition of revenue related to a combined license and research and development under our SymBio agreement, partially offset by higher accounts payable and accrued expenses. Total stockholders’ deficit decreased $4.0million from $10.9 million at December 31, 2017 to $6.9 million at March 31, 2018, primarily due to a net loss of $5.1 million for the three months ended March 31, 2018, partially offset by increases in common stock and additional paid in capital related to stock compensation expense and our sale of securities during the first quarter of 2018.

 

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 $5.1 million and $8.3 million for the three months ended March 31, 2018 and 2017, respectively. Our operating activities used $5.5 million and $6.1 million of net cash during the three months ended March 31, 2018 and 2017, respectively. At March 31, 2018, we had an accumulated deficit of $367.4 million, a working capital shortfall of $2.0 million, and cash and cash equivalents of $7.3 million.

 

On April 27, 2018, we entered into the Underwriting Agreement with HCW for an offering of units of common stock and warrants, which closed on May 1, 2018. The Company issued 55,411,763 shares of common stock, pre-funded warrants to purchase 12,235,295 shares of common stock, and preferred stock warrants to purchase 1,691,176.450 shares of Series B convertible preferred stock. Each share of Series B convertible preferred stock is convertible into 40 shares of common stock. Net proceeds were approximately $25.6 million. We believe that our cash and cash equivalents will be sufficient to fund our ongoing trials and operations into the fourth quarter of 2019.

 

Cash Flows

 

The following table summarizes our cash flows for the three months ended March 31, 2018 and 2017:

 

 

 

Three Months ended March 31,

 

 

 

2018

 

2017

 

Net cash (used in) provided by:

 

 

 

 

 

Operating activities

 

$

(5,509,000

)

$

(6,056,000

)

Investing activities

 

 

 

Financing activities

 

8,741,000

 

40,000

 

Effect of foreign currency translation

 

8,000

 

5,000

 

Net decrease in cash and cash equivalents

 

$

3,240,000

 

$

(6,011,000

)

 

Net cash used in operating activities

 

Net cash used in operating activities was $5.5 million for the three months ended March 31, 2018 and consisted primarily of a net loss of $5.1 million, which included $0.8 million of income related to the change in the fair value of the warrant liability and $0.3 million of noncash stock-based compensation and depreciation expense. Changes in operating assets and liabilities resulted in a net increase in cash of $0.1 million. Significant changes in operating assets and liabilities included an increase in accounts payable and accrued liabilities of $0.7 million as a result of the timing of receipt and payment of vendor invoices, primarily related to our INSPIRE trial, and an increase in receivables related to our receivable from HanX.  Deferred revenue decreased $0.1 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 March 31, 2018 or 2017.

 

Net cash provided by financing activities

 

Net cash provided by financing activities for the three months ended March 31, 2018 and 2017 was $8.7 million and $40,000 respectively, which resulted from the proceeds received from the sale of our Common Stock during those periods.

 

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Operating and Capital Expenditure Requirements

 

We believe that our cash and cash equivalents will be sufficient to fund our ongoing trials and operations 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 2018 to be comparable to 2017. 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” in this 10-Q and previously disclosed in our annual report on Form 10-K filed with the SEC on March 16, 2018.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

As a smaller reporting company, the Company is not required to provide the information otherwise required by this Item.

 

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Item 4. Controls and Procedures

 

Managements’ Evaluation of our Disclosure Controls and Procedures

 

Our management, with the participation of our principal executive and principal financial officers, evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2018. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Based on the evaluation of our disclosure controls and procedures as of March 31, 2018, our principal executive and principal financial officers concluded that, as of such date, our disclosure controls and procedures were effective.

 

Changes in Internal Control Over Financial Reporting

 

Our management, with the participation of our principal executive and principal financial officers, evaluated any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during our most recently completed fiscal quarter. Based on that evaluation, our principal executive and principal financial officers concluded that no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the fiscal quarter ended March 31, 2018 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

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PART II — OTHER INFORMATION

 

Item 1. Legal Proceedings

 

We are not party to any pending material legal proceedings and are not aware of any such proceedings contemplated by governmental authorities.

 

Item 1A. Risk Factors

 

The following risk factor should be read in conjunction with the “Risk Factors” previously disclosed in our annual report on Form 10-K filed with the SEC on March 16, 2018.

 

We are not in compliance with the Nasdaq continued listing requirements. If we are unable to comply with the continued listing requirements of the Nasdaq Capital Market, our common stock could be delisted, which could affect the common stock’s market price and liquidity and reduce our ability to raise capital.

 

On May 7, 2018, the Company received a letter from The Nasdaq Stock Market LLC (“Nasdaq”) indicating that the Company has failed to comply with the minimum bid price requirement of Nasdaq Listing Rule 5550(a)(2). Nasdaq Listing Rule 5550(a) (2) requires that companies listed on the Nasdaq Capital Market maintain a minimum closing bid price of at least $1.00 per share.

 

Under Nasdaq Listing Rule 5810(c)(3)(A), the Company has a 180 calendar day grace period, or until November 5, 2018, to regain compliance by meeting the continued listing standard. The continued listing standard will be met if the Company’s common stock has a minimum closing bid price of at least $1.00 per share for a minimum of ten consecutive business days during the 180 calendar day grace period.

 

If the Company is not in compliance by November 5, 2018, the Company may be afforded a second 180 calendar day period to regain compliance. To qualify, the Company would be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, except for the minimum bid price requirement. In addition, the Company would be required to notify Nasdaq of its intention to cure the minimum bid price deficiency during the second compliance period, by effecting a reverse stock split, if necessary.

 

If the Company does not regain compliance within the allotted compliance period(s), including any extensions that may be granted by Nasdaq, Nasdaq will provide notice that the Company’s common stock will be subject to delisting. At that time, the Company may appeal the Nasdaq Staff’s determination to a Hearings Panel.

 

The Company intends to monitor the closing bid price of the Company’s common stock and consider its available options to resolve the noncompliance with the minimum bid price requirement. No determination regarding the Company’s response has been made at this time. There can be no assurance that the Company will be able to regain compliance with the minimum bid price requirement or will otherwise be in compliance with other Nasdaq listing criteria.  For example, as of March 31, 2017, June 30, 2017, September 30, 2017, December 31, 2017 and March 31, 2018, the Company’s total stockholders’ equity was $(2.7) million, $0.4 million, $(6.1) million, $(10.9) million and $(7.3) million, respectively. As a result, the Company did not comply with the Nasdaq’s $2.5 million minimum stockholders’ equity requirement, nor the alternative compliance standards under Nasdaq Listing Rule 5550(b) for the continued listing of our securities on The Nasdaq Capital Market. As a result of the April 2018 Offering, the Company was able to regain compliance with the minimum stockholders’ equity requirement. However, there is no assurance that the Company will be able to maintain compliance. If the Company’s securities are delisted, it could be more difficult to buy or sell the Company’s securities and to obtain accurate quotations, and the price of the Company’s securities could suffer a material decline. Delisting could also impair the Company’s liquidity and ability to raise capital.

 

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

 

On April 4, 2018, the Company sold 816,945 shares of common stock to Pint for $1,250,000 in connection with the Company’s License, Development and Commercialization Agreement with Pint \ and the related Securities Purchase Agreement with Pint.  The sale of such shares was not registered under the Securities Act because it was made in a transaction exempt from registration under Section 4(a)(2) of the Securities Act and/or Rule 506 promulgated thereunder.

 

On March 26, 2018, the Company agreed to issue to World Wide Holdings, LLC d/b/a Invictus Resources (“Invictus”), in connection with that certain Master Services Agreement between the Company and Invictus, warrants for Common Stock.  The warrants issuable as of March 26, 2018 are exercisable for (i) 75,000 shares of common stock at a price of $0.94 per share of Common

 

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Stock and (ii) 125,000 shares of common stock at a price of $1.41 per share of common stock.  The sale of such securities to Invictus was not registered under the Securities Act because it was made in a transaction exempt from registration under Section 4(a)(2) of the Securities Act and/or Rule 506 promulgated thereunder.

 

On February 12, 2018, the Company issued warrants to HCW as additional underwriter compensation in connection with an underwritten offering of securities of the Company.  These warrants are exercisable for 49,737.5 shares of Series A Preferred Stock, which are convertible into 497,375 shares of common stock subject to the terms of the Series A Preferred Stock. These warrants have an exercise price of $1.2625 per 0.1 share of Series A Preferred Stock.  The sale of such securities to HCW was not registered under the Securities Act because it was made in a transaction exempt from registration under Section 4(a)(2) of the Securities Act and/or Rule 506 promulgated thereunder.

 

Item 3. Defaults Upon Senior Securities

 

Not applicable.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information

 

As disclosed in the Company’s Current Report on Form 8-K filed with the SEC on May 15. 2018, the Company’s 2018 Annual Meeting of Stockholders is scheduled to be held on June 27, 2018. This date is more than 30 days after the anniversary of the Company’s 2017 Annual Meeting of Stockholders. As a result, in accordance with the applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) and the Company’s Amended and Restated Bylaws, written notice from a stockholder interested in bringing business before the Company’s 2018 Annual Meeting of Stockholders or nominating a director candidate for election at the Company’s 2018 Annual Meeting of Stockholders (including any notice on Schedule 14N) must be received by no later than 5:00 p.m., Eastern time, on May 25, 2018 at the Company’s principal executive offices, 375 Pheasant Run, Newtown, PA 18940. Any such written notice must be directed to the attention of the Company’s Secretary and comply with the applicable advance notice provisions of the Company’s Amended and Restated Bylaws. Stockholder proposals intended to be considered for inclusion in the Company’s proxy materials for the 2018 Annual Meeting of Stockholders must comply with the requirements, including the deadline, set forth above as well as the all applicable rules and regulations promulgated by the SEC under the Exchange Act.

 

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Item 6. Exhibits

 

Exhibit
Number

 

Description

 

 

 

3.1

 

Certificate of Designation of Series A Convertible Preferred Stock (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on February 8, 2018).

3.2

 

Certificate of Amendment to Tenth Amended and Restated Certificate of Incorporation of Onconova Therapeutics, Inc., as amended (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on March 22, 2018)

4.1

 

Form of Underwriter Warrant issued as of February 12, 2018 (Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on February 8, 2018).

4.2

 

Form of Preferred Stock Warrant issued as of February 12, 2018 (Incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on February 8, 2018).

4.3

 

Form of Pre-Funded Warrant issued as of February 12, 2018 (Incorporated by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K filed on February 8, 2018).

10.1*

 

License, Development and Commercialization Agreement, dated as of March 2, 2018, by and between Onconova Therapeutics, Inc. and Pint International SA

10.2

 

Securities Purchase Agreement, dated as of March 2, 2018, by and between Onconova Therapeutics, Inc. and Pint Pharma GmbH

31.1

 

Rule 13a-14(a)/15d-14(a) Certifications of Principal Executive Officer

31.2

 

Rule 13a-14(a)/15d-14(a) Certifications of Principal Financial Officer

32.1

 

Section 1350 Certifications of Principal Executive Officer

32.2

 

Section 1350 Certifications of Principal Financial Officer

 

 

 

101.INS

 

XBRL Instance

101.SCH

 

XBRL Taxonomy Extension Schema Document

101.CAL

 

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

 

XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB

 

XBRL Taxonomy Extension Labels Linkbase Document

101.PRE

 

XBRL Taxonomy Extension Presentation Linkbase Document

 


*  Confidential treatment has been requested with respect to certain portions of this exhibit. Omitted portions have been filed separately with the Securities and Exchange Commission.

 

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EXHIBIT INDEX

 

Exhibit
Number

 

Description

 

 

 

3.1

 

Certificate of Designation of Series A Convertible Preferred Stock (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on February 8, 2018).

3.2

 

Certificate of Amendment to Tenth Amended and Restated Certificate of Incorporation of Onconova Therapeutics, Inc., as amended (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on March 22, 2018)

4.1

 

Form of Underwriter Warrant issued as of February 12, 2018 (Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on February 8, 2018).

4.2

 

Form of Preferred Stock Warrant issued as of February 12, 2018 (Incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on February 8, 2018).

4.3

 

Form of Pre-Funded Warrant issued as of February 12, 2018 (Incorporated by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K filed on February 8, 2018).

10.1*

 

License, Development and Commercialization Agreement, dated as of March 2, 2018, by and between Onconova Therapeutics, Inc. and Pint International SA

10.2

 

Securities Purchase Agreement, dated as of March 2, 2018, by and between Onconova Therapeutics, Inc. and Pint Pharma GmbH

31.1

 

Rule 13a-14(a)/15d-14(a) Certifications of Principal Executive Officer

31.2

 

Rule 13a-14(a)/15d-14(a) Certifications of Principal Financial Officer

32.1

 

Section 1350 Certifications of Principal Executive Officer

32.2

 

Section 1350 Certifications of Principal Financial Officer

 

 

 

101.INS

 

XBRL Instance

101.SCH

 

XBRL Taxonomy Extension Schema Document

101.CAL

 

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

 

XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB

 

XBRL Taxonomy Extension Labels Linkbase Document

101.PRE

 

XBRL Taxonomy Extension Presentation Linkbase Document

 


*  Confidential treatment has been requested with respect to certain portions of this exhibit. Omitted portions have been filed separately with the Securities and Exchange Commission.

 

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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.

 

 

ONCONOVA THERAPEUTICS, INC.

 

 

Dated: May 15, 2018

 

 

 

 

/s/ RAMESH KUMAR, Ph.D.

 

Ramesh Kumar, Ph.D.

 

President and Chief Executive Officer

 

( Principal Executive and Principal Operating Officer )

 

 

Dated: May 15, 2018

 

 

 

 

/s/ MARK GUERIN

 

Mark Guerin

 

Chief Financial Officer

 

( Principal Financial Officer )

 

49


Exhibit 10.1

 

EXECUTION VERSION

 

Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in places marked “[**]” and has been filed separately with the Securities and Exchange Commission pursuant to a Confidential Treatment Application filed with the Securities and Exchange Commission.

 

LICENSE, DEVELOPMENT AND COMMERCIALIZATION AGREEMENT

DATED AS OF MARCH 2, 2018

 

by and between

 

ONCONOVA THERAPEUTICS, INC.

 

and

 

PINT PHARMA INTERNATIONAL SA

 



 

LICENSE, DEVELOPMENT AND COMMERCIALIZATION AGREEMENT

 

This License, Development and Commercialization Agreement (this “ Agreement ”), dated as of March 2, 2018 (the “ Effective Date ”), is made by and among Onconova Therapeutics, Inc., a Delaware corporation (“ Onconova ”), and Pint Pharma International SA, a company registered under Swiss laws having its registered office at Route de Chenaux 9, 1091 Bourg-en-Levaux, Switzerland (“ Pint ”).  Onconova and Pint are sometimes referred to herein individually as a “ Party ” and collectively as the “ Parties ”.

 

RECITALS

 

WHEREAS , Onconova has certain rights to patents and other intellectual property related to the Compound (as defined below);

 

WHEREAS , Pint has significant experience in the development and commercialization of pharmaceutical products in the Territory (as defined below);

 

WHEREAS , Pint desires to license from Onconova such intellectual property rights, and to further Develop and Commercialize the Compound and Products in the Territory for use in the Field (all as defined below), and Onconova desires to grant such a license to Pint in accordance with the terms and conditions of this Agreement; and

 

WHEREAS , concurrently with the execution and delivery of this Agreement, the Parties are entering into a securities purchase agreement dated as of the date of this Agreement (the “ Securities Purchase Agreement ”), providing for the issuance to Pint of common stock of Onconova.

 

NOW THEREFORE , in consideration of the foregoing premises and the mutual promises, covenants and conditions contained in this Agreement, the Parties agree as follows:

 

ARTICLE 1
DEFINITIONS

 

As used in this Agreement, the following capitalized terms shall have the meanings set forth in this Article 1 or as otherwise defined elsewhere in this Agreement:

 

1.1                                Affiliate ” means any Person directly or indirectly controlled by, controlling or under common control with, a Party, but only for so long as such control shall continue.  For purposes of this definition, “control” (including, with correlative meanings, “controlled by”, “controlling” and “under common control with”) shall be presumed to exist with respect to a Person in the event of the possession, direct or indirect, of (i) the power to direct or cause the direction of the management and policies of such Person (whether through ownership of securities, by contract or otherwise), or (ii) at least fifty percent (50%) of the voting securities or other comparable equity interests.  The Parties acknowledge that in the case of certain entities organized under the laws of certain countries outside of the United States, the maximum percentage ownership permitted by law for a foreign investor may be less than fifty percent

 



 

(50%), and that in such case, such lower percentage shall be substituted in the preceding sentence, provided that such foreign investor has the power to direct or cause the direction of the management and policies of such Person.  For the avoidance of doubt, neither of the Parties shall be deemed to be an “Affiliate” of the other.

 

1.2                                Commercialize ”, “ Commercializing ” or “ Commercialization ” means all activities directed to the marketing, promotion, selling or offering for sale of a product for an indication, including planning, market research, pre-marketing, advertising, educating, marketing, promoting, importing, exporting, distributing and post-marketing safety surveillance and reporting.  For clarity, “Commercialization” shall not include any activities related to clinical research, Manufacturing or Development of the Product.

 

1.3                                Commercially Reasonable Efforts ” means, with respect to a Party’s obligation under this Agreement, including to Develop or Commercialize the Product, the level of diligent and sustained efforts to accomplish an objective as a typical company in the pharmaceutical industry would normally use to accomplish a similar objective under similar circumstances.  It is understood and agreed that such efforts shall be substantially equivalent to those efforts and resources commonly used by typical companies in the pharmaceutical industry for products owned by them or to which they have rights, which are at a similar stage in development or product life or have similar market potential taking into account efficacy, safety, approved labeling, the competitiveness of alternative products, the patent and other proprietary position of the product(s), the likelihood of regulatory approval given the Regulatory Authority involved, the profitability of the product including amounts payable to licensors of patents or other intellectual property rights, alternative products, other risks associated with the development or commercialization of the product and other relevant factors.  Commercially Reasonable Efforts will be determined on a market-by-market and indication-by-indication basis for a particular Product, and it is anticipated that the level of effort may be different for different markets, and may change over time, reflecting among other things changes in the status of the Product(s) and market(s) involved.  Payments required to be made to Onconova under this Agreement shall not be considered in evaluating Pint’s obligations to use Commercially Reasonable Efforts.  In addition, other compounds or products owned, licensed, distributed or sold by a Party shall not be considered in evaluating a Party’s obligations to use Commercially Reasonable Efforts.

 

1.4                                Competitive Product ” means any pharmaceutical product that is being researched, developed or commercialized for the same specific indication(s) for which Regulatory Approval has been obtained or is reasonably anticipated to be obtained for Product in the Territory.

 

1.5                                Compound ” means the pharmaceutical compound rigosertib, a diagram of which is attached hereto as Schedule 1.5.

 

1.6                                Control ” means, when used in reference to intellectual property, other intangible property or materials, that a Party owns or has a license or sublicense to such intellectual property, other intangible property or materials, and has the ability to grant a license or sublicense or other right to use such intellectual property, other intangible property or materials, as applicable, as provided for herein, without (i) requiring the consent of a Third Party or (ii) violating the terms of any agreement or other arrangement with any Third Party.

 



 

1.7                                Develop ”, “ Developing ” or “ Development ” means all activities relating to research, non-clinical, preclinical and clinical, toxicology testing, statistical analysis and reporting, preparation and submission of applications for regulatory approval of the Product, all other activities necessary or reasonably useful or otherwise requested or required by a Regulatory Authority as a condition or in support of obtaining or maintaining all regulatory approvals for the Product and all other development-related activities that are deemed by the JSC to be Commercially useful.

 

1.8                                Development Activities ” means those Development activities undertaken by or on behalf of Pint or its Affiliates with respect to the Product in the Field in the Territory consistent with the applicable Development Plan.

 

1.9                                Dollar ” means a U.S. dollar, and “$” shall be interpreted accordingly.

 

1.10                         Dossier ” means the Common Technical Document for the Registration of Pharmaceuticals for Human Use, or equivalent.

 

1.11                         FDA ” means the U.S. Food and Drug Administration and any successor Governmental Authority having substantially the same function.

 

1.12                         FD&C Act ” means the U.S. Federal Food, Drug, and Cosmetic Act, 21 U.S.C. § 301 et seq. , as amended from time to time, together with any rules, regulations and requirements promulgated thereunder (including all additions, supplements, extensions and modifications thereto).

 

1.13                         Field ” means all uses of Compound or Product in humans.

 

1.14                         Finished Product ” means Product including primary and secondary packaging and labeling (a) as approved in the country of origin for “named patient” sale in a country within the Territory prior to Regulatory Approval in such country within the Territory, or (b) in Spanish or Portuguese as approved in the country of intended sale within the Territory following Regulatory Approval of Product in such country.

 

1.15                         First Commercial Sale ” means, with respect to the Product, the first sale of the Product in a given country or other regulatory jurisdiction in the Territory by or on behalf of Pint, its Affiliates or sublicensees to a Third Party.

 

1.16                         Good Clinical Practices ” or “ GCP ” means all applicable Good Clinical Practice standards for the design, conduct, performance, monitoring, auditing, recording, analyses and reporting of clinical trials, including, as applicable, (i) the Declaration of Helsinki (2004) as last amended at the 52nd World Medical Association in October 2000 and any further amendments or clarifications thereto, (ii) U.S. Code of Federal Regulations (C.F.R.) Title 21, Parts 50 (Protection of Human Subjects), 56 (Institutional Review Boards) and 312 (Investigational New Drug Application), as may be amended from time to time, and (iii) the equivalent Laws in any relevant country, each as may be amended and applicable from time to time and in each case, that provide for, among other things, assurance that the clinical data and reported results are credible and accurate and protect of the rights, integrity, and confidentiality of trial subjects.

 



 

1.17                         Good Laboratory Practices ” or “ GLP ” means all applicable Good Laboratory Practice standards, including, as applicable, the then-current good laboratory practice standards promulgated or endorsed by the FDA as defined in 21 C.F.R. Part 58, and the equivalent Laws in any relevant country, each as may be amended and applicable from time to time.

 

1.18                         Good Manufacturing Practices ” or “ GMP ” means all applicable Good Manufacturing Practice standards including (i) the principles detailed in the U.S. Current Good Manufacturing Practices, 21 C.F.R. Sections 210, 211, 601 and 610, (ii) the principles detailed in the ICH Q7A guidelines and (iii) the equivalent Laws in any relevant country, each as may be amended and applicable from time to time.

 

1.19                         Governmental Authority ” means any multinational, federal, state, local, municipal or other governmental authority of any nature (including any governmental division, prefecture, subdivision, department, agency, bureau, branch, office, commission, council, court or other tribunal), in each case, having jurisdiction over the applicable subject matter.

 

1.20                         IND ” means (i) an Investigational New Drug Application as defined in the FD&C Act or (ii) the equivalent application to the equivalent agency in any other regulatory jurisdiction outside the U.S., such as a clinical trial application or a clinical trial exemption, the filing of which is necessary to commence or conduct clinical testing of a pharmaceutical product in humans in such jurisdiction.

 

1.21                         Invention ” means any invention, discovery, improvement or technology (in each case, whether patentable or otherwise) that is first discovered or conceived as a result of activities under this Agreement during the Term.

 

1.22                         ITT Population” means the trial eligibility criteria set forth in the protocol for the INSPIRE trial as of the Effective Date as approved by the FDA and EMA.

 

1.23                         Joint Inventions ” means all Inventions developed or invented jointly by, on the one hand, employee(s) of Pint and/or its Affiliates, and/or a Third Party acting on behalf of Pint and/or its Affiliates, and, on the other hand, by employee(s) of Onconova and/or its Affiliates, and/or a Third Party acting on behalf of Onconova and/or its Affiliates.

 

1.24                         JSC ” means the joint steering committee formed by the Parties as described in Section 3.1.

 

1.25                         Know-How ” means any proprietary data, results, material(s), technology, and nonpublic information of any type whatsoever, in any tangible or intangible form, including know-how, trade secrets, practices, techniques, methods, processes, inventions, developments, specifications, formulations, formulae, materials or compositions of matter of any type or kind (patentable or otherwise), software, algorithms, marketing reports and plans, market research, expertise, technology, test data (including pharmacological, biological, chemical, biochemical, toxicological, preclinical and clinical test data), analytical and quality control data, stability data, other study data and procedures.

 

1.26                         Laws ” means all laws, statutes, rules, regulations, directives, decisions, ordinances, guidelines and other pronouncements of any Governmental Authority.

 



 

1.27                         Manufacture ” or “ Manufacturing ” means all activities related to the manufacturing of the Compound and/or Product, or any ingredient thereof, including manufacturing for clinical use or commercial sale, in-process and finished product testing, release of product, quality assurance activities related to manufacturing and release of product and ongoing stability tests and regulatory activities related to any of the foregoing.

 

1.28                         Marketing Authorization Application ” or “ MAA ” means an application to the appropriate Regulatory Authority for approval to sell the Product (but excluding Pricing Approval) in any particular country or regulatory jurisdiction.

 

1.29                         NDA ” means a New Drug Application as defined in the FD&C Act, filed with the FDA to obtain approval to sell the Product in the United States.

 

1.30                         Net Sales ” means the gross amount invoiced by or on behalf of Pint or any of its Affiliates or sublicensees (or permitted distributors) on account of sales of the Product to the first Third Party, less the following deductions specifically and solely related to the Product and actually allowed:

 

(a)                                  customary trade, cash or quantity discounts allowed and taken, to the extent not already reflected in the amount invoiced, but specifically excluding prompt payment and/or cash discounts;

 

(b)                                  excise, sales and value added taxes and customs duties to the extent included in the price (but specifically excluding, for clarity, any income taxes assessed against the income arising from such sale);

 

(c)                                   outbound freight, shipment and insurance costs;

 

(d)                                  amounts actually allowed or credited on returns in accordance with Pint’s returned goods policy provided to Onconova, including by reason of rejections, defects return goods allowance, recalls or returns, or because of retroactive price reductions, including rebates or wholesaler chargebacks; and

 

(e)                                   price reductions, rebates or charge-backs, retroactive or otherwise, imposed by, negotiated with or otherwise paid to Governmental Authorities or other payees.

 

In all cases, deductions taken into account in the computation of Net Sales shall not exceed (on an invoice by invoice basis) in the aggregate fifty percent (50%) of the gross amounts invoiced by or on behalf of Pint or any of its Affiliates or sublicensees for sales of the Product.  For clarity, (i) Net Sales shall not be reduced by the amount of any commissions paid to individuals, whether they are associated with independent sales agencies or regularly employed by Pint (or any agent, sublicensee, distributee or designee thereof) or for a cost of collection or any other amount not specifically set forth in (a) through (e) above and (ii) the amount of any discounts, rebates or allowances granted or taken with respect to the total sales to a customer for multiple products of Pint (or any agent, distributee, or designee thereof) shall not be deducted in calculating Net Sales.  Any of the items set forth above that would otherwise be deducted from the invoice price in the calculation of Net Sales but which are separately charged to, and paid by, Third Parties shall not be deducted from the invoice price in the calculation of Net Sales.  In the

 



 

case of any sale of the Product for value other than in an arm’s-length transaction exclusively for cash, such as barter or counter-trade, Net Sales shall be determined by referencing Net Sales at which substantially similar quantities of the Product are sold in an arm’s-length transaction for cash.

 

Net Sales shall be accounted for in accordance with International Financial Reporting Standards (IFRS), consistently applied.  For purposes of determining Net Sales, the Product shall be deemed to be sold when invoiced.  Pint, its Affiliates and sublicensees (and any permitted distributor) will sell the Product as a stand-alone product and will not sell the Product as part of a bundle with other products or offer package deals to customers that include the Product, except to the extent required to obtain sales contracts with government entities, and in such case, the price of the Product relevant for the calculation of Net Sales will be the average price in the preceding calendar quarter of the Product sold separately less the average discount of all products sold as part of the package.

 

1.31                         Onconova Inventions” means all Inventions developed or invented solely by employee(s) of Onconova and/or its Affiliates, and or a Third Party acting on behalf of Onconova and/or its Affiliates, and not employed by Pint and/or Pint’s Affiliates.

 

1.32                         Onconova Know-How ” means all Know-How that (i) is Controlled by Onconova or its Affiliates as of the Effective Date or (ii) comes under the Control of Onconova or its Affiliates during the Term (including Onconova Inventions), in each case of (i) or (ii), which specifically describes, embodies or relates to the Product or its manufacture or use in any formulation or is necessary or useful for the Development, Manufacture or Commercialization of the Product in the Field in the Territory.  For clarity, “Onconova Know-How” shall not include the Onconova Patents.

 

1.33                         Onconova Patent ” means any Patent in the Territory that is (i) Controlled by Onconova or its Affiliates as of the Effective Date as set forth on Schedule 1.33 or (ii) a Patent that comes under the Control of Onconova or its Affiliates during the Term, in each case of (i) and (ii), that claims or covers (a) Compound or Product or the manufacture or use thereof or (b) any Onconova Know-How.

 

1.34                         Onconova Technology ” means the Onconova Patents and Onconova Know-How.

 

1.35                         Patents ” means patents and patent applications and all substitutions, divisions, continuations, continuations-in-part, any patent issued with respect to any such patent applications, any reissue, reexamination, utility models or designs, renewal or extension (including any supplemental patent certificate) of any such patent, and any confirmation patent or registration patent or patent of addition based on any such patent, and all counterparts thereof in any country.

 

1.36                         Patent Term Extension ” means any term extensions, supplementary protection certificates, Regulatory Exclusivity and equivalents thereof offering Patent protection beyond the initial term with respect to any issued Patents.

 



 

1.37                         Person ” shall mean any corporation, limited or general partnership, limited liability company, joint venture, trust, unincorporated association, governmental body, authority, bureau or agency, any other entity or body, or an individual.

 

1.38                         Pint Inventions ” means all Inventions developed or invented solely by employee(s) of Pint and/or its Affiliates, and or a Third Party acting on behalf of Pint and/or its Affiliates, and not employed by Onconova and/or Onconova’s Affiliates.

 

1.39                         Pint Know-How ” means all Know-How that is (i) Controlled by Pint or its Affiliates as of the Effective Date or (ii) comes under the Control of Pint or its Affiliates during the Term (including Pint Inventions), in each case of (i) or (ii), which specifically describe, embody or relate to the Product or its manufacture or use in any formulation or is necessary or useful for the Manufacturing, Development or Commercialization of the Product in the Field.  For clarity, “Pint Know-How” shall not include the Pint Patents.

 

1.40                         Pint Patent ” means any Patent that is (i) Controlled by Pint or its Affiliates as of the Effective Date or (ii) comes under the Control of Pint or its Affiliates during the Term, in each case of (i) or (ii), which claims or covers (a) Compound or Product or the manufacture or use thereof or (b) any Pint Know-How.

 

1.41                         Pint Technology ” means the Pint Know-How and the Pint Patents.

 

1.42                         Pricing Approval ” means the approval, agreement, determination or decision from a Governmental Authority establishing the price or reimbursement for the Product for sale in a given country or regulatory jurisdiction, as required by applicable Law in such country or other regulatory jurisdiction prior to the sale of the Product in such country or regulatory jurisdiction.

 

1.43                         Product ” means any pharmaceutical product containing a Compound.

 

1.44                         Regulatory Approvals ” means all necessary approvals (including INDs, NDAs, MAAs and supplements and amendments thereto and Pricing Approvals), licenses, registrations or authorizations of any Governmental Authority, necessary for the manufacture, distribution, use, promotion and sale of the Product in a given country or regulatory jurisdiction.

 

1.45                         Regulatory Authority ” means, in a particular country or regulatory jurisdiction, any applicable Governmental Authority involved in granting Regulatory Approval in such country or regulatory jurisdiction, including in the U.S., the FDA.

 

1.46                         Regulatory Data ” means any and all research data, pharmacology data, chemistry, manufacturing and control data, preclinical data, clinical data and all other documentation submitted, or required to be submitted, to Regulatory Authorities in association with regulatory filings for the Product (including any applicable Drug Master Files (“ DMFs ”), Chemistry, Manufacturing and Control (“ CMC ”) data, or similar documentation).

 

1.47                         Regulatory Exclusivity ” means any exclusive marketing rights or data exclusivity rights conferred by any Governmental Authority with respect to the Product other than a Patent right, including rights conferred in the U.S. under the Hatch-Waxman Act or the

 



 

FDA Modernization Act of 1997, or rights similar thereto outside the U.S., including in the European Union, European Commission Regulation (EC) No 726/2004 and European Commission Directive 2001/83/EC (as amended).

 

1.48                         Regulatory Materials ” means regulatory applications, submissions, notifications, communications, correspondence, registrations, Regulatory Approvals and/or other filings made to, received from or otherwise conducted with a Regulatory Authority that are necessary in order to Develop, Manufacture, market, sell or otherwise Commercialize the Product in a particular country or regulatory jurisdiction.  Regulatory Materials include INDs, NDAs, MAAs and applications for other Product approvals.

 

1.49                         Royalty Term ” means, on a country-by-country basis, the period of time commencing on the First Commercial Sale of the Product in a country within the Territory and continuing until the latest of (i) the expiration of the last-to-expire Valid Claim of an Onconova Patent in such country, (ii) the expiration of Regulatory Exclusivity for such Product in such country or (iii) ten (10) years from the date of First Commercial Sale of Product within such country.

 

1.50                         Supply Agreement ” means the quality and supply agreement referenced in Section 7.1 hereto.

 

1.51                         Temple License Agreements ” means, collectively, those certain License Agreements, dated as of January 1, 1999, October 1, 1999, November 1, 1999, and October 1, 2000, by and between Onconova and Temple University - Of the Commonwealth System of Higher Education, as each is amended from time to time.

 

1.52                         Territory ” means Argentina, Belize, Bolivia, Brazil, Chile, Colombia, Costa Rica, Cuba, Dominican Republic, Ecuador, El Salvador, French Guiana, British Guiana, Suriname, Guatemala, Haiti, Honduras, Mexico, Nicaragua, Panama, Paraguay, Peru, Uruguay and Venezuela.

 

1.53                         Third Party ” means any Person other than Onconova or Pint or their respective Affiliates.

 

1.54                         U.S. ” means the United States of America and its possessions and territories.

 

1.55                         Valid Claim ” means (i) a claim of an issued and unexpired Patent that has not been disclaimed, revoked or held to be invalid or unenforceable by a court or other authority of competent jurisdiction, from which decision no appeal can be further taken or (ii) a claim included in a pending patent application whether filed before or after the Effective Date and that has not been (a) canceled, (b) withdrawn from consideration, (c) finally determined to be unallowable by the applicable governmental authority (from which no appeal is or can be taken), or (d) abandoned or disclaimed.

 

Interpretation .  Except where expressly stated otherwise in this Agreement, the following rules of interpretation apply to this Agreement: (a) “include”, “includes” and “including” are not limiting; (b) “hereof”, “hereto”, “herein” and “hereunder” and words of similar import when used in this Agreement refer to this Agreement as a whole and not to any particular provision of this

 



 

Agreement; (c) words of one gender include the other gender; (d) references to a contract or other agreement mean such contract or other agreement as from time to time amended, modified or supplemented; (e) references to a Person are also to its permitted successors and assigns; (f) references to an “Article”, “Section” or “Schedule” refer to an Article or Section of, or Schedule to, this Agreement, unless expressly stated otherwise; and (g) references to a law include any amendment or modification to such law and any rules and regulations issued thereunder, whether such amendment or modification is made, or issuance of such rules and regulations occurs, before or after the date of this Agreement.

 

Additional Definitions. The following terms have the meanings set forth in the corresponding Sections of this Agreement:

 

Term

 

Section

Agreement

 

Preamble

Audited Party

 

8.11

Audit

 

8.11

CMC

 

1.46

CMC Information

 

5.3(a)

Commercialization Data

 

6.7

Commercialization Plan

 

6.2.1(a)

Confidential Information

 

12.1

Controlling Party

 

9.4.1(a)

Development Data

 

4.5

Development Plan

 

4.2.1

Disclosing Party

 

12.1

DMFs

 

1.46

Effective Date

 

Preamble

Executive Officer

 

3.4.1

Indemnification Claim Notice

 

11.3.1

Indemnified Party

 

11.3.1

Indemnifying Party

 

11.3.1

Indemnitees

 

11.3.1

Infringement Claim

 

9.4.1

Losses

 

11.1

Onconova

 

Preamble

Party ” or “ Parties

 

Preamble

Patent Challenge

 

9.7

Pint

 

Preamble

Receiving Party

 

12.1

Recovery

 

9.4.2(c)(iv)

“Research and Development Event”

 

8.1.2

Research and Development Payment

 

8.1.2

“Securities Purchase Agreement”

 

Preamble

Term

 

13.1

Third Party Claim

 

11.1

 



 

ARTICLE 2
LICENSES

 

2.1                                Grant to Pint.   Subject to the terms and conditions of this Agreement and the applicable terms of the Temple License Agreements, Onconova hereby grants to Pint an exclusive, royalty-bearing license, with the right to sublicense, under the Onconova Technology to Develop and Commercialize (including to make, have made, use, import, export, offer to sell and sell) the Product in the Field in the Territory.

 

2.2                                Grant to Onconova.

 

2.2.1                      General Grant to Onconova.   Subject to the terms and conditions of this Agreement, Pint, together with its Affiliates, hereby grants to Onconova during the Term (i) an exclusive, fully paid-up, royalty-free license, with the right to sublicense, under the Pint Technology to make and have made the Product anywhere in the world for (a) Development, Commercialization or other use outside the Territory or (b) for supply to Pint or its Affiliates or sublicensees in the Territory, and (ii) an exclusive, fully paid-up, royalty-free license, with the right to sublicense, under the Pint Technology to Develop and Commercialize the Product outside the Territory.

 

2.2.2                      Additional Grant to Onconova.  Pint, together with its Affiliates, hereby grants to Onconova, from and after the end of the Term, a non-exclusive, paid-up, irrevocable, perpetual, worldwide license, with the right to sublicense, under the Pint Technology, to Develop (including obtaining and maintaining regulatory approval), make, use, import, export, offer for sale and sell the Product anywhere in the world.

 

2.3                                Additional Licensing Provisions.

 

2.3.1                      Negative Covenant.  Each Party covenants that it will not use or practice any of the other Party’s Patent rights or other intellectual property rights licensed (or sublicensed, as applicable) to it under this Article 2 except for the purposes expressly permitted in the applicable license grant.

 

2.3.2                      No Implied Licenses; Retained Rights.   Except as explicitly set forth in this Agreement, neither Party grants any license, express or implied, under its intellectual property rights to the other Party, whether by implication, estoppel or otherwise.  Without limiting the generality of the foregoing, Onconova hereby expressly retains, on behalf of itself and its Affiliates, licensees and sublicensees, all right, title and interest in and to the Onconova Technology, Development Data and Regulatory Materials with respect to (i) developing (including obtaining and maintaining regulatory approval), making, using, importing, exporting, offering for sale and selling pharmaceutical products containing Compound for sale anywhere in the world (other than the sale of the Product in the Field in the Territory), and (ii) exercising its rights and performing its obligations hereunder, including the Manufacture of the Product for Development and Commercialization in the Field in the Territory. .

 



 

2.4                                Performance by Affiliates, Sublicensees and Subcontractors.

 

2.4.1                      Performance by Affiliates.   The Parties recognize that each may perform some or all of its obligations under this Agreement through Affiliates; provided, however, that each Party shall remain responsible for and be guarantor of the performance by its Affiliates and shall cause its Affiliates to comply with the provisions of this Agreement in connection with such performance.  Each Party hereby expressly waives any requirement that the other Party exhaust any right, power or remedy, or proceed against an Affiliate, for any obligation or performance hereunder prior to proceeding directly against such Party.  Wherever in this Agreement the Parties delegate responsibility to Affiliates, the Parties agree that such entities may not make decisions inconsistent with this Agreement, amend the terms of this Agreement or act contrary to its terms in any way.

 

2.4.2                      Sublicensees.   Each Party and its respective Affiliates shall be entitled, without the prior consent of the other Party, to grant one or more sublicenses, in full or in part, by a written agreement to Third Parties (with the right to sublicense through multiple tiers); provided, however, that as a condition precedent to and requirement of any such sublicense: (i) any such permitted sublicense shall be consistent with and subject to the terms and conditions of this Agreement and (ii) the sublicensing Party will continue to be responsible for full performance of such Party’s obligations under this Agreement and will be responsible for all actions of the sublicensee as if such sublicensee were the sublicensing Party hereunder.

 

2.4.3                      Subcontractors.   Each Party shall ensure that each of its subcontractors accepts and complies with all of the terms and conditions of this Agreement, and such Party shall guarantee its subcontractors’ performance under this Agreement.  For the avoidance of doubt, Pint will remain directly responsible for all amounts owed to Onconova under this Agreement, including royalty payments for Net Sales by Pint’s permitted subcontractors.  Each Party hereby expressly waives any requirement that the other Party exhaust any right, power or remedy, or proceed against a subcontractor, for any obligation or performance hereunder prior to proceeding directly against such Party.

 

2.5                                Exclusivity.   Pint hereby covenants not to research, develop (including submitting any applications for regulatory approval), manufacture or commercialize, during the Term, any Competitive Product, either on its own, with or through any Affiliate, or in collaboration with a Third Party, in each case other than with respect to the Development and Commercialization of the Product in the Field in the Territory pursuant to this Agreement.

 

2.6                                Restrictive Covenants.

 

2.6.1                      Ex-Territory Activities.   Pint hereby covenants and agrees that it shall not (and shall cause its Affiliates, sublicensees and subcontractors not to), either directly or indirectly, market, distribute or sell the Product into countries outside of the Territory.  Without limiting the generality of the foregoing, with respect to such countries outside of the Territory, Pint shall not (i) engage in any advertising activities relating to the Product directed to customers located or for use in such countries, or (ii) solicit orders from any prospective purchaser located or for use in such countries.  If Pint receives any order from a prospective purchaser located or for use in a country outside of the Territory, Pint shall immediately refer that order to Onconova and shall not accept any such order or deliver or tender (or cause to be delivered or tendered) any Product under such order.  If Pint should reasonably know that a customer or distributor, or a

 



 

customer’s distributor or customer, is engaged in the sale or distribution of the Product outside of the Territory, then Pint shall (a) within forty-eight (48) hours of gaining knowledge, or a reasonable suspicion, of such activities notify Onconova regarding such activities and provide all information that Onconova may request concerning such activities and (b) take all reasonable steps (including cessation of sales to such customer) necessary to limit such sale or distribution outside the Territory.

 

2.6.2                      Territory Activities.   Onconova hereby covenants and agrees that it shall not (and shall cause its Affiliates, sublicensees and subcontractors not to), either directly or indirectly, market, distribute or sell the Product into countries within the Territory; provided that, for clarity, Onconova may Manufacture and supply the Product for Development or Commercialization in the Territory in connection with this Agreement.  Without limiting the generality of the foregoing, with respect to such countries within the Territory, Onconova shall not (i) engage in any advertising activities relating to the Product directed to customers located or for use in such countries, or (ii) solicit orders from any prospective purchaser located or for use in such countries.  If Onconova receives any order from a prospective purchaser located or for use in a country within the Territory, Onconova shall immediately refer that order to Pint and shall not accept any such order or deliver or tender (or cause to be delivered or tendered) any Product under such order.  If Onconova should reasonably know that a customer or distributor, or a customer’s distributor or customer, is engaged in the sale or distribution of the Product within the Territory, then Onconova shall (a) within forty-eight (48) hours of gaining knowledge, or a reasonable suspicion, of such activities notify Pint regarding such activities and provide all information that Pint may request concerning such activities and (b) take all reasonable steps (including cessation of sales to such customer) necessary to limit such sale or distribution within the Territory.

 

ARTICLE 3
GOVERNANCE

 

3.1                                Joint Steering Committee.   The Parties shall establish a joint steering committee (JSC) within thirty (30) days after the Effective Date that will have the responsibility for the overall coordination of the Parties’ activities under this Agreement.  The role of the JSC shall be:

 

(a)                                  to review and discuss the overall strategy for Developing and Commercializing the Product in the Field in the Territory, including reviewing, coordinating and discussing the overall strategy for seeking Regulatory Approvals (including Pricing Approvals) and obtaining, maintaining and enforcing Patent protection and market and data exclusivity for the Product in the Field in the Territory;

 

(b)                                  to review any amendments or revisions to the Development Plan and the Commercialization Plan;

 

(c)                                   to facilitate the exchange of information between the Parties under this Agreement regarding the strategy for implementing the Development Activities, including sharing Development Data created pursuant to this Agreement, if any, and establishing procedures for the efficient sharing of information and materials necessary or useful for the Parties’ Development of the Product in the Field in the Territory;

 



 

(d)                                  to review the design of the clinical trial protocols and endpoints of all clinical trials to be conducted with respect to the Product in the Field in the Territory;

 

(e)                                   to discuss Pint’s performance against the then-current Development Plan;

 

(f)                                    to resolve any disputes and to consider any other issues brought to its attention by the Parties;

 

(g)                                  to perform such other functions as appropriate to further the purposes of this Agreement, as mutually agreed upon by the Parties in writing.

 

3.2                                Joint Steering Committee Membership.  Onconova and Pint shall each designate two (2) representatives to serve on the JSC by written notice to the other Party.  Either Party may designate substitutes for its representatives if one (1) or more of such Party’s designated representatives are unable to be present at a meeting.  From time to time each Party may replace its representatives by written notice to the other Party specifying the prior representative(s) and their replacement(s).  One of the Onconova representatives shall serve as the chairperson of the JSC.  The chairperson shall be responsible for (i) calling meetings, (ii) preparing and issuing minutes of each such meeting within thirty (30) days thereafter, and (iii) preparing and circulating an agenda for the upcoming meeting; provided that the chairperson shall consider including any agenda items proposed by Pint no less than five (5) days prior to the next scheduled JSC meeting.

 

3.3                                Joint Steering Committee Meetings. The JSC shall hold at least one (1) meeting per calendar quarter at such times during such calendar quarter as it elects to do so; provided that, notwithstanding the foregoing, the JSC shall hold an initial meeting within ninety (90) days of the Effective Date.  Meetings of the JSC shall be effective only if at least one (1) representative of each Party is present or participating.  The JSC may meet either (i) in person at either Party’s facilities or at such locations as the Parties may otherwise agree or (ii) by audio or video teleconference; provided that no less than one (1) meeting of the JSC during each calendar year shall be conducted in person.  Other representatives of each Party involved with the Product may attend meetings as non-voting participants, subject to the confidentiality provisions set forth in Article 12.  Additional meetings of the JSC may also be held with the consent of each Party, or as required under this Agreement, and neither Party shall unreasonably withhold its consent to hold such additional meetings.  Each Party shall be responsible for all of its own expenses incurred in connection with participating in the JSC meetings.

 

3.4                                Joint Steering Committee Decisions.

 

3.4.1                      Initial Dispute Resolution Procedures.   Subject to the provisions of this Section 3.4, actions to be taken by the JSC shall be taken only following a unanimous vote, with each Party having one (1) vote.  If the JSC fails to reach unanimous agreement on a matter before it for decision for a period in excess of thirty (30) days, the matter shall be referred to the Chief Executive Officers of each of the Parties, or a designee from senior management with decision-making authority (the Chief Executive Officer or such designee, the “ Executive Officer ”) for resolution.  In the event that the Executive Officers are unable to resolve such

 



 

dispute within ten (10) days of such dispute being referred to the Executive Officers, then the provisions of Section 3.4.2 shall apply.

 

3.4.2                      Subsequent Dispute Resolution Procedures.   To the extent a dispute of the JSC has not been resolved pursuant to Section 3.4.1, the following shall apply:

 

(a)                                  Subject to Section 3.4.2(b), the Pint Executive Officer shall have the final decision-making authority with respect to any dispute involving the Development or Commercialization of the Product in the Field in the Territory.

 

(b)                                  The Onconova Executive Officer shall have the final decision-making authority with respect to any dispute involving the Product which is reasonably likely to adversely affect the safety profile of the Product outside the Territory or outside the Field.

 

(c)                                   Resolution of any other dispute that is the subject of this Section 3.4.2, but not subject to any of the foregoing clause (a) or (b), shall be handled pursuant to Article 15.

 

(d)                                  Notwithstanding the foregoing provisions of this Section 3.4.2, neither Party shall exercise its right to finally resolve a dispute pursuant to the foregoing clause (a) or (b), as applicable, in a manner that excuses such Party from any of its obligations specifically enumerated under this Agreement or in a manner that negates any consent rights or other rights specifically allocated to the other Party under this Agreement.  In addition, in resolving a dispute pursuant to the foregoing clauses (a), (b) or (c), each Party shall at all times act in good faith.

 

3.4.3                      No Limitation on Remedies.   Nothing in this Section 3.4 shall affect the right of a Party to exercise its rights or remedies for a breach of this Agreement by the other Party.

 

3.5                                Authority.   The JSC shall have only the powers assigned expressly to it in this Article 3 and elsewhere in this Agreement, and shall not have any power to amend, modify or waive compliance with this Agreement.  In furtherance thereof, each Party shall retain the rights, powers and discretion granted to it under this Agreement and no such rights, powers or discretion shall be delegated or vested in the JSC unless such delegation or vesting of rights is expressly provided for in this Agreement or the Parties expressly so agree in writing.  Without limiting the generality of the foregoing, the JSC shall have no decision-making authority with respect to any matters related to the (i) Manufacturing of the Product for sale outside the Territory or (ii) the Development, Commercialization or use of the Product outside the Field or outside of the Territory.

 



 

ARTICLE 4
DEVELOPMENT

 

4.1                                Overview.

 

4.1.1                      Overview of Development.  During the Term, Pint shall be solely responsible for Developing the Product in the Territory for use in the Field at its sole cost and expense.

 

4.1.2                      Development Outside the Field or Outside the Territory; Regulatory Approvals Outside the Territory.   The Parties hereby agree and acknowledge that: (i) nothing contained herein shall limit or otherwise restrict the ability of Onconova to (a) Develop the Product outside the Field or outside the Territory or (b) Develop the Product in the Territory for purposes of obtaining Regulatory Approval outside the Territory; and (ii) nothing contained herein shall limit or otherwise restrict the ability of Onconova to obtain or maintain Regulatory Approvals for the Product outside the Field and/or outside the Territory.  Without limiting the generality of the foregoing, at all times prior to conducting Development of the Product in the Territory for purposes of obtaining Regulatory Approval outside the Territory, Onconova shall keep Pint reasonably apprised in advance and during such planned activities.

 

4.1.3                      Compliance.   Pint shall conduct its Development Activities in compliance with all applicable Laws.

 

4.2                                Development Plan.

 

4.2.1                      General.   Pint shall be solely responsible for the creation of a comprehensive development plan (the “ Development Plan ”) related to Pint’s planned Development of the Product for use in the Field in the Territory. Such Development Plan shall reflect that Pint shall conduct, at its expense, any pre-clinical and clinical trials necessary to receive and maintain Regulatory Approval (including registrations) to Commercialize Product in the Territory; provided that no pre-clinical or clinical trials for Product shall be conducted by or on behalf of Pint without Onconova’s prior written consent, which consent shall not be unreasonably withheld.  The initial Development Plan for the Product for the first full calendar year of this Agreement (including any additional period from the Effective Date through the end of the initial calendar year) has been circulated by Pint to Onconova.

 

4.2.2                      Updating and Amending Development Plan; Additional Development Activities. On or before the end of each calendar year during the Term, Pint shall update the Development Plan, which shall cover the Development Activities to be conducted during the upcoming calendar year, and shall, on at least a quarterly basis, review and update, as appropriate, the then-current Development Plan to reflect any changes, reprioritizations of, or additions to the Development Plan; provided, however, that any disputes with respect thereto shall be resolved pursuant to Section 3.4.

 

4.3                                Records, Reports and Information.

 

4.3.1                      General.  Pint shall maintain current and accurate records of all work conducted by it under the Development Plan and all data and other information resulting from

 



 

such work.  Such records shall properly reflect all work done and results achieved in the performance of the Development Activities in good scientific manner appropriate for regulatory purposes.  Pint shall document all preclinical studies and clinical trials to be conducted pursuant to the Development Plan in formal written study reports according to applicable national and international (e.g., ICH, GCP and GLP) guidelines.  Pint shall provide copies of any such study reports (including copies of all toxicity, pharmacokinetics (PK) and pharmacodynamics (PD) reports to Onconova within ninety (90) days of completion of each report.

 

4.3.2                      Status Updates in the Territory.   Pint shall provide the JSC with reports detailing its Development Activities under the Development Plan and the results thereof at each JSC meeting.

 

4.4                                Right to Audit.   Pint shall ensure that Onconova’s authorized representatives and, to the extent permitted by applicable Law, any Regulatory Authorities may, during regular business hours and upon reasonable prior written notice, (i) examine and inspect its facilities or, subject to any Third Party confidentiality restrictions and other obligations, the facilities of any subcontractor or any investigator site used by it in the performance of Development of the Product in the Territory hereunder, and (ii) subject to applicable Law and any Third Party confidentiality restrictions and other obligations, inspect all data, documentation and work product relating to the activities performed by it, the subcontractor or investigator site, in each case generated pursuant to Development of the Product in the Territory hereunder.  This right to inspect all data, documentation, and work product relating to the Product in the Field in the Territory may be exercised no more often than one time per year (except for cause audits).

 

4.5                                Ownership and Transfer of Development Data.   All data (including pre-clinical, clinical, technical, chemical, safety, and scientific data and information), know-how and other results generated by or resulting from or in connection with the conduct of Development Activities, including relevant laboratory notebook information, screening data, Regulatory Data and synthesis schemes, including descriptions in any form, data and other information (collectively, the “ Development Data ”), shall be promptly provided to Onconova, owned jointly by Onconova and Pint, and deemed the Confidential Information of both Parties.

 

ARTICLE 5
REGULATORY

 

5.1                                Regulatory Filings and Regulatory Approvals.

 

5.1.1                      General.   Pint shall be responsible for formulating regulatory strategy for obtaining and maintaining Regulatory Approvals for the sale of the Product in the Field in the Territory.  Pint shall be responsible for the preparation of all Regulatory Materials necessary or desirable for obtaining and maintaining such Regulatory Approvals in the Territory (including in connection with package inserts, labeling and packaging for the Product in the Field in the Territory; provided, however, that Onconova shall share with Pint all open files (artwork) related to its own packaging development outside the Territory).  Pint shall submit such Regulatory Materials and Regulatory Approval applications to the applicable Government Authorities in the Territory.  Onconova shall cooperate with Pint in connection therewith, including providing all such supporting documentation in Onconova’s possession and control for Regulatory Materials

 



 

to Pint with sufficient time to allow Pint to review and timely submit such Regulatory Materials in accordance with applicable Law.  The provisions of this Section 5.1.1 shall be subject to the provisions of Section5.1.2.

 

5.1.2                      Pricing Approvals.   To the extent that a given country or regulatory jurisdiction in the Territory requires Pricing Approval for sale of the Product in the Field in such country or regulatory jurisdiction, Pint shall (to the extent permitted by applicable Laws) be solely responsible for obtaining and maintaining Pricing Approvals in all such countries and regulatory jurisdictions in the Territory.  Without limiting the foregoing, Pint shall apply for Pricing Approvals in each country or regulatory jurisdiction where Pricing Approvals are required for the sale of the Product in the Field promptly following the receipt of the MAA for the Product in such country or regulatory jurisdiction in the Territory.  Pint shall keep Onconova reasonably informed on an ongoing basis through the JSC of Pint’s strategy for seeking, and the results it obtains in seeking, such Pricing Approvals in the Territory.

 

5.1.3                      Ownership of Regulatory Materials and Regulatory Approvals.   All Regulatory Approvals in the Territory for sale of the Product in the Field in the Territory shall be in the name of Pint, and Pint shall own all right, title and interest in all such Regulatory Approvals and all related Regulatory Materials.

 

5.1.4                      Cost of Regulatory Activities.   All costs and expenses incurred by either Party (or their Affiliates) in connection with the preparation or maintenance of Regulatory Materials and Regulatory Approvals for sale of the Product in the Field in the Territory, including any filing fees shall be borne solely by Pint.

 

5.1.5                      Reporting and Review.   Pint shall keep Onconova reasonably informed via the JSC in connection with the preparation of all Regulatory Materials, Regulatory Authority review of Regulatory Materials, and Regulatory Approvals, in each case with respect to the Product for sale in the Field in the Territory.  Pint shall provide Onconova with all clinical reports with respect to the Product in the Field in the Territory in accordance with Section 4.3.1.  Each Party shall provide the other Party, in a timely manner, with copies of all notices, questions, and requests for information in tangible form which it receives from a Regulatory Authority in the Territory with respect to the Product for sale in the Field in the Territory; provided, however that such Party shall have the right to redact any information to the extent not related to the Product for sale in the Field in the Territory.  Notwithstanding the foregoing, each Party shall only provide such copies to the extent permitted under any contractual obligations of such Party (provided that each Party shall use Commercially Reasonable Efforts to avoid any such contractual restrictions) and to the extent such information is in such Party’s possession and control.

 

5.2                                Communications.   The Parties shall cooperate in communicating with any Regulatory Authority having jurisdiction in the Territory regarding the Product in the Field in the Territory and each Party shall immediately notify the other in the event that such Party communicates, or intends to communicate, either on its own initiative in accordance with this Agreement or as a result of such a Regulatory Authority initiating contact with such Party.  Notwithstanding the foregoing, each Party shall only provide such notification to the extent permitted under any contractual obligations of such Party (provided that each Party shall use

 



 

Commercially Reasonable Efforts to avoid any such contractual restrictions) and to the extent such information is in such Party’s possession and control.  Notwithstanding the foregoing, except as may be required by Law, (1) Pint shall not, with respect to the Product, communicate with any Regulatory Authority having jurisdiction outside of the Territory regarding the Product without the prior written consent of Onconova, or unless so ordered by such Regulatory Authority, in which case Pint shall immediately notify Onconova of such order; and (2) Onconova shall not, with respect to the Product, communicate with any Regulatory Authority having jurisdiction inside the Territory regarding the Product without the prior written consent of Pint, or unless so ordered by such Regulatory Authority, in which case Onconova shall immediately notify Pint of such order.

 

5.3                                Rights of Reference to Regulatory Materials.

 

(a)                                  Onconova hereby grants to Pint a right of reference to all Regulatory Materials filed by Onconova outside the Territory for Development or Commercialization of the Product in the Field outside the Territory solely for the purposes of Development Activities to obtain Regulatory Approval and Commercialization in the Field in the Territory.   Within ninety (90) days following FDA Regulatory Approval of Product for sales within the United States, Onconova shall provide to Pint true and complete copies