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Trovagene Q4 Revenues Down, Company Restructuring to Expand Into Therapeutics

NEW YORK (GenomeWeb) – Trovagene announced after the close of the market on Wednesday a 14 percent year-over-year drop in fourth quarter revenues. The firm also announced a restructuring program to expand into precision cancer drug development.

The liquid biopsy molecular diagnostics developer said its revenues were $68,000 for the three  months ended Dec. 31, 2016, compared to $79,000 in Q4 2015, and significantly short of the analysts' average estimate of $180,000.

Meanwhile, Trovagene reported a net loss of $8.5 million, or $0.34 per share, in Q4 2016 compared to a loss of $7.4 million, or $0.26 per share, in the year-ago quarter. Analysts had been expecting, on average, a loss of $0.32 per share for the quarter.

The company's net loss attributable to common stockholders for the recently completed quarter was $8.6 million, compared to $7.4 million a year ago.

Investors reacted to the news by selling off Trovagene's stock. In early morning trading on the Nasdaq, the company's shares were down about 27 percent at $1.27.

According to Trovagene, the year-over-year increase in losses was mainly due to higher research and development costs associated with the development of its multigene liquid biopsy panel.

Trovagene's R&D spending in Q4 2016 rose 19 percent year over year to $3.8 million from $3.2 million, while its SG&A costs rose about 15 percent to $4.7 million from $4.1 million. The company also recorded restructuring charges of $790,000 in the recently completed quarter, compared to none a year ago.

Trovagene said payments to Boreal Genomics last fall also contributed to its increase in its net loss in Q4 2016.

Trovagene and Boreal Genomics said in November that they had agreed to merge their respective technologies in order to codevelop assay kits for the detection and analysis of circulating tumor DNA in urine and blood, with plans to launch them this year.

Soon afterward, Trovagene announced a reorganization effort that included a cut of 20 jobs in order to refocus its efforts away from offering testing as a service, and toward distribution of these planned kits to clinical research laboratories.

Alongside its Q4 financial report on Wednesday, Trovagene also announced a license agreement with Nerviano Medical Sciences granting Trovagene exclusive global development and commercialization rights to the investigational drug PCM-075 for acute myeloid leukemia.

PCM-075 is a highly-selective adenosine triphosphate competitive inhibitor of PLK 1, the company said. A phase 1 safety study has already been successfully completed in patients with advanced metastatic cancer.

"We are excited to announce the execution of our strategy to vertically integrate our ctDNA … technology with precision cancer therapeutics by developing drugs where our deep understanding of tumor genomics may allow for effective targeting of appropriate cancer patients," Trovagene CEO Bill Welch said in a statement.

According to Welch, Trovagene's diagnostic technologies will play an important role in further development of the newly licensed therapy. The firm will use its ctDNA technology to profile AML markers such as FLT3, DNMT3A, NRAS, and KIT in order to measure patient response.

To support this move, Welch said that Trovagene is undergoing additional restructuring — including the reduction of approximately 30 personnel, as well as research, clinical studies, and operations expenses —  that it estimates will reduce annual pre-tax expenses by approximately $8.0 million per year.

However, Trovagene will maintain its CLIA/CAP-accredited laboratory for clinical services to pharmaceutical companies and for internal programs.

"We believe today's announcement is in the best interest of all stakeholders as we look to build an industry-leading precision medicine company," Welch said during the call.

"While we have made good progress with our ctDNA detection platform, and early market feedback has been positive, we appreciate that broad-based adoption … takes time. Restructuring will streamline our early development programs as we focus … on precision cancer therapeutic opportunities," he added.

As part of its deal with Nerviano, Trovagene will have sole responsibility for the global development and commercialization of PCM-075. It will pay Nerviano $2.0 million upfront and development and regulatory-based milestone payments and royalty payments on future sales of PCM-075.

Trovagene CSO Mark Erlander said that the company believes that the drug could have broader opportunities in addition to AML. "Nerviano has conducted numerous preclinical studies with early data supportive of other blood-related tumors such as pediatric acute lymphoblastic leukemia … as well as for ovarian cancer and non-small cell lung cancer," he said.

Over the whole of 2016, Trovagene's revenues rose 22 percent to $381,000 from $313,000 the prior year, widely missing the consensus analyst estimate of $860,000.

Its net loss in 2016 widened to $39.2 million, or $1.37 per share, compared to $27.5 million, or $1.21 per share in 2015. Analysts had estimated a net loss of $1.35 per share.

Net loss attributable to common stockholders in 2016 was also $39.2 million, up from $27.5 million in 2015.

Trovagene's full-year R&D spending increased more than 40 percent to $15 million from $10.6 million in 2015, and its SG&A costs rose more than 60 percent to $23 million from $14.3 million in 2015.

The firm exited 2016 with $37.9 million in cash, cash equivalents, and short-term investments.