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CANF: Update on First Quarter Financials ended March 31, 2016

By Grant Zeng, CFA

NYSE: CANF

Update on First Quarter Financials ended March 31, 2016

Revenues for 1Q16 were $0.06 million. The company did not record any revenues during the three months ended March 31, 2015. The increase in revenue was due to the recognition of a portion of the $1.36 million upfront payment received in March 2015 under the distribution agreement with Cipher Pharmaceuticals.

R&D expenses for 1Q16 were $1.08 million, compared with $0.62 million for the same period in 2015. The increase was primarily due to costs associated with preparations of the CF101 Phase III studies in the treatment of rheumatoid arthritis and psoriasis.

G&A expenses for 1Q16 were $0.63 million, compared to $0.66 million for the same period in 2015. The minimal decrease was primarily due to a reduction in professional services expenses.

Net loss for the three months ended March 31, 2016 was $1.54 million ($0.13/ADR), compared with a net loss of $0.40 million ($0.03/ADR) for the same period in 2015.

As of March 31, 2016, Can-Fite (CANF) had cash and cash equivalents of $15.03 million.

In September, 2015, the company closed a registered direct offering with institutional investors for gross proceeds of $9 million. In connection with the offering, the Company issued 2,068,966 registered American Depository Shares (ADSs) of Can-Fite at a purchase price of $4.35 per ADS in a registered direct offering. Additionally, for each ADS purchased by investors, the investors received an unregistered warrant to purchase one-half of an ADS. The warrants have an exercise price of $5.25 per ADS, shall be exercisable six months following the issuance date and will expire five and one-half years from the issuance date.

Further in October, 2015, the same institutional investors who participated in September’s round have invested again in Can-Fite's registered direct offering. This time, Can-Fite will issue 1,109,196 registered American Depository Shares (ADSs) of Can-Fite at a purchase price of $4.35 per ADS in a registered direct offering. Additionally, for each ADS purchased by investors, the investors will receive an unregistered warrant to purchase 40% of an ADS. The warrants have an exercise price of $5.25 per ADS, shall be exercisable six months following the issuance date and will expire five and one-half years from the issuance date. Can-Fite received gross proceeds of approximately $4.8 million.

These two new financings not only boost Can-Fite’s balance sheet immediately, but further validate its technology and clinical programs.

Current cash at hand can carry the company’s operations into mid-2017 according to our financial model.

Update on CF101 Phase III Study for RA

On June 1, 2016, Can-Fite announced that it has reached agreement with the European Medicines Agency (EMA) on the final design of a global pivotal Phase III trial for its lead drug candidate, Piclidenoson (CF101), in rheumatoid arthritis (RA).

Following a successful meeting with the EMA, and based on guidance received from the European health regulatory body, Can-Fite plans to evaluate the efficacy and safety of Piclidenoson compared to methotrexate (MTX) in the treatment of early rheumatoid arthritis patients. The Company intends to initiate the Phase III trial in the second or third quarter of 2016.

The EMA suggested Piclidenoson should be developed as an alternative to MTX, the most widely prescribed rheumatoid arthritis drug in the world. The EMA further suggested that this pivotal Phase III study will serve as the first of two pivotal studies required for drug approval.

The planned Phase III trial will be a randomized, double-blind, active and placebo-controlled trial to establish non-inferiority of Piclidenoson versus MTX, conducted in approximately 500 patients worldwide.

• Piclidenoson at 1 mg and 2 mg or placebo will be administered twice daily, and MTX or placebo will be administered once weekly.
• The primary endpoint will be Low Disease Activity as measured by Disease Activity Scores at week 12.
• The trial will also evaluate key secondary endpoints, including American College of Rheumatology (ACR) score 20, 50 and 70 and the correlation between A3AR expression at baseline and patients' response to Piclidenoson. Based on Can-Fite's Phase II clinical studies with CF101 in patients with active rheumatoid arthritis, the percentage of patients with high expression of A3AR is estimated to be approximately 70%.
• To establish longer-term clinical efficacy and safety, the trial will continue for a period of 24 weeks.

The company will file similar submissions in Canada and the U.S.

Over the several clinical experiences with CF101 for RA, Can-Fite has learned and identified the relationship between A3AR expression and response for CF101. Based on these findings, the company’s last Phase IIb trial demonstrated positive data of CF101 for the treatment of RA patients based on the level of A3AR expression. The planned Phase III trial uses the same criteria for screening RA patients, and therefore has a high possibility that it will replicate the results of the last Phase IIb trial.

Update on CF101 for Psoriasis

Can-Fite is now completing the design of its Phase III study protocol for CF101 in the treatment of psoriasis which the Company plans to file with the EMA in the first half of 2016 and anticipates initiating patient enrolment in the fourth quarter of 2016.

The Company previously reported positive data from further analysis of its completed Phase II/III study that suggests CF101 as a potential systemic therapy for patients with moderate-severe psoriasis.

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