Ignyta Announces Third Quarter 2016 Company Highlights and Financial Results

On November 7, 2016 Ignyta, Inc. (Nasdaq: RXDX), a biotechnology company focused on precision medicine in oncology, reported company highlights and financial results for the third quarter ended September 30, 2016 (Press release, Ignyta, NOV 7, 2016, View Source [SID1234516390]).

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"During the third quarter, we advanced our lead program, entrectinib, with continued successful execution of STARTRK-2, our global pivotal Phase 2 clinical trial now open at more than 100 sites in 12 countries," said Jonathan Lim, M.D., Chairman and CEO of Ignyta. "This global clinical footprint helps ensure that entrectinib, a novel, orally available, CNS-penetrant tyrosine kinase inhibitor targeting tumors that harbor TRK, ROS1, or ALK fusions, is made available to patients for clinical development on a worldwide basis. Further, by expanding our collaboration with the European Organisation for Research and Treatment of Cancer, or EORTC, we hope to identify additional patients across Europe who may be eligible for STARTRK-2."

Ignyta will not be conducting a conference call in conjunction with this release, but will summarize company highlights for the third quarter as part of its presentation at the Credit Suisse 25th Annual Healthcare Conference on Tuesday, November 8, 2016, at 10:30 a.m. Mountain time (9:30 a.m. Pacific time) in Scottsdale, AZ. A webcast of the presentation will be available during the presentation in the Investors section of the company’s website at View Source, and will be archived and available at that site for 14 days.

Company Highlights

Announced Approval of an IDE for Trailblaze Pharos

In August 2016, the U.S. Food and Drug Administration (FDA) approved an investigational device exemption (IDE) for the company’s RNA-based companion diagnostic, next-generation sequencing (NGS) assay known as Trailblaze Pharos. The Trailblaze Pharos assay is intended for use in identifying patients, including those who are treatment-naïve, who have solid tumors with NTRK1/2/3, ROS1, or ALK gene rearrangements leading to fusion proteins, to determine eligibility for enrollment into the global STARTRK-2 trial.

Expanded Collaborative Agreement with EORTC

In September 2016, we expanded our collaborative agreement with EORTC. Under this collaboration, Ignyta will serve as a diagnostic laboratory performing fusion testing for EORTC’s SPECTA (Screening Patients for Efficient Clinical Trial Access) initiative, which may help us identify patients with a variety of tumor histologies across Europe who could potentially be enrolled in our STARTRK-2 clinical trial.

Third Quarter 2016 Financial Results

For the third quarter of 2016, net loss was $23.3 million, or $0.56 per share, compared with $14.6 million, or $0.49 per share, for the third quarter of 2015.

Ignyta did not record any revenue for the three months ended September 30, 2016, or for the three months ended September 30, 2015.

Research and development expenses for the third quarter of 2016 were $16.6 million, compared with $10.4 million for the third quarter of 2015. This increase was primarily due to the $4.3 million increase in the external development costs associated with entrectinib, taladegib and other product candidates, coupled with personnel expenses related to hiring and engaging additional employees and consultants to help advance the company’s product candidates.

General and administrative expenses were $6.1 million for third quarter of 2016, compared with $3.9 million for third quarter of 2015. This increase was driven by higher personnel and share-based compensation costs, higher facilities-related expenses resulting from the increase of our leased facilities space, and increases in consulting fees and depreciation expense.

At September 30, 2016, the company had cash, cash equivalents and available-for-sale securities totaling $152.5 million and current and long-term debt of $32.0 million. At December 31, 2015, the company had cash, cash equivalents and available-for-sale securities totaling $172.1 million and current and long-term debt of $31.0 million.

Halozyme Reports Third Quarter 2016 Financial Results

On November 7, 2016 Halozyme Therapeutics, Inc. (NASDAQ: HALO) reported financial results and recent highlights for the third quarter ended September 30 (Press release, Halozyme, NOV 7, 2016, View Source [SID1234516388]).

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"The third quarter was highlighted by Genentech’s BLA filing for rituximab in a subcutaneous formulation using Halozyme’s ENHANZE platform in multiple blood cancers, a development that adds to the potential for our royalty revenue and highlights the benefits of our business model," said Dr. Helen Torley, president and chief executive officer. "In our oncology pillar, we continued initiation of our global sites in our phase 3 study of PEGPH20 and are making progress toward dose expansion in our study with Keytruda, all as we anticipate reporting topline results from stage 2 of our HALO-202 study once the data is mature."

Halozyme was recently informed by the independent statistician for the data monitoring committee of its HALO-202 study that progression-free survival data are not yet mature for analysis. As a result, the company now expects the reporting of data may move into 2017, depending on when it is mature for analysis.

Third Quarter 2016 and Recent Highlights include:

The inclusion of PEGPH20 in the Pancreatic Cancer Action Network’s Precision Promise initiative, a broad industry and pancreatic cancer community coalition established to study pancreatic cancer therapies in patients based on the molecular profile of their tumors. The clinical trial plans to enroll patients at 12 consortium sites in the U.S. beginning in spring 2017.
Continuing to initiate sites in the HALO-301 | Pancreatic study toward the goal of having approximately 90 percent of centers ready to screen patients by the end of 2016.
Progressing in dose escalation of the ongoing phase 1b clinical study evaluating PEGPH20 in combination with KEYTRUDA (pembrolizumab) in relapsed non-small cell lung and gastric cancer patients. The company continues to project that the study will move to the dose expansion phase by the end of 2016.
U.S. Food and Drug Administration (FDA) filing a Biologics License Application (BLA) to support approval for the subcutaneous formulation of Rituximab in multiple blood cancer indications. Including all approved indications, Roche reported total 2015 sales of rituximab in the United States of 3.76 billion CHF.
Pfizer announcing discontinuation of the global clinical development program for bococizumab, its investigational PCSK9 inhibitor. The development of a subcutaneous version on the Halozyme ENHANZE platform has also been discontinued. Pfizer also made a portfolio decision to discontinue development of rivipansel with the ENHANZE platform even though the technology performed as intended. Pfizer continues to develop an additional program with the ENHANZE platform for an undisclosed target.
Third Quarter 2016 Financial Highlights

Revenue for the third quarter was $31.9 million compared to $20.8 million for the third quarter of 2015, driven primarily by royalties from partner sales of Herceptin SC, MabThera SC and HYQVIA, API sales to partners, and manufacturing and clinical supply reimbursements from ENHANZE partners.
Revenue for the third quarter included $13 million in royalties, an increase of 58 percent from the prior-year period, $9.6 million in sales of bulk rHuPH20 primarily for use in manufacturing collaboration products and $3.7 million in HYLENEX recombinant (hyaluronidase human injection) product sales.
Research and development expenses for the third quarter were $33.9 million, compared to $27.6 million for the third quarter of 2015. The planned increases were primarily due to a ramp in spending associated with the HALO-301 study, personnel expenses, and manufacturing and clinical supply expenses that are reimbursed by ENHANZE partners.
Selling, general and administrative expenses for the third quarter were $11.6 million, compared to $10.2 million for the third quarter of 2015. The increase was primarily due to personnel expenses, including stock compensation, for the period.
Net loss for the third quarter was $28.9 million, or $0.23 per share, compared to a net loss in the third quarter of 2015 of $24.5 million, or $0.19 per share.
Cash, cash equivalents and marketable securities were $221.1 million at September 30 compared to $230 million at June 30, 2016.
Financial Outlook for 2016

For the full year 2016, the company updated and narrowed its financial guidance, now expecting:

Net revenue of $145 million to $150 million, raising the lower end of its prior $140 million to $150 million range;
Operating expenses of $240 million to $245 million, from the prior $245 million to $260 million range;
Cash flow of $75 million to $85 million, from the prior range of $65 million to $85 million;
Year-end cash balance of $180 million to $190 million, raising the lower end of its prior $170 million to $190 million range.
– See more at: View Source#sthash.RNuqhBMu.dpuf

Fate Therapeutics Reports Third Quarter 2016 Financial Results

On November 7, 2016 Fate Therapeutics, Inc. (NASDAQ: FATE), a biopharmaceutical company dedicated to the development of programmed cellular immunotherapies for cancer and immune disorders, reported business highlights and financial results for the third quarter ended September 30, 2016 (Filing, Q3, Fate Therapeutics, 2016, NOV 7, 2016, View Source [SID1234516386]).

"During the quarter, we made substantial progress and intensified our commitment towards accelerating the clinical development of ProTmune and bringing innovative natural killer- and T-cell cancer immunotherapies into the clinic," said Scott Wolchko, President and Chief Executive Officer of Fate Therapeutics. "We significantly bolstered our ability to pursue accelerated registration for ProTmune by instituting investigator and patient blinding in our randomized, controlled PROTECT study. We advanced FATE-NK100, a first-in-class adaptive NK cell product candidate with multi-faceted anti-tumor activity, to IND filing and we are now preparing for the initiation of clinical investigation in early 2017. Additionally, we joined forces with Memorial Sloan Kettering Cancer Center to pioneer the development of off-the-shelf T-cell immunotherapies using engineered induced pluripotent cell lines, a breakthrough approach that enables the continuous production of clonal T-cell products at the scale necessary to serve significant numbers of patients."

Recent Highlights & Program Updates

• IND Filed for Adaptive NK Cell Cancer Immunotherapy. Fate Therapeutics, in collaboration with the Masonic Cancer Center, University of Minnesota, plans to initiate clinical testing in 2017 of FATE-NK100, a first-in-class adaptive natural killer (NK) cell product candidate, for the treatment of refractory or relapsed acute myeloid leukemia (AML). FATE-NK100 has demonstrated in preclinical studies enhanced anti-tumor activity, improved persistence and increased immune checkpoint resistance as compared to NK cell therapies that are being clinically-administered today. New preclinical data from the program are scheduled to be presented at an oral session at the 58th American Society of Hematology (ASH) (Free ASH Whitepaper) Annual Meeting and Exposition in December.


Bolstered Path for Accelerated Registration of ProTmune PROTECT Study. The Company amended its protocol for its randomized, controlled Phase 1/2 PROTECT clinical trial of ProTmune. The amendment blinds both investigators and subjects in the study, substantially enhancing its potential to support accelerated registration. In addition, the study eligibility criteria were expanded to include subjects with additional hematologic malignancies, including myelodysplastic syndromes, and to include cytomegalovirus (CMV)-seronegative subjects. ProTmune is currently being evaluated for the prevention of life-threatening complications, including acute graft-versus-host disease (GvHD), in adult subjects with hematologic malignancies undergoing allogeneic mobilized peripheral blood hematopoietic cell transplantation (HCT).


Granted Broad Orphan Drug Designations by FDA and EMA for ProTmune. In September, the U.S. Food and Drug Administration (FDA) granted Orphan Drug Designation and, in October, the European Medicines Agency (EMA) granted Orphan Medicinal Product Designation, for ProTmune. The designation granted by each agency broadly covers subjects undergoing allogeneic HCT across diseases for which the procedure is performed, including blood cancers and genetic disorders. In June 2016, the FDA granted Fast Track designation for ProTmune for the reduction of incidence and severity of acute GvHD in patients undergoing allogeneic HCT.


Launched Off-the-Shelf T-Cell Immunotherapy Partnership with Memorial Sloan Kettering. The multi-year collaboration led by Michel Sadelain, M.D., Ph.D., Director of the Center for Cell Engineering and the Stephen and Barbara Friedman Chair at Memorial Sloan Kettering Cancer Center (MSK), is advancing T-cell product candidates derived from engineered induced pluripotent cells. Like master cell lines used for the manufacture of monoclonal antibodies, pluripotent cell lines can serve as a renewable cell source for the consistent manufacture of clonal populations of effector cells for off-the-shelf treatment of patients. In connection with the partnership, Fate Therapeutics also exclusively licensed from MSK foundational intellectual property covering T cells and NK cells derived from induced pluripotent cells engineered with chimeric antigen receptors.


Completed $10.3M Common Stock Private Placement. In August, Fate Therapeutics issued 5.25 million shares of common stock at $1.96 per share pursuant to a securities purchase agreement with certain institutional investors including Franklin Advisers, Inc.

Third Quarter 2016 Financial Results


Cash & Short-term Investment Position: Cash, cash equivalents and short-term investments as of September 30, 2016 were $46.6 million compared to $64.8 million as of December 31, 2015. The decrease was primarily driven by the Company’s use of cash to fund operating activities and to service principal and interest obligations under its loan agreement with Silicon Valley Bank. This use was partially offset by $10.2 million in net proceeds received by the Company in August 2016 in connection with its private placement of common stock to certain institutional investors.


Total Revenue: Revenue was $1.0 million for the third quarter of 2016 as well as for the comparable period in 2015. All revenue was derived from the Company’s research collaboration and license agreement with Juno Therapeutics.


Total Operating Expenses: Total operating expenses were $9.4 million for the third quarter of 2016 compared to $7.4 million for the comparable period in 2015. Operating expenses for the third quarter of 2016 included $0.8 million of stock compensation expense, compared to $0.6 million for the comparable period in 2015.


R&D Expenses: Research and development expenses were $6.8 million for the third quarter of 2016 compared to $5.0 million for the comparable period in 2015. The increase in R&D expenses was primarily related to an increase in third-party service provider fees to support the Company’s clinical development of ProTmune and preclinical development of FATE-NK100 in collaboration with the University of Minnesota, and an increase in personnel expenses resulting from the hiring of additional employees to support the conduct of its research activities, including activities under its collaboration with Juno.


G&A Expenses: General and administrative expenses were $2.6 million for the third quarter of 2016 compared to $2.4 million for the comparable period in 2015. The increase in G&A expenses was primarily related to an increase in intellectual property-related expenses.


Common Shares Outstanding: Common shares outstanding as of September 30, 2016 were 34.1 million compared to 28.7 million as of December 31, 2015. Common shares outstanding increased primarily as a result of the Company’s issuance of 5.25 million shares of common stock in August 2016 in connection with its private placement of common stock to certain institutional investors.

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Emergent BioSolutions Reports Third Quarter and Nine Months 2016 Financial Results

On November 7, 2016 Emergent BioSolutions Inc. (NYSE:EBS) reported financial results for the quarter and nine months ended September 30, 2016 (Press release, Emergent BioSolutions, NOV 7, 2016, View Source;p=RssLanding&cat=news&id=2220329 [SID1234516384]).

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FINANCIAL HIGHLIGHTS

The following financial highlights reflect Emergent’s financial performance from "Continuing Operations" and exclude the impact of the operations associated with the Company’s former biosciences business which was spun-off into a separate publicly traded company, Aptevo Therapeutics Inc., on August 1, 2016.

Total revenues from continuing operations: Q3 2016 of $142.9 million; nine months 2016 of $337.1 million
GAAP net income from continuing operations: Q3 2016 of $20.4 million, or $0.43 per diluted share; nine months 2016 of $30.2 million, or $0.68 per diluted share
Adjusted net income from continuing operations: Q3 2016 of $28.5 million, or $0.58 per diluted share; nine months 2016 of $44.0 million, or $0.90 per diluted share
EBITDA from continuing operations: Q3 2016 of $45.6 million, or $0.92 per diluted share; nine months 2016 of $82.2 million, or $1.68 per diluted share
Adjusted EBITDA from continuing operations: Q3 2016 of $50.2 million, or $1.02 per diluted share; nine months 2016 of $91.7 million, or $1.88 per diluted share
Note: For a reconciliation of the Company’s Statement of Operations for the Three and Nine Months Ended September 30, 2016 on a continuing operations basis to that on a combined basis, which takes into account the impact of the Aptevo-related discontinued operations, see "Reconciliation of Statement of Operations."

Q3 2016 AND RECENT BUSINESS ACCOMPLISHMENTS

Signed a five-year contract with the Biomedical Advanced Research and Development Authority (BARDA) for advanced development and procurement of NuThrax (Anthrax Vaccine Adsorbed with CPG 7909 Adjuvant), the Company’s next generation anthrax vaccine candidate, valued at up to $1.6 billion
Department of Health and Human Services issued a Sole Source Notification indicating its intention to award the Company a follow-on procurement contract with the Centers for Disease Control and Prevention (CDC) for the purchase of 29.4 million doses of BioThrax (Anthrax Vaccine Adsorbed), the Company’s licensed anthrax vaccine, for delivery into the Strategic National Stockpile (SNS); Company anticipates finalizing the contract in the coming weeks
Completed delivery of the full 44.75 million doses of BioThrax under current 2011 procurement contract as CDC exercised option to purchase all remaining doses
Achieved Food and Drug Administration (FDA) licensure for Building 55, the Company’s large-scale BioThrax manufacturing facility
Completed the spin-off of Aptevo Therapeutics Inc.
2016 FINANCIAL GUIDANCE

The Company continues to postpone its financial guidance for 2016 until the CDC follow-on BioThrax procurement contract has been finalized.

2016 FINANCIAL PERFORMANCE

Note: As a result of the August 1, 2016 spin-off of the Company’s biosciences business into a separate publicly traded company, Aptevo Therapeutics Inc., the financial statements and related explanatory sections for Emergent, exclusive of Aptevo, presented herein have been revised accordingly and are referenced as "continuing operations."

The results of operations and financial position of Aptevo are reflected on one line of the Company’s Statements of Operations for the three and nine months ended September 30, 2016 and 2015 as "Income (loss) from discontinued operations, (net of tax)." Please refer to "Reconciliation of Statement of Operations" for a reconciliation of the Company’s Statement of Operations for the Three and Nine Months Ended September 30, 2016 on a continuing operations basis to that on a combined basis, which takes into account the impact of the Aptevo-related discontinued operations.

(I) Quarter Ended September 30, 2016 (unaudited)

Revenues

Product Sales
For Q3 2016, product sales were $96.7 million, a decrease of 18% as compared to 2015. The decrease in BioThrax sales was primarily due to fewer doses delivered to the SNS. The decrease in other sales was primarily due to the timing of BATTM [Botulism Antitoxin Heptavalent (A,B,C,D,E,F,G)-(Equine)] sales to the SNS.

(in millions) Three Months Ended
September 30,
2016 2015 % Change
Product Sales
BioThrax $ 94.1 $ 109.8 (14 )%
Other $ 2.6 $ 7.7 (67 )%
Total Product Sales $ 96.7 $ 117.5 (18 )%
Contract Manufacturing
For Q3 2016, revenue from the Company’s contract manufacturing operations was $14.7 million, an increase of 30% as compared to 2015. The increase primarily reflects the timing of fill/finish services.

Contracts and Grants
For Q3 2016, contracts and grants revenue was $31.5 million, an increase of 7% as compared to 2015.

Operating Expenses

Cost of Product Sales and Contract Manufacturing
For Q3 2016, cost of product sales and contract manufacturing was $39.6 million, an increase of 12% as compared to 2015. The increase primarily reflects an increase in costs associated with underutilized manufacturing capacity at the Company’s Winnipeg site and an increase in the BioThrax cost per dose sold associated with lower production yield in the period in which the doses sold were produced.

Research and Development
For Q3 2016, gross research and development (R&D) expenses were $27.2 million, a decrease of 20% as compared to 2015. The decrease primarily reflects lower contract service costs.

For Q3 2016, net R&D was fully funded, or a positive $4.3 million, versus an expense of $4.7 million in Q3 2015. Net R&D, which is more representative of the Company’s actual out-of-pocket investment in product development, is calculated as gross research and development expenses less contracts and grants revenue.

(in millions) Three Months Ended
September 30,
2016 2015 % Change
Research and Development Expenses [Gross] $ 27.2 $ 34.2 (20 )%
Adjustments:
– Contracts and grants revenue $ 31.5 $ 29.5 7 %
Net Research and Development Expenses (Income) $ (4.3 ) $ 4.7 –
Selling, General and Administrative
For Q3 2016, selling, general and administrative expenses were $40.7 million, an increase of 58% as compared to 2015. This increase includes costs associated with the Aptevo spin-off, restructuring activities at the Company’s Lansing, Michigan site, along with increased professional services to support the Company’s strategic growth initiatives.

Net Income from Continuing Operations
For Q3 2016, GAAP net income from continuing operations was $20.4 million, or $0.43 per diluted share, versus $42.1 million, or $0.90 per diluted share, in 2015.

For Q3 2016 and 2015, GAAP net income from continuing operations per diluted share is computed using the "if-converted" method. This method requires GAAP net income to be adjusted to reflect the impact of interest expense and amortization of debt issuance cost, both net of tax, associated with the Company’s 2.875% Convertible Senior Notes due 2021. As a result, GAAP net income from continuing operations per diluted share for Q3 2016 is adjusted in the amount of $1.1 million, from $20.4 million to $21.5 million, and diluted shares outstanding were 49.4 million. GAAP net income per diluted share for Q3 2015 is adjusted in the amount of $1.0 million, from $42.1 million to $43.1 million, and diluted shares outstanding were 47.8 million.

(II) Nine Months Ended September 30, 2016 (unaudited)

Revenues

Product Sales
For the nine months of 2016, product sales were $208.8 million, an increase of 2% as compared to 2015. The increase in BioThrax sales was primarily due to the timing of deliveries to the SNS. The decrease in other sales was primarily due to the timing of sales of BAT to the SNS and a one-time payment for AnthrasilTM [Anthrax Immune Globulin Intravenous (Human)] that occurred in the prior comparative period.

(in millions) Nine Months Ended
September 30,
2016 2015 % Change
Product Sales
BioThrax $ 193.3 $ 182.0 6 %
Other $ 15.5 $ 22.5 (31 )%
Total Product Sales $ 208.8 $ 204.6 2 %
Contract Manufacturing
For the nine months of 2016, revenue from contract manufacturing operations was $32.5 million, level with that in 2015.

Contracts and Grants
For the nine months of 2016, contracts and grants revenue was $95.9 million, an increase of 4% as compared to 2015.

Operating Expenses

Cost of Product Sales and Contract Manufacturing
For the nine months of 2016, cost of product sales and contract manufacturing was $93.0 million, an increase of 27% as compared to 2015. The increase primarily reflects an increase in the BioThrax cost per dose sold associated with lower production yield in the period in which the doses sold were produced along with increased costs associated with underutilized manufacturing capacity at the Company’s Winnipeg facility.

Research and Development
For the nine months of 2016, gross research and development (R&D) expenses were $81.2 million, a decrease of 13% as compared to 2015. The decrease primarily reflects lower contract service costs.

For the nine months of 2016, net R&D was fully funded, or a positive $14.7 million, versus an expense of $1.3 million in the comparable period in 2015.

(in millions) Nine Months Ended
September 30,
2016 2015 % Change
Research and Development Expenses [Gross] $ 81.2 $ 93.8 (13 )%
Adjustments:
– Contracts and grants revenue $ 95.9 $ 92.5 4 %
Net Research and Development Expenses (Income) $ (14.7 ) $ 1.3 –
Selling, General and Administrative
For the nine months of 2016, selling, general and administrative expenses were $108.3 million, an increase of 25% as compared to 2015. This increase includes costs associated with the Aptevo spin-off, restructuring activities at the Company’s Lansing, Michigan site, along with increased professional services to support the Company’s strategic growth initiatives.

Net Income from Continuing Operations
For the nine months of 2016, GAAP net income from continuing operations was $30.2 million, or $0.68 per diluted share, versus $48.9 million, or $1.11 per diluted share, in 2015.

Pursuant to the "if-converted" method, GAAP net income from continuing operations per diluted share for the nine months of 2016 is adjusted in the amount of $2.8 million, from $30.2 million to $33.0 million, and diluted shares outstanding were 48.8 million. GAAP net income from continuing operations per diluted share for the nine months of 2015 is adjusted in the amount of $3.1 million, from $48.9 million to $52.0 million, and diluted shares outstanding were 47.0 million.

(III) RECONCILIATION OF GAAP NET INCOME TO ADJUSTED NET INCOME, EBITDA AND ADJUSTED EBITDA ALL RELATED TO CONTINUING OPERATIONS

This press release contains three financial measures (Adjusted Net Income, EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization), and Adjusted EBITDA) that are considered "non-GAAP" financial measures under applicable Securities and Exchange Commission rules and regulations. These non-GAAP financial measures should be considered supplemental to and not a substitute for financial information prepared in accordance with generally accepted accounting principles. The Company’s definition of these non-GAAP measures may differ from similarly titled measures used by others. Adjusted Net Income adjusts for specified items that can be highly variable or difficult to predict, or reflect the non-cash impact of charges resulting from purchase accounting. EBITDA reflects net income excluding the impact of depreciation, amortization, interest expense and provision for income taxes. Adjusted EBITDA also excludes specified items that can be highly variable and the non-cash impact of certain purchase accounting adjustments. The Company views these non-GAAP financial measures as a means to facilitate management’s financial and operational decision-making, including evaluation of the Company’s historical operating results and comparison to competitors’ operating results. These non-GAAP financial measures reflect an additional way of viewing aspects of the Company’s operations that, when viewed with GAAP results and the reconciliations to the corresponding GAAP financial measure, may provide a more complete understanding of factors and trends affecting the Company’s business.

The determination of the amounts that are excluded from these non-GAAP financial measures are a matter of management judgment and depend upon, among other factors, the nature of the underlying expense or income amounts. Because non-GAAP financial measures exclude the effect of items that will increase or decrease the Company’s reported results of operations, management strongly encourages investors to review the Company’s consolidated financial statements and publicly filed reports in their entirety.

Reconciliation of GAAP Net Income to Adjusted Net Income

The following table provides a reconciliation of GAAP Net Income to Adjusted Net Income for the three month periods as indicated.

(in millions, except per share value) Three Months Ended September 30,
2016 2015 Source
GAAP Net Income From Continuing Operations $ 20.4 $ 42.1 NA
Adjustments:
+ Spin-off and acquisition-related costs (transaction & integration) 4.6 1.0 SG&A
+ Non-cash amortization charges 2.0 2.2 COGS, SG&A,
Other Income
+ Exit and disposal costs 7.9 – SG&A
+ Impact of purchase accounting on inventory step-up – 0.3 COGS
Tax effect (6.4 ) (1.1 ) NA
Total Adjustments 8.1 2.5 NA
Adjusted Net Income From Continuing Operations
Adjusted Net Income per Diluted Share $28.5
$0.58
$44.6
$0.93
NA
The following table provides a reconciliation of GAAP Net Income to Adjusted Net Income for the nine month periods as indicated.

(in millions, except per share value) Nine Months Ended September 30,
2016 2015 Source
GAAP Net Income From Continuing Operations $ 30.2 $ 48.9 NA
Adjustments:
+ Spin-off and acquisition-related costs (transaction & integration) 9.5 3.5 SG&A
+ Non-cash amortization charges 6.5 6.7 COGS, SG&A,
Other Income
+ Exit and disposal costs 8.7 – SG&A
+ Impact of purchase accounting on inventory step-up – 0.3 COGS
Tax effect (10.9 ) (3.2 ) NA
Total Adjustments 13.8 7.3 NA
Adjusted Net Income From Continuing Operations
Adjusted Net Income per Diluted Share $44.0
$0.90
$56.2
$1.20
NA
Reconciliation of GAAP Net Income to EBITDA and Adjusted EBITDA

The following table provides a reconciliation of GAAP Net Income to EBITDA and Adjusted EBITDA for the three month periods as indicated.

(in millions, except per share value) Three Months Ended September 30,
2016 2015
GAAP Net Income From Continuing Operations $ 20.4 $ 42.1
Adjustments:
+ Depreciation & Amortization 9.7 7.5
+ Provision For Income Taxes 13.2 20.1
+ Total Interest Expense 2.0 1.6
Total Adjustments 24.9 29.2
EBITDA From Continuing Operations
EBITDA per Diluted Share $45.3
$0.92
$71.3
$1.49

Additional Adjustments:
+ Spin-off and acquisition-related costs (transaction & integration) 4.6 1.0
+ Impact of purchase accounting on inventory step-up – 0.3
Total Additional Adjustments 4.6 1.3
Adjusted EBITDA From Continuing Operations
Adjusted EBITDA per Diluted Share $49.9
$1.01
$72.6
$1.52

The following table provides a reconciliation of GAAP Net Income to EBITDA and Adjusted EBITDA for the nine month periods as indicated.

(in millions, except per share value) Nine Months Ended September 30,
2016 2015
GAAP Net Income From Continuing Operations $ 30.2 $ 48.9
Adjustments:
+ Depreciation & Amortization 27.0 24.7
+ Provision For Income Taxes 19.9 23.6
+ Total Interest Expense 5.1 4.9
Total Adjustments 52.0 53.2
EBITDA From Continuing Operations
EBITDA per Diluted Share $82.2
$1.68
$102.1
$2.17

Additional Adjustments:
+ Spin-off and acquisition-related costs (transaction & integration) 9.5 3.5
+ Impact of purchase accounting on inventory step-up – 0.3
Total Additional Adjustments 9.5 3.8
Adjusted EBITDA From Continuing Operations
Adjusted EBITDA per Diluted Share $91.7
$1.88
$105.9
$2.26

(IV) RECONCILIATION OF STATEMENT OF OPERATIONS

The following table provides a reconciliation of the Company’s Statement of Operations for the Three Months Ended September 30, 2016 on a continuing operations basis to that on a combined basis, which takes into account the impact of the Aptevo-related discontinued operations.

Emergent BioSolutions Inc. and Subsidiaries
Consolidated Statements of Operations
(in thousands, except share and per share data)


Three Months Ended September 30, 2016
Continuing Operations Discontinued Operations Combined
Revenues: (Unaudited)
Product sales $ 96.7 $ 3.0 $ 99.7
Contract manufacturing 14.7 - 14.7
Contracts and grants 31.5 0.1 31.6
Total revenues 142.9 3.1 146.0

Operating expenses:
Cost of product sales and contract manufacturing 39.6 0.9 40.5
Research and development 27.2 2.5 29.7
Selling, general and administrative 40.7 7.5 48.2
Income from operations 35.5 (7.8 ) 27.7

Other income (expense):
Interest income 0.4 - 0.4
Interest expense (2.0 ) - (2.0 )
Other income, net (0.2 ) (0.1 ) (0.3 )
Total other expense, net (1.9 ) (0.1 ) (2.0 )

Income (loss) before provision for (benefit) from income taxes 33.6 (7.9 ) 25.6
Provision for (benefit from) income taxes 13.2 (8.9 ) 4.3
Net income $ 20.4 $ 1.0 $ 21.3

The following table provides a reconciliation of the Company’s Statement of Operations for the Nine Months Ended September 30, 2016 on a continuing operations basis to that on a combined basis, which takes into account the impact of the Aptevo-related discontinued operations.

Emergent BioSolutions Inc. and Subsidiaries
Consolidated Statements of Operations
(in thousands, except share and per share data)


Nine Months Ended September 30, 2016
Continuing Operations Discontinued Operations Combined
Revenues: (Unaudited)
Product sales $ 208.8 $ 21.2 $ 230.0
Contract manufacturing 32.5 - 32.5
Contracts and grants 95.9 0.2 96.1
Total revenues 337.1 21.4 358.5

Operating expenses:
Cost of product sales and contract manufacturing 93.0 11.6 104.6
Research and development 81.2 18.0 99.2
Selling, general and administrative 108.3 23.8 132.1
Income from operations 54.6 (32.0 ) 22.6

Other income (expense):
Interest income 0.8 - 0.8
Interest expense (5.1 ) - (5.1 )
Other income, net (0.2 ) (0.0 ) (0.2 )
Total other expense, net (4.5 ) (0.0 ) (4.5 )

Income (loss) before provision for (benefit) from income taxes 50.1 (32.0 ) 18.1
Provision for (benefit from) income taxes 19.9 (16.2 ) 3.7
Net income $ 30.2 $ (15.9 ) $ 14.4

Dynavax Reports Third Quarter 2016 Financial Results and Company Update

On November 7, 2016 Dynavax Technologies Corporation (NASDAQ: DVAX) reported financial results for the third quarter and nine months ended September 30, 2016 (Press release, Dynavax Technologies, NOV 7, 2016, View Source [SID1234516383]).

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The Company had $109.6 million in cash, cash equivalents and marketable securities as of September 30, 2016, compared to $196.1 million at December 31, 2015. The net loss for the third quarter of 2016 was $34.7 million, compared to $30.1 million for the third quarter of 2015.

Recent Progress

HEPLISAV-B. In late August, the U.S. Food and Drug Administration (FDA) cancelled its previously scheduled Vaccines and Related Biological Products Advisory Committee (VRBPAC) meeting to review the Biologics License Application (BLA) for HEPLISAV-B [Hepatitis B Vaccine, Recombinant (Adjuvanted)]. The FDA indicated that remaining questions on the BLA will be addressed between Dynavax and the FDA review team. The Company has since provided responses to information requests by the FDA related to remaining questions. The FDA also confirmed in August that it will not include in its review of the BLA the immunogenicity data submitted by the Company related to sub-populations, including results in individuals with diabetes. The Company plans to submit these data as a supplemental BLA.

The Prescription Drug User Fee Act (PDUFA) date for the HEPLISAV-B BLA is December 15, 2016.

In late October, we reported sub-group results from HBV-23, demonstrating that HEPLISAV-B, when administered as two doses over one month, induced significantly higher seroprotection rates than the approved hepatitis B vaccine Engerix-B, when administered as three doses over six months. This result was observed in all prespecified groups of study participants, including those with characteristics that are known to have a reduced immune response to currently licensed hepatitis B vaccines, including older age, high body mass index, diabetes mellitus, male gender and persons who smoke. In the total Phase 3 trial population, the rates of adverse events, serious adverse events and deaths were similar between the HEPLISAV-B and Engerix-B groups. The data were presented at the Infectious Diseases Society of America’s (IDSA) annual IDWeek 2016 meeting in New Orleans.

Preparations for launch of HEPLISAV-B are continuing, including pre-commercial activities, manufacturing of launch inventory and continued infrastructure spending related to commercial development and information technology capabilities and related increases in headcount.

Immuno-oncology. In October we announced at the European Society of Medical Oncology (ESMO) (Free ESMO Whitepaper) Annual Congress 2016 the first presentation of findings from an ongoing Phase 1/2 study evaluating SD-101, Dynavax’s intratumoral TLR9 agonist, in combination with Keytruda (pembrolizumab), Merck’s anti-PD-1 treatment. Early results evaluating five patients with metastatic melanoma for efficacy and 16 patients for safety were reported. In patients naïve to anti-PD-1 treatment objective responses were observed in three out of four (75%) including one complete response (CR) and two partial responses (PR’s). One patient with progressive disease while receiving anti-PD-1 therapy was observed to have stable disease (SD). The drug combination was well-tolerated. No dose-limiting toxicities of the combination were observed in any dose cohort, and a maximum tolerated dose (MTD) was not identified. No immune-related adverse events were reported. Additional results from this study will be presented at future scientific meetings.

Financial. In late October we secured a $100 million loan commitment from Deerfield upon FDA approval of HEPLISAV-B and satisfaction of other conditions. We intend to use the net proceeds for general corporate purposes, including the commercialization of HEPLISAV-B.

Financials

Total revenues for the third quarter of 2016 were $0.2 million compared to $1.2 million for the same period in 2015. The $1.0 million decrease was due to the conclusion of our work under the research collaboration and license agreement with AstraZeneca for the clinical development of AZD 1419.

Research and development expenses for the third quarter of 2016 were $23.2 million compared to $24.1 million for the same period in 2015. This $0.9 million decrease was primarily due to reduction in outside services expense associated with the completion of HBV-23 in the fourth quarter of 2015, partially offset by an increase in employee headcount and regulatory and manufacturing activities in preparation for the anticipated commercial launch of HEPLISAV-B.

General and administrative expenses for the third quarter of 2016 were $11.8 million compared to $5.5 million for the same period in 2015. This $6.3 million increase reflects expenses related to preparation for the commercial launch of HEPLISAV-B including additional headcount, information technology systems and infrastructure to support commercial development.

The net loss for the third quarter of 2016 was $34.7 million, or $0.90 per basic and diluted share, compared to $30.1 million, or $0.82 per basic and diluted share, for the same period in 2015.