On October 27, 2016 Agenus Inc. (NASDAQ: AGEN), an immuno-oncology (I-O) company developing antibodies, including checkpoint inhibitors and other checkpoint modulators and cancer vaccines, reported an update on its progress and reported financial results for the third quarter ended September 30, 2016 (Press release, Agenus, OCT 27, 2016, View Source [SID1234516081]).

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Agenus Logo
"In the third quarter we advanced our pre-clinical and clinical programs and focused our efforts on our product development plans with an intent to commercialize Agenus’ first generation of I-O products in the next five years," commented Garo H. Armen, Ph.D., Chairman and CEO of Agenus. "We have delineated our clinical development path as it relates to our monoclonal antibodies, targeting the foundational immune checkpoints CTLA-4 and PD-1. In addition, we are steering our antibody vaccine combinations towards the clinic. Our world class team, along with our diverse portfolio and capabilities, are key differentiators for Agenus to compete in the field and to deliver on the promise of immunotherapy."

Recent Highlights

Our first CTLA-4 antibody AGEN1884 advanced in the clinic.
Our novel checkpoint antibodies and vaccine programs progressed in various stages of development.
GlaxoSmithKline’s Shingrix vaccine candidate containing Agenus’ QS-21 Stimulon for prevention of shingles in adults aged 50 years or older, was filed for US regulatory approval.
Jean-Marie Cuillerot, M.D. appointed Vice President and Global Head of Clinical Development.
James Gorman, M.D., Ph.D. appointed Vice President of Strategic Planning and Portfolio Management.
Projected Near-Term Milestones

Phase 1 trial initiation for OX40 agonist INCAGN1949 in collaboration with Incyte.
Phase 1 trial initiation for PD-1 antagonist AGEN2034.
Clinical study initiation combining CTLA-4 and PD-1 antagonists.
Third party-sponsored randomized trial initiation for Prophage together with a checkpoint antagonist in newly diagnosed glioblastoma.
Phase 1 trial initiation for AutoSynVax.
Consummation of additional strategic partnerships.
Third Quarter 2016 Financial Results

For the third quarter ended September 30, 2016, Agenus reported a net loss attributable to common stockholders of $40.8 million which includes $18.7 million of non-cash expenses. This compares to a net loss attributable to common stockholders for the third quarter of 2015 of $13.2 million which included $4.1 million of non-cash income. Net loss was $0.47 per share, and $0.16 per share, basic and diluted, for the three months ended September 30, 2016 and 2015, respectively. The increase in net loss attributable to common stockholders for the three months ended September 30, 2016, compared to the net loss attributable to common stockholders for the same period in 2015, was largely due to the $22.7 million increase in non-cash expenses primarily from fair value adjustments of the contingent obligations in addition to $4.9 million applicable to the advancement of the checkpoint and cancer vaccine programs.

For the nine months ended September 30, 2016, the company reported a net loss attributable to common stockholders of $101.0 million, which includes $35.9 million in non-cash expenses, compared with a net loss attributable to common stockholders of $72.4 million, which included $22.5 million in non-cash expenses, for the nine months ended September 30, 2015. Net loss was $1.16 per share and $0.95 per share, basic and diluted for the nine months ended September 30, 2016 and 2015, respectively.

Cash, cash equivalents and short-term investments were $95.4 million as of September 30, 2016.

On October 27, 2016 West Pharmaceutical Services, Inc. (NYSE: WST) reported its financial results for the third quarter 2016, updated financial guidance for the full-year 2016, introduced sales growth outlook for full-year 2017 and reaffirmed long-term 2020 financial targets (Press release, West Pharmaceutical Services, OCT 27, 2016, View Source;reqid=2216475 [SID1234516080]).

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West Pharmaceutical Services, Inc.
Third Quarter 2016 Highlights

Reported net sales of $376.7 million grew 9.4% over the prior-year quarter. Net sales at constant currency grew by 10.0%.
Third quarter 2016 reported diluted EPS was $0.50 as compared to $0.02 in the prior-year quarter. Adjusted diluted EPS was $0.53 as compared to $0.44 in the prior-year quarter, representing 20% year-over-year growth. Both reported and adjusted diluted EPS comparisons to the prior-year period were adversely impacted by $0.04 of currency impacts.
Raising full-year 2016 net sales guidance and tightening adjusted diluted EPS guidance range.
Full-year net sales are now expected to be between $1.510 billion and $1.520 billion compared to prior range of $1.505 billion to $1.520 billion.
Full-year 2016 adjusted diluted EPS is now expected to be between $2.17 and $2.22 compared to prior range of $2.15 to $2.25.
Providing preliminary 2017 sales growth guidance at the high-end of our long-term guidance and reaffirms 2020 financial targets.
"Net sales at constant currency" and "adjusted diluted EPS" are Non-GAAP measurements. See discussion under the heading "Non-GAAP Financial Measures" in this release.

Executive Commentary

"West had another successful quarter with double-digit organic sales growth, year-over-year increases in gross and operating profit margins and strong double-digit growth in adjusted earnings," said Eric M. Green, President and Chief Executive Officer. "Sales growth contribution came from both Proprietary Products and Contract-Manufactured Products segments. The growth was broad-based across our Biologics, Generics and Pharma market units as well as in all geographies. We continue to see strong double-digit sales growth and growing customer demand for our high-value product offerings including FluroTec, Westar RU, Daikyo, administration systems and NovaPure components."

"Fueled by our organic sales growth and a favorable product mix of high-value products, we had year-over-year gross margin expansion. Importantly, our Global Operations team remains on track to achieve our targets of reduced lead times and backlog, which is critical in ensuring a stable supply chain for our customers."

Mr. Green continued, "Last year, we issued 5-year financial targets for 2020. We are off to a good start, and we are reaffirming those targets. In the first year of the plan, we realigned our organization to a market-led strategy, expanded manufacturing capacity and launched new high-value products. In addition, our customers have received regulatory approval for several products using Crystal Zenith and SmartDose technologies."

In the first three quarters of 2016, we have generated almost 10% organic sales growth, expanded both gross and operating profit margins and grown adjusted diluted EPS by 21%. We are raising our full-year 2016 organic sales growth guidance to the upper end of our prior range of 7% to 9% and expect full-year 2016 adjusted diluted EPS to grow approximately 20% at the mid-point of our updated range of $2.17 to $2.22. As we look to 2017, we see continued demand trends from the markets we serve, and we expect to be at the high end of our long-term guidance range of 6% to 8% organic sales growth."

Third Quarter 2016 Results

Gross profit margin was 32.1%, an increase of 70 basis points compared to the prior-year quarter. Proprietary Products gross profit margin was 36.4%, an increase of 90 basis points, primarily due to product mix improvements and modest price increases partially offset by increased labor and overhead costs and changes in foreign currency rates. Contract-Manufactured Products gross profit margin was 16.0%, a decrease of 80 basis points, primarily due to an unfavorable mix of products sold, including low-margin tooling sales.

Third quarter 2016 reported operating profit margin was 13.6%, compared with -1.0% in the prior-year quarter. Excluding 2016 restructuring activities and a 2015 pension settlement charge, third quarter 2016 adjusted operating profit margin was 14.2% compared to 13.2% in the 2015 quarter, an increase of 100 basis points.

Third Quarter 2016 Business Segment Results

Proprietary Products ($298.1 million, 79% of overall net sales)

Proprietary Products reported sales growth was 10.7% over the prior-year quarter. Organic sales growth was 11.6%, led by double-digit growth in the Biologics market unit, high-single digit sales growth in the Generics market unit and mid-single digit sales growth in the Pharma market unit. High-value product offerings had organic sales growth of 25%.

The Proprietary Products backlog of committed orders at September 30, 2016 was $388 million, a decrease of 2% at constant currency compared to September 30, 2015. This continues the 2016 quarterly trend of reduced lead times and backlog as a result of successful Global Operations initiatives and capacity enhancements.

Operating profit for the segment was $57.5 million, resulting in an operating profit margin of 19.3%, compared to $49.5 million and 18.4% in the 2015 period. The margin increase was primarily due to an improvement in gross profit margin.

Contract-Manufactured Products ($79.0 million, 21% of overall net sales)

Contract-Manufactured Products reported sales growth and organic sales growth both were 4.6%, primarily due to higher drug delivery and diagnostic product sales.

Operating profit for the segment was $8.9 million, resulting in an operating profit margin of 11.1%, compared to $8.3 million and 11.0% in the 2015 period. Cost controls on selling, general and administrative expenses offset the decline in gross profit margin.

Corporate and Other

General corporate costs declined by $1.2 million to $6.0 million. Stock-based compensation costs increased by $1.0 million to $4.6 million. U.S. pension expense increased $0.7 million, to $2.2 million.

The effective tax rate used in determining reported net income was 29.3% for the third quarter of 2016. The effective tax rate used in determining adjusted net income was 28.8% as compared to 26.7% in the same quarter of 2015.

During the quarter, the Company repurchased 117,310 shares for $9.6 million. During the first nine months of 2016, the Company has repurchased 370,810 shares for $26.8 million. There are up to 329,190 shares remaining to be repurchased in the program authorized in December 2015.

Full-Year 2016 Financial Guidance

West’s full-year 2016 net sales, margin and EPS guidance are as follows:

(in millions, except EPS)
2016 Updated
Guidance

Prior Guidance
Consolidated net sales
$1,510 to $1,520
$1,505 to $1,520

Consolidated gross profit margin (% of net sales)
33.6% to 33.7%
33.6% to 34.0%

Proprietary Products net sales
$1,195 to $1,200
$1,195 to $1,200

Proprietary Products
Gross profit margin (% of net sales)

38.0% to 38.2%

37.9% to 38.4%

Contract-Manufactured Products net sales
$315 to $320
$310 to $320

Contract-Manufactured Products
Gross profit margin (% of net sales)

16.8% to 17.2%

17.1% to 17.6%

Full-Year adjusted diluted EPS*
$2.17 to $2.22
$2.15 to $2.25
* Adjusted diluted EPS is a non-GAAP measurement. See discussion under the heading "Non-GAAP Financial Measures" in this release.

The principal currency assumption used in preparing these estimates is the translation of the euro at $1.10 for the remainder of 2016 as compared to the prior guidance exchange rate of $1.12 per euro.

With one quarter remaining in the year, the gross profit margin guidance range has been tightened and reflects the expected positive impact from the mix of high-value product sales growth offset by changes in foreign currency exchange rates, in particular the Japanese yen, and incremental sales of low-margin contract manufacturing tooling sales.

The Company expects that its annual effective tax rate, used in determining adjusted net income and adjusted diluted EPS, will be approximately 28.5%.

The Company estimates its 2016 capital spending at between $150 million and $175 million.

2017 Revenue and Long-Term Outlook

The Company expects 2017 organic sales growth to grow at the high end of its long-term outlook of 6% to 8%. Sales growth of high-value products is expected to be in the low-double digits.

The Company is reaffirming its 2020 financial targets of sales between $2.2 billion and $2.4 billion with a consolidated operating profit margin in the range of 19% to 23%. Over this period, the Company continues to estimate capital spending to be in the range of $150 million to $175 million per year.

On October 27, 2016 argenx (Euronext Brussels: ARGX), a clinical-stage biopharmaceutical company focused on creating and developing differentiated therapeutic antibodies for the treatment of cancer and severe autoimmune diseases, reported a business update and announced financial results for the third quarter ended 30 September 2016(Press release, arGEN-X, OCT 27, 2016, View Source [SID1234516078]).

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"This is a very exciting time for the company as we finalize later-stage clinical development plans for our two lead antibody programs, ARGX-113 and ARGX-110. Over the next six months, we expect to launch four Phase 2 studies, all in therapeutic settings with a strong scientific rationale. For ARGX-113, we have seen the potential of the drug to reduce IgGs, and look forward to initiating trials and reporting results in indications such as myasthenia gravis and immune thrombocytopenia, where pathogenic IgG’s are a key contributor to disease. For ARGX-110, we plan to initiate two combination trials with the goal of enhancing standard of care for TCL and AML patients," commented Tim Van Hauwermeiren, Chief Executive Officer of argenx.

THIRD QUARTER 2016

Hosted inaugural R&D day in New York with updates on lead programs in auto-immune disease and oncology including:

Myasthenia gravis (MG) and immune thrombocytopenia (ITP) will be the initial indications for Phase 2 studies of ARGX-113. The first of the studies in myasthenia gravis is expected to initiate by the end of 2016.
T-cell lymphoma (TCL) and acute myeloid leukemia (AML) are the indications for Phase 2 combination studies of ARGX-110. The studies are expected to initiate by the end of 2016.

FINANCIAL HIGHLIGHTS (as of 30 September, 2016) (compared to financial highlights as of 30 September 2015)

Operating income of EUR 12.5 million (30 September 2015: EUR 7.3 million).
Net loss of EUR 12.6 million (30 September 2015: EUR 10.1 million).
Cash position of EUR 103.1 million (cash, cash-equivalents and financial assets) allowing Company to pursue development of its product portfolio as planned.

DETAILS OF OPERATIONAL RESULTS

Products in clinical development:
ARGX-113

Data set from Phase 1 single ascending dose (SAD) and multiple ascending dose (MAD) studies showed favorable safety profile and specific IgG reduction of up to 85 % with a long duration of effect, with repeated dosing of the drug.
Complete MAD data will be presented at a workshop being held in conjunction with the American Society of Hematology (ASH) (Free ASH Whitepaper) annual meeting.
Start of Phase 2 study in MG by the end of 2016.
Start of Phase 2 study in ITP in Q1 2017.

ARGX-110

T-cell lymphoma (TCL):
Interim data of Phase 1b safety expansion study in TCL show partial responses and improvement of skin lesions in cutaneous TCL patients.
Update from safety expansion study to be presented by the end of 2016 at a workshop being held in conjunction with the ASH (Free ASH Whitepaper) annual meeting.
First combination study with romidepsin to initiate by the end of 2016.
Acute myeloid leukemia (AML):
Role of CD70 in newly diagnosed AML patients was presented during R&D day.
First combination study with azacitidine to initiate by the end of 2016.
Preclinical data to be presented by the end of 2016 at a workshop being held in conjunction with ASH (Free ASH Whitepaper) annual meeting.
ARGX-111

Twenty-five patients have been treated in the dose escalation and safety expansion cohort of the Phase 1b study. No additional recruitment of MET-amplified patients is planned and the Company is focused on partnering the asset ahead of any Phase 2 study.

Products in Preclinical Development

ARGX-115

In collaboration with AbbVie to develop and commercialize ARGX-115.
Under agreement, argenx will conduct research and development through IND-enabling studies. Upon successful completion of IND-enabling studies, AbbVie may exercise the exclusive option to license ARGX-115 and assume responsibility for further clinical development and commercialization.
Corporate

Increased FTEs to 71.3 in support of the expansion of the business.
Recognized by the 2016 European Frost & Sullivan Award for Technology Innovation for SIMPLE Antibody discovery platform.
The Company continues to collaborate with Shire, LEO Pharma and Bird Rock Bio. Milestone payments to be expected in 2017.
Mr. Tony Rosenberg will serve as an independent advisor to the Board of Directors, effective 1 October 2016. Previously he served as Global Head, M&A and Licensing for Novartis and has held diverse leadership positions with Novartis predecessor company, Sandoz.

KEY FIGURES (CONSOLIDATED)

in thousands of euros

Period ended

Sept 30, 2016

Period ended

Sept 30, 2015

Variance

Revenue

10,515

4,981

5,535

Other operating income

2,010

2,320

(310)

Total operating income

12,525

7,300

5,225

Research and development expenses

(20,170)

(14,200)

(5,970)

General and administrative expenses

(4,927)

(3,345)

(1,581)

Operating profit/(loss)

(12,572)

(10,245)

(2,327)

Financial income/(expense)

55

51

4

Exchange gains/(losses)

(51)

119

(170)

Profit/loss for the period

(12,568)

(10,075)

(2,494)

Net increase (decrease) in cash, cash-equivalents and financial assets (compared to year end 2015 and 2014)

60,740

(9,336)

Cash, cash-equivalents and financial assets at the end of the period

103,067

46,637

THIRD QUARTER 2016 FINANCIAL RESULTS

On 30 September 2016, operating income reached EUR 12.5 million compared to EUR 7.3 million at the same date in 2015. The increase of EUR 5.2 million in operating income in 2016 results primarily from (i) the deferred revenue recognized from the collaboration agreement signed with Abbvie in April 2016 and (ii) the milestone payment received in February 2016 from the collaboration with LEO Pharma.

Research and development expenses totalled EUR 20.2 million and EUR 14.2 million for the nine-month period ended 30 September 2016 and 2015, respectively. The increase of EUR 6 million in R&D expenses in the first nine months of 2016 correspond principally to (i) increased clinical trial and product manufacturing activities (ii) the recruitment of additional R&D personnel and consultants in relation to increased R&D activities and (iii) the share based payment costs recognized in compensation for the grant of stock options to the R&D employees.

General and administrative expenses amounted to EUR 4.9 million on 30 September 2016, compared to EUR 3.3 million on 30 September 2015. The increase of EUR 1.6 million in G&A expenses in the first nine months of 2016 is principally explained by (i) the increase of personnel expenses related to the employees recruited to strengthen the Group’s G&A activities and support R&D activities, (ii) increased expenses in relation with the growth of the operational activities of the Company (including notably the new offices and laboratory, travel, business development and ICT expenses), and (iii) the share based payment costs recognized in compensation for the grant of stock options to the G&A employees.

During the first nine months of 2016, the Company generated a net loss of EUR 12.6 million compared to a net loss of EUR 10.1 million in the same period of 2015.

On 30 September 2016 the Company’s cash, cash equivalents and financial assets amounted to EUR 103.1 million compared to EUR 42.3 million on 31 December 2015 and EUR 46.6 million on 30 September 2015. The significant increase in the Company’s cash, cash equivalents and financial assets is explained by (i) the two financings completed in January and June 2016 with institutional investors for total gross proceeds of EUR 46 million and (ii) the upfront payment of USD 40 million received following the signature of the collaboration agreement with Abbvie in April 2016.

On October 27, 2016 Integra LifeSciences Holdings Corporation (NASDAQ:IART) reported its financial results for the third quarter ending September 30, 2016 (Press release, Integra LifeSciences, OCT 27, 2016, View Source [SID1234516072]).

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Highlights:

Third quarter revenue increased 10.6% over the prior-year quarter to $250.3 million, and year-to-date revenue grew 14.8% over the prior year period;
Organic revenue increased 9.5% over the prior-year quarter, and year-to-date organic revenue grew 9.7% over the prior-year period;
Both GAAP and adjusted gross margin increased 230 basis points over the prior-year quarter to 64.3% and 69.3%, respectively;
GAAP net income increased to $20.1 million, or $0.50 per share, versus a loss of $31.9 million in the third quarter of 2015;
Adjusted net income increased 33.7% to $36.1 million and adjusted earnings per share of $0.93 increased 24%, compared to the third quarter of 2015;
Operating cash flow was $46.8 million in the third quarter, more than double the prior-year quarter; free cash flow conversion exceeded 75% on a trailing twelve-month basis; and,
The Company is maintaining its previously issued 2016 full-year sales guidance range of $992 million to $1.002 billion, raising organic growth guidance to a range of 9.0% to 9.5% and increasing the low end of its diluted adjusted EPS guidance by $0.04 to a new range of $3.47 to $3.53.
Total revenues for the third quarter were $250.3 million, reflecting an increase of $24.0 million, or 10.6%, over the third quarter of 2015. Both global segments contributed to the growth, with revenue in Orthopedics and Tissue Technologies and Specialty Surgical Solutions increasing by 14.7% and 8.4%, respectively, compared to the prior year.

Excluding the revenue contribution from acquisitions, discontinued products, and the effect of currency exchange rates, revenues increased 9.5% over the third quarter of 2015.

"We are seeing consistent and solid organic growth across both our global segments driven by our differentiated products, leading brand positions, new product introductions and end market growth," said Peter Arduini, Integra’s President and Chief Executive Officer. "Double-digit growth outside the United States in both segments reflects improved execution of our international strategy."

The Company reported GAAP net income of $20.1 million, or $0.50 per diluted share, for the third quarter of 2016, compared to a GAAP net loss of $31.9 million, or $0.90 per diluted share, for the third quarter of 2015. Results for the third quarter of 2015 included a $35.6 million non-cash tax charge to establish a valuation allowance for certain deferred tax assets associated with the SeaSpine separation.

Adjusted measures discussed below are computed with the adjustments to GAAP reporting set forth in the attached reconciliation.

Adjusted net income for the third quarter of 2016 was $36.1 million, or $0.93 per share, compared to adjusted net income of $27.0 million, or $0.75 per share, in the third quarter of 2015.

Adjusted EBITDA for the third quarter of 2016 was $58.6 million, or 23.4% of revenue, compared to $47.7 million, or 21.1% of revenue, in the third quarter of 2015.

Operating cash flow for the third quarter was $46.8 million, more than double the prior-year period. Trailing twelve month adjusted free cash flow conversion ended September 30, 2016, was 75.6%, versus 73.4% in the prior year.

Outlook for 2016

Based on third quarter results, the Company is maintaining its full-year 2016 revenue guidance in the range of $992 million to $1.002 billion. Guidance for full-year 2016 organic revenue growth is being increased to a new range of 9.0% to 9.5%, up from 9% previously. The Company is raising the low end of its full-year GAAP and adjusted earnings per share guidance range by $0.04, to a new range of $1.82 – $1.88 and $3.47 – $3.53, respectively, mainly due to a lower effective tax rate.

"We executed on our operational and financial plans in the third quarter, which drove double-digit revenue growth, a record adjusted gross margin, EBITDA margin expansion of 230 basis points and over 20% improvement in adjusted earnings per share," said Glenn Coleman, Integra’s Chief Financial Officer. "We are on track to meet our full-year 2016 financial objectives and are well positioned to achieve the 2018 financial targets provided at our analyst meeting last November."

In the future, the Company may record, or expects to record, certain additional revenues, gains, expenses, or charges as described in the Discussion of Adjusted Financial Measures below that it will exclude in the calculation of adjusted EBITDA and adjusted earnings per share for historical periods and in providing adjusted earnings per share guidance.

On October 27, 2016 Cytokinetics, Inc. (Nasdaq:CYTK) reported total revenues for the third quarter of 2016 were $59.0 million, compared to $7.9 million, during the same period in 2015 (Press release, Cytokinetics, OCT 27, 2016, View Source;p=RssLanding&cat=news&id=2216748 [SID1234516067]). The net income for the third quarter was $31.9 million, or $0.80 and $0.74 per basic and diluted share, respectively. This is compared to the net loss for the same period in 2015 of $(8.8) million, or $(0.23) per basic and diluted share. As of September 30, 2016, cash, cash equivalents and investments totaled $86.3 million and the Company received an additional $65.0 million in October 2016, from the expanded collaboration with Astellas Pharma, Inc. ("Astellas"), which was effective in September 2016.

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"We had a very productive quarter advancing our growing portfolio of novel mechanism drug candidates," said Robert I. Blum, Cytokinetics’ President and Chief Executive Officer. "We are especially pleased to be moving omecamtiv mecarbil into GALACTIC-HF with agreement from FDA on key elements of a SPA and look forward to finalizing the protocol in collaboration with Amgen. We also made great progress completing enrollment in VITALITY-ALS and initiating VIGOR-ALS, the open-label extension trial for patients with ALS who have completed VITALITY-ALS. Finally, it’s gratifying to have again expanded our collaboration with Astellas and to align our interests for tirasemtiv and CK-2127107 in ALS and other indications, while advancing another next-generation fast skeletal muscle activator into pre-clinical development. We believe the activities of the past quarter demonstrate the power of our muscle biology platform and the promise of innovations arising from our pioneering research and development."

Recent Highlights and Upcoming Milestones

Cardiac Muscle Program

omecamtiv mecarbil

Announced the advancement of omecamtiv mecarbil to a Phase 3 clinical trials program. The first Phase 3 trial, GALACTIC-HF (Global Approach to Lowering Adverse Cardiac Outcomes Through Improving Contractility in Heart Failure), to be conducted by Amgen in collaboration with Cytokinetics, is designed to evaluate the effect of treatment with omecamtiv mecarbil compared with placebo on the time to cardiovascular death or first heart failure event, whichever comes first, in approximately 8,000 subjects with chronic heart failure with reduced ejection fraction receiving standard of care therapy.
Announced additional results from COSMIC-HF (Chronic Oral Study of Myosin Activation to Increase Contractility in Heart Failure), a Phase 2 trial evaluating omecamtiv mecarbil in patients with chronic heart failure, showing that omecamtiv mecarbil may improve symptoms versus placebo in patients with moderate to severe heart failure symptoms at baseline after 20 weeks of double-blind treatment, as measured by the Kansas City Cardiomyopathy Questionnaire Total Symptom Score, one of the sub-domains of a self-administered questionnaire that measures quality-of-life in patients with heart failure. The results were presented at the 20th Annual Heart Failure Society of America Scientific Meeting in Orlando, FL.

Reached agreement with FDA on key elements of GALACTIC-HF through a Special Protocol Assessment (SPA). Details of the protocol are being finalized with regulators.
Expect to initiate sites for GALACTIC-HF in the fourth quarter of 2016.
Skeletal Muscle Program

tirasemtiv

Announced the completion of patient enrollment in VITALITY-ALS (Ventilatory Investigation of Tirasemtiv and Assessment of Longitudinal Indices after Treatment for a Year in ALS), an international Phase 3 clinical trial of tirasemtiv in patients with ALS. VITALITY-ALS is designed to assess the effects of tirasemtiv versus placebo on slow vital capacity (SVC) and other measures of skeletal muscle strength in patients with ALS. VITALITY-ALS enrolled more than 700 patients.
Convened the second Data Monitoring Committee Meeting for VITALITY-ALS to review unblinded safety and efficacy data; the Committee recommended continuing the trial without modifications to the protocol.
Amended our collaboration agreement with Astellas to provide an option right for the development and commercialization of tirasemtiv outside of North America, Europe and select other countries.
Announced the first patient has been enrolled in VIGOR-ALS (Ventilatory Investigations in Global Open-Label Research in ALS), an open-label extension clinical trial designed to assess the long-term safety and tolerability of tirasemtiv, in patients with ALS who have completed their participation in VITALITY-ALS.
Expect data from VITALITY–ALS in the fourth quarter of 2017.
CK-2127107

Amended our collaboration agreement with Astellas to enable the development of CK-2127107, under an agreed plan for the potential treatment of patients with ALS.
Continued enrollment of the ongoing Phase 2 clinical trial of CK-2127107 in patients with spinal muscular atrophy (SMA) in collaboration with Astellas.
Expect to complete enrollment of Cohort 1 in the Phase 2 clinical trial of CK-2127107 in patients with SMA in the fourth quarter of 2016. Expect data from this clinical trial in first half of 2017.
Expect Astellas to complete enrollment in a Phase 2 clinical trial of CK-2127107 in patients with COPD in 2017.
Pre-Clinical Research

Announced the initiation of IND-enabling studies for a next-generation fast skeletal muscle activator under our collaboration with Astellas.
Extended our joint research program with Astellas focused on the discovery of next-generation skeletal muscle activators through 2017.
Continued research activities under our joint research program with Amgen directed to the discovery of next-generation cardiac muscle activators and under our joint research program with Astellas directed to the discovery of next-generation skeletal muscle activators. In addition, company scientists continued independent research activities directed to our other muscle biology programs.
Corporate

Announced that the Federal Trade Commission granted early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act) in connection with the 2016 amendment to the License and Collaboration Agreement initially executed between Cytokinetics and Astellas Pharma Inc., in 2013 and amended in 2014.

Recently received the upfront payment of $65 million from Astellas related to the amendment to our collaboration agreement.

Received a $2 million milestone payment related to the initiation of IND-enabling studies for a next-generation fast skeletal muscle activator under our collaboration with Astellas.

Earned a $150,000 milestone payment related to our collaboration with MyoKardia.
Announced the continuation and expansion of our partnership with The ALS Association in the fight against ALS, including renewal of our Gold Level Sponsorship of the National Walks to Defeat ALS and Platinum Level Sponsorship for initiatives led by The ALS Association’s Golden West Chapter.
Financials

Revenues for the third quarter of 2016 were $59.0 million, compared to $7.9 million during the same period in 2015. Revenues for the third quarter of 2016 included $53.0 million of license revenues, $3.0 million of research and development revenues and $2.0 million of milestone payments from our collaboration with Astellas, $0.6 million in research and development revenues from our collaboration with Amgen, $0.3 million in research and development revenues from our collaboration with ALSA and $0.2 million in milestone revenue from our collaboration with MyoKardia. Revenues for the same period in 2015 were comprised of $4.1 million of license revenues and $3.2 million of research and development revenues from our collaboration with Astellas, and $0.6 million of research and development revenues from our collaboration with Amgen. The increase in revenues for the third quarter of 2016, compared with the same period in 2015, was mainly due to the license revenue associated with the expansion of the Astellas collaboration agreement, which was effective in September 2016.

Total research and development (R&D) expenses for the third quarter of 2016 were $19.3 million, compared to $11.6 million for the same period in 2015. The $7.7 million increase in R&D expenses for the third quarter of 2016, compared with the same period in 2015, was primarily due to an increase of $6.6 million in outsourced pre-clinical and clinical costs mainly associated with the ongoing VITALITY-ALS trial, and an increase of $1.1 million in personnel related expenses due to increased headcount costs and increased non-cash stock compensation expense.

Total general and administrative (G&A) expenses for the third quarter of 2016 were $7.2 million compared to $5.3 million for the same period in 2015. The $1.9 million increase in G&A expenses for the third quarter of 2016, compared to the same period in 2015, was primarily due to an increase of $1.3 million in personnel related expenses due to increased headcount and increased non-cash stock compensation expense, an increase of $0.4 million in outsourced costs related to commercial development and information technology, and an increase of $0.2 million in corporate and patent legal fees.

Revenues for the nine months ended September 30, 2016 were $73.3 million, compared to $18.9 million for the same period in 2015. Revenues for the first nine months of 2016 included $59.0 million of license revenues, $9.5 million of research and development revenues and $2.0 million of milestone payments from our collaboration with Astellas, $1.8 million of research and development revenues from our collaboration with Amgen, $0.8 million in research and development revenues from our collaboration with ALSA and $0.2 million in milestone payment revenue from our collaboration with MyoKardia. Revenues for the same period in 2015 included $8.8 million of license revenues and $8.2 million of research and development revenues from our collaboration with Astellas, and $1.9 million of research and development revenues from our collaboration with Amgen.

Total R&D expenses for the nine months ended September 30, 2016 were $42.6 million, compared to $33.1 million for the same period in 2015. The $9.5 million increase in R&D expenses in the first nine months of 2016, over the same period in 2015, was primarily due to an increase of $9.5 million in outsourced clinical costs, an increase of $3.5 million in personnel related expenses due to increased headcount costs and increased non-cash stock compensation expense, partially offset by a decrease of $3.6 million in outsourced preclinical costs mainly associated with clinical manufacturing activities. The increase in outsourced clinical costs was comprised of an increase of $14.0 million in outsourced clinical costs mainly associated with VITALITY-ALS, offset by a $4.5 million litigation settlement in June 2016 from a contract research organization for BENEFIT-ALS, our Phase 2 clinical trial which was concluded in 2014.

Total G&A expenses for the nine months ended September 30, 2016 were $21.1 million, compared to $14.1 million for the same period in 2015. The $7.0 million increase in G&A spending in the first nine months of 2016 compared to the same period in 2015, was primarily due to an increase of $3.3 million in personnel related expenses due to increased headcount costs and increased non-cash stock compensation expense, an increase of $1.9 million in outsourced costs related to commercial development, grants and sponsorships, and accounting and finance, and an increase of $1.6 million in corporate and patent legal fees.

The net income for the nine months ended September 30, 2016, was $7.8 million, or $0.20 and $0.19 per basic and diluted share, respectively, compared to a net loss of $(28.3) million, or $(0.73) per basic and diluted share, for the same period in 2015.

Financial Guidance

Cytokinetics also updated its financial guidance for 2016. The company anticipates cash revenue will be in the range of $84 to $87 million, cash R&D expenses will be in the range of $65 to $67 million, and cash G&A expenses will be in the range of $23 to $26 million. This guidance excludes approximately $13.5 million in unearned revenue from the 2014 amendment of our collaboration with Astellas, which will be recognized in 2016 under generally accepted accounting principles, as well as any potential future milestones that may be achieved in accordance with our collaboration agreements with our partners Amgen and Astellas. We expect a milestone payment from Amgen of approximately $27 million relating to the start of GALACTIC-HF in the fourth quarter 2016. The guidance includes $15 million in cash revenue under the 2016 amendment to our collaboration with Astellas, which will be recorded under generally accepted accounting principles once Astellas exercises its option to add tirasemtiv to the collaboration. This guidance also excludes an estimated $7.2 million in non-cash related operating expenses primarily related to stock compensation expense.