On May 5, 2016 PTC Therapeutics, Inc. (NASDAQ: PTCT) reported a corporate update and reported financial results for the first quarter ending March 31, 2016 (Press release, PTC Therapeutics, MAY 5, 2016, View Source [SID:1234512058]).

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"We are working hard to make Translarna available to all Duchene muscular dystrophy patients globally who may benefit," said Stuart W. Peltz, Ph.D., Chief Executive Officer, PTC Therapeutics, Inc. "To that end, we are in dialogue with the FDA about the Refuse to File letter we received earlier this year. In Europe, we are also continuing discussions with the CHMP surrounding our regulatory submissions for DMD and CF. We are seeing growth in Translarna global sales and continue to expand access for DMD patients outside of the U.S. We were pleased with the positive recommendation from NICE, and anticipate access for patients in England once the market access agreement with NHS England is finalized. We are also excited that the second SMA compound in our collaboration is advancing in the clinic."

Key First Quarter and other Corporate Highlights:

Actively pursuing regulatory approvals for Translarna in DMD globally. PTC has engaged in dialogue with the U.S. Food and Drug Administration (FDA) to discuss the matters described in the Agency’s Refuse to File letter regarding Translarna for nonsense mutation Duchenne muscular dystrophy (nmDMD) and to seek a potential path forward to bring Translarna to patients in the U.S. Given the sensitivity around these discussions as well as their iterative nature, PTC will provide an update once it has clarified the regulatory strategy for Translarna in the U.S.
In the first quarter of 2016, PTC submitted the ACT DMD Phase 3 results to the European Medicines Agency (EMA) in support of the marketing authorization for Translarna for the treatment of nmDMD in ambulatory patients aged five and over, and separately, submitted a request for renewal of its current conditional marketing authorization. PTC is in the process of responding to requests for supplementary information from the Committee for Medicinal Products for Human Use (CHMP) to assist in determining whether the results of ACT DMD support a positive benefit-risk assessment for Translarna. PTC anticipates that the CHMP will issue its recommendation in mid-2016.

In Canada, PTC plans to submit a New Drug Submission for Translarna to Health Canada incorporating the results of the company’s Phase 3 ACT DMD study in the second half of 2016.

PTC recently initiated a Phase 1 pharmacokinetics study to assess the effects of Translarna in Japanese healthy volunteers. This study is the first step in pursuing regulatory approval for Translarna for nmDMD in Japan, one of the world’s largest pharmaceutical markets.

Translarna revenue of $18.9M in first quarter, which represents 49% growth over prior quarter. PTC has established a strong global commercial footprint launching the first approved therapy in nmDMD. By the end of 2016, PTC anticipates expanding commercial access to Translarna in over 35 countries across Europe, the Middle East, Latin America and Asia Pacific.
Translarna received recommendation in draft guidance from NICE. In the UK, the National Institute for Health and Care Excellence (NICE) has recommended Translarna for ambulatory patients aged five years and older with nmDMD in connection with a Managed Access Agreement (MAA) with NHS England. The provision of patient access is subject to the completion of the MAA with NHS England and finalization of the NICE draft guidance. NICE recently extended the timeframe for finalization of its guidance.
German patients accessing Translarna through alternate distribution channel. In Germany, PTC has delisted Translarna from the pharmacy ordering system. Since delisting in April, initial orders for German patients have already been successfully fulfilled via a foreign importation pathway. This pathway allows patients with high unmet medical needs to receive reimbursed access to treatments not directly available in Germany.
ACT CF Phase 3 clinical trial on track for completion by year-end 2016 with top-line results expected early 2017. During the third quarter of 2015, PTC submitted a variation to its marketing authorization requesting EMA approval of Translarna for the treatment of nonsense mutation cystic fibrosis (nmCF) based on the company’s previous Phase 3 study. The company anticipates the CHMP will issue its opinion regarding this submission in mid-2016. PTC’s confirmatory Phase 3 ACT CF trial is currently ongoing, and there is substantial risk that the results from this trial will be required for approval.
SMA program progressing with proof of concept achieved in Phase 1 study of RG7916 and clinical study in SMA patients planned for second half of 2016. Clinical development of the spinal muscular atrophy (SMA) program, a collaboration with Roche and the SMA Foundation, continued with the completion of a Phase 1 study of RG7916 in healthy volunteers. Preliminary results indicate that RG7916 was well tolerated and treatment resulted in increases of full length SMN2 mRNA. A clinical study of RG7916 in SMA patients is expected to begin in the second half of 2016.
First Quarter Financial Highlights:

Translarna net product sales were $18.9 million for the first quarter of 2016, representing 49% growth over $12.7 million reported in the fourth quarter of 2015; and significant growth versus $5.1 million in the first quarter of 2015. Translarna net product sales were positively impacted by a significant order from Brazil, where purchasing is often fulfilled in six-month orders, partially offset by a lower sales price for existing stock in Germany as a result of a mandatory discount imposed by the German Federal Association of the Statutory Health Insurances (GKV-SV) prior to delisting. The effect of larger but less frequent orders from Brazil may result in fluctuations in quarterly sales reporting during the course of the year.
Total revenues for the first quarter of 2016 were $18.9 million compared to $7.5 million in the same period of 2015. The change in total revenue was a result of the expanded commercial launch of Translarna, partially offset by lower grant revenue.
Non-GAAP R&D expenses were $27.1 million for the first quarter of 2016, excluding $4.3 million in non-cash, stock-based compensation expense, compared to $23.3 million for the same period in 2015, excluding $4.6 million in non-cash, stock-based compensation expense. GAAP R&D expenses were $31.4 million for the first quarter of 2016 compared to $27.9 million for the same period in 2015. The increase in R&D expense for the first quarter of 2016 as compared to the prior year period was primarily due to additional costs associated with our ongoing clinical trials.
Non-GAAP SG&A expenses were $21.3 million for the first quarter of 2016, excluding $4.6 million in non-cash, stock-based compensation expense, compared to $12.5 million for the same period in 2015, excluding $5.1 million in non-cash, stock-based compensation expense. GAAP SG&A expenses were $25.9 million for the first quarter of 2016 compared to $17.6 million for the same period in 2015. The increase in SG&A expense for the first quarter 2016 as compared to the prior year period primarily resulted from additional costs associated with commercial activities in support of Translarna across Europe and other regions.
Net interest expense for the first quarter of 2016 was $2.0 million compared to net interest income of $0.5 million in the same period in 2015. The increase in interest expense is primarily a result of the $150 million convertible debt offering completed during the third quarter 2015. The debt was recorded on PTC’s balance sheet at a discount, which will be amortized over the life of the bond.
Net loss for the first quarter of 2016 was $41.2 million compared to a net loss of $37.9 million for the same period in 2015.
During the quarter, PTC announced a workforce reduction of approximately 18% of its employees and contractors, which will result in a one-time charge of approximately $2.6 million. PTC incurred $1.9 million of this charge in the first quarter.
Cash, cash equivalents, and marketable securities totaled approximately $299 million at March 31, 2016 compared to approximately $339 million at December 31, 2015.
Shares issued and outstanding as of March 31, 2016 were 34.3 million, which includes 0.4 million shares of unvested restricted stock.
2016 Guidance:

Total ex-U.S. Translarna nmDMD revenues for 2016 are anticipated to be between $65 and $85 million. This guidance assumes current exchange rates and the continued commercial expansion for Translarna in nmDMD outside of the U.S.
Operating expenses for the full year 2016 are anticipated to be between $185 million and $195 million, excluding expected non-cash stock-based compensation expense of approximately $40 million, for total operating expenses of approximately $225 million to $235 million. These expenses will be primarily in support of our ongoing clinical trials for Translarna in nmDMD and nmCF, commercial launch activities for Translarna outside of the US, and the continued research and clinical development of other product pipeline candidates.
PTC expects to end 2016 with cash and cash equivalents of approximately $200 million.
Non-GAAP Financial Measures

In this press release, PTC’s financial results and financial guidance are provided in accordance with accounting principles generally accepted in the United States (GAAP) and using certain non-GAAP financial measures. In particular, non-GAAP financial results exclude stock-based compensation expense. These results are provided as a complement to results reported in GAAP, because management uses these non-GAAP financial measures when assessing and identifying operational trends.

PTC Therapeutics, Inc.
Consolidated Statements of Operations
(In thousands, except per share data)


Three Months Ended

March 31,

2016

2015

Revenues:

Net product revenue
$18,878

$5,069

Collaboration and grant revenue
17

2,413

Total revenues
18,895

7,482

Operating expenses:

Research and development (1)
31,399

27,938

Selling, general and administrative (1)
25,938

17,615

Total operating expenses
57,337

45,553

Loss from operations
(38,442)

(38,071)

Interest (expense)/income, net
(1,956)

524

Other expense, net
(721)

(368)

Loss before income tax expense
(41,119)

(37,915)

Income tax expense
(114)

—

Net loss
($41,233)

($37,915)

Weighted-average shares outstanding (in shares):

Basic and diluted
33,919,169

33,067,752

Net loss per share – basic and diluted (in dollars per share)
($1.22)

($1.15)

(1) Non-cash share-based compensation expense

included in operating expenses are as follows:

Research and development
$4,328

$4,667

Selling, general and administrative
4,587

5,081

Total share-based compensation expense
$8,915

$9,748

PTC Therapeutics, Inc.
Summary Consolidated Balance Sheet
(In thousands, except share amounts)

March 31,

December 31,

2016

2015
Cash, cash equivalents and marketable securities
$298,712

$338,925
Total assets
$335,232

$365,281

Total debt
$93,366

$91,848
Total deferred revenue
396

139
Total liabilities
$139,231

$139,280

Total stockholders’ equity (33,919,684 and 33,916,559 common shares

issued and outstanding at March 31, 2016 and December 31, 2015, respectively)
196,001

226,001
Total liabilities and stockholders’ equity
$335,232

$365,281

Upcoming Events:

PTC will participate in the following upcoming conference:

Bank of America 2016 Healthcare Conference, May 12 at 9:20 a.m. in Las Vegas, NV
The presentation will be webcast live on the Events and Presentations page under the investor relations section of PTC’s website at www.ptcbio.com and will be archived for two weeks following the presentation. PTC’s current investor presentation is available at the same website location.

On May 05, 2016 Raptor Pharmaceutical Corp. (NASDAQ:RPTP) ("Raptor" or the "Company"), a biopharmaceutical company developing and commercializing transformative treatments for rare diseases, reported its financial results for the first quarter of 2016 and provided an update on recent corporate developments (Press release, Raptor Pharmaceutical, MAY 5, 2016, View Source [SID:1234512059]).

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Summary

Global net product revenue for PROCYSBI was $27.5 million for the first quarter ended March 31, 2016, a 34% increase compared to $20.5 million for the same period in 2015.

Net loss, including In-Process R&D (IPR&D) impairment and changes in the fair value of contingent consideration liability, on a GAAP basis was $41.6 million, or $0.49 per share, for the first quarter of 2016 compared to a GAAP net loss of $19.7 million, or $0.28 per share, for the same period in 2015.

Non-GAAP net loss, which excludes non-cash expenditures such as stock compensation, impairment of intangible assets and adjustment to the fair value of contingent consideration liability, was $14.1 million, or $0.17 per share compared to a net loss of $16.8 million, or $0.24 per share in the first quarter of 2015.

Cash and cash equivalents were $132.0 million as of March 31, 2016.

"Raptor achieved several significant milestones during the quarter, underscoring the progress we are making in building a premiere rare disease company," said Julie Anne Smith, President and CEO of Raptor. "PROCYSBI continues to deliver strong growth as a result of significant market penetration and continued high levels of patient compliance and we now look forward to revenues from the commercialization of QUINSAIRTM. We are focused on prioritizing key clinical programs to drive growth and being measured with our investments in selected development to extend our cash runway. As a result we are adjusting our non-GAAP cash operating expense guidance favorably for 2016. We look forward to continuing momentum as we work to bring QUINSAIR to patients in Europe and Canada, to make progress towards an NDA filing for MP-376 in cystic fibrosis (CF) and to initiate a Phase 2 MP-376 study in non-cystic fibrosis bronchiectasis (BE)."

First Quarter 2016 Business Highlights

Four new patents related to PROCYSBI were listed in the Orange Book during the quarter, bringing the total number of Orange Book-listed patents to five. In addition, PROCYSBI was granted additional U.S. orphan exclusivity in the two-to-six year old nephropathic cystinosis population until August 2022.

In March 2016, MP-376 received Qualified Infectious Disease Product (QIDP) designation for three distinct indications: the treatment of chronic pulmonary infections due to Pseudomonas aeruginosa, in patients with CF and in patients with BE, and in patients with nontuberculous mycobacteria infections (NTM). QIDP designation confers five years exclusivity under the Hatch-Waxman Act, which, in the case of CF, would be added to the seven years of orphan exclusivity for a total potential of 12 years of exclusivity, if approved for the indication.

In March 2016, Health Canada accepted the new drug submission for PROCYSBI in nephropathic cystinosis with Priority Review, which provides for a shortened review period of 180 days, compared to a standard review of 300 days. If approved, the shorter review time is expected to enable Raptor to bring PROCYSBI to market faster in Canada.

First Quarter 2016 Financial Results

Raptor provides non-GAAP financial measures, which it believes can enhance an overall understanding of its financial performance when considered together with GAAP figures. Refer to the section of this press release below entitled "Non-GAAP Financial Information and Other Disclosures" for further discussion on this subject.

Net Product Revenue

PROCYSBI global net revenue for the first quarter of 2016 was $27.5 million, compared to $20.5 million for the first quarter of 2015. The 34% revenue growth was driven by further market penetration in the U.S. and in Europe and named patient sales in other international territories.

Cost of Sales

Cost of sales was $4.3 million for the first quarter of 2016, compared to $3.7 million for the first quarter of 2015. The increase was due to higher quarterly sales year-over-year, which yielded higher direct costs and royalty expenses, and lower inventory reserves in 2016.

Research & Development (R&D)

R&D expenses for the first quarter of 2016 were $14.0 million compared to $16.6 million for the first quarter of 2015. The change was primarily due to a decrease in clinical trial expenses.

Selling, General and Administrative (SG&A)

SG&A expenses were $20.4 million for the first quarter of 2016 compared to $14.8 million for the first quarter of 2015. The increase in SG&A expenses was primarily a result of increased staffing and promotional support for commercial operations of PROCYSBI worldwide and administrative expenses.

In-Process R&D (IPR&D) and Contingent Consideration Liability Related to QUINSAIR Acquisition

The Company has revised its clinical development plans for MP-376. As a result, for the quarterly period ended March 31, 2016, based on a fair value assessment, Raptor recorded a non-cash impairment charge to IPR&D of $39.6 million and a partially offsetting contingent consideration credit adjustment of $14.7 million related to R&D stage projects from its October 2015 acquisition of QUINSAIR.

Interest Expense

Interest expense for the first quarter of 2016 was $5.0 million, compared to $4.5 million for the first quarter of 2015. The increase in interest expense was due to an increase in royalty fees based on net sales for the period.

Net Loss

GAAP net loss in the first quarter of 2016 was $41.6 million, or $0.49 per share, compared to a net loss of $19.7 million, or $0.28 per share, in the first quarter of 2015.

Non-GAAP net loss, which excludes the non-cash expenses of stock compensation expenses, impairment of intangible assets and adjustment to the fair value of the contingent consideration liability, for the first quarter of 2016 was $14.1 million, or $0.17 per share, compared to a net loss of $16.8 million, or $0.24 per share, in the first quarter of 2015.

Cash, Cash Equivalents

As of March 31, 2016, Raptor had $132.0 million in cash and cash equivalents compared to $157.4 million in cash and cash equivalents at the end of 2015.

2016 Full-Year Financial Guidance

Reiterating 2016 global net revenue guidance of $115 to $125 million.
Reiterating PROCYSBI revenue growth of 25% to 30% over 2015 revenues.
Lowering non-GAAP operating expense guidance, which excludes non-cash expenditures such as stock compensation, amortization and impairment of IPR&D and adjustment to the fair value of the contingent consideration liability, to $125 to $135 million from $135 to $145 million.
Product and Pipeline Updates

PROCYSBI for Nephropathic Cystinosis

PROCYSBI is currently commercially available to patients in the U.S., where it is the market leader in nephropathic cystinosis. PROCYSBI is also commercially available in Europe and is made available in additional markets through named patient sales.
In March 2016, Health Canada accepted for review the Company’s New Drug Submission (NDS) for PROCYSBI for the treatment of nephropathic cystinosis, with Priority Review status.
QUINSAIRTM

In April 2016, the Company launched QUINSAIR in Germany and Denmark for the management of chronic pulmonary infections due to Pseudomonas aeruginosa in adults with CF. Raptor anticipates launching the product in Canada in the second half of 2016.
MP-376 (Investigational Form of QUINSAIRTM)

In March 2016, MP-376 received QIDP designation for three distinct indications: the treatment of chronic pulmonary infections due to Pseudomonas aeruginosa, in patients with CF and in patients with BE, and in patients with NTM. Granting of the QIDP designation by the FDA highlights the potential of MP-376 to address a number of serious and life-threatening infections and provides Raptor with significant incentives for the development of MP-376, including Priority Review by the FDA, eligibility for Fast Track designation and a five-year extension of marketing exclusivity under the Hatch-Waxman Act. QIDP also paves the way for the FDA to apply greater regulatory flexibility in the case of high unmet medical need for serious life-threatening infections. Raptor holds orphan drug designation in the U.S. for MP-376 for the treatment of CF, which, when added to the five years of exclusivity associated with QIDP designation, would confer 12 years of regulatory exclusivity upon FDA approval.
Raptor expects to provide an update on regulatory discussions with the FDA concerning MP-376 in CF.
The Company intends to initiate a Phase 2 study for MP-376 in BE this year. The Company will provide additional clarity on the timing of key activities once the study design has been finalized.
RP103 for Huntington’s Disease (HD)

Based on prioritization of clinical programs and the best use of current capital, the Company will be exploring non-dilutive funding and partnering options.
RP103 for Mitochondrial Diseases

The second interim analysis, which occurred after 12 patients completed 24 weeks of treatment, indicated the trial should continue as planned. The treatment was generally safe and well tolerated and no unexpected safety signals were observed in this patient population.
Anticipated Upcoming Milestones

4Q 2016 — Potential PROCYSBI approval in Canada
2H 2016 — Potential PROCYSBI and QUINSAIR launches in Canada
2016 — Advancements toward an NDA submission for MP-376 in CF in the U.S.
2016 — Initiation of a Phase 2 study for MP-376 in BE
Conference Call and Webcast Information

Raptor will conduct a conference call and live audio webcast at 4:30 p.m. ET (1:30 p.m. PT) today. The live call may be accessed by dialing (877) 710-6201 for domestic callers or (616) 548-5611 for international callers and using the conference ID number 1390038. A live webcast of the conference call will be available online from the investor relations section of the Raptor website at www.raptorpharma.com. After the call, a webcast replay will be available on the Raptor website for 90 days while a telephone replay will be available for five days. This can be accessed by dialing (855) 859-2056 for domestic callers, or (404) 537-3406 for international callers, and using the conference ID number 1390038.

Non-GAAP Financial Information and Other Disclosures

Raptor uses non-GAAP financial measures, such as non-GAAP net loss, non-GAAP net loss per share and non-GAAP operating expense, to assess and analyze its operational results and trends, provide operating expense guidance, and to make financial and operational decisions. Raptor believes these non-GAAP financial measures are also useful to investors because they provide greater transparency regarding Raptor’s operating performance and exclude non-cash expenditures such as stock compensation, amortization and impairment of IPR&D, and change in the fair value of the contingent consideration liability related to acquisitions. These non-GAAP financial measures should not be considered an alternative to measurements required by GAAP, such as net loss, net loss per share and total operating expense, and should not be considered measures of Raptor’s liquidity. Non-GAAP financial measures should not be considered as a substitute for measures of financial performance calculated in accordance with GAAP and should only be used to supplement an understanding of Raptor’s operating results as reported under GAAP. In addition, these non-GAAP financial measures are unlikely to be comparable with non-GAAP information provided by other companies. Reconciliations between non-GAAP financial measures and GAAP financial measures are included in the table accompanying this press release after the unaudited consolidated financial statements. Raptor has not provided a GAAP reconciliation for its forward-looking non-GAAP financial measures, such as 2016 operating expense, because such measures are not readily determinable and not available without unreasonable efforts. Raptor cannot reliably predict without unreasonable efforts the timing or likelihood of outcomes that determine future impairments or changes in the fair value of contingent consideration liability nor the timing or amount of the factors that substantially contribute to the projection of stock compensation expense. Both are excluded from the forward-looking non-GAAP financial measures. The Company does not believe that such a reconciliation would be meaningful to stockholders.

As part of its disciplined approach to funding innovation, Amgen carefully evaluates each internal program to determine which ones will receive much-coveted development funding (Company Web Page, Amgen, MAY 5, 2016, View Source [SID:1234511964]). Occasionally, a program will come along that does not make Amgen’s resource allocation cut in their intended indication but shows great promise in other areas. This presents a dilemma. Does Amgen provide more funding to explore this new promising area? Or, does Amgen put this asset in the hands of a committed outside party? In one recent deal, Amgen found some middle ground. When a particular molecule showed promise outside its intended area, an external team committed to moving it forward was located, while Amgen holds an option to take it back at a later stage. This is how startup company Celimmune came to develop AMG 714.

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A New Direction for AMG 714
AMG 714 is an anti-IL-15 monoclonal antibody that, following a series of rheumatoid arthritis and psoriasis studies, Amgen deprioritized. But there was a scientist outside of Amgen who hadn’t forgotten about anti-IL-15. Dr. Francisco Leon, a leading expert in the development of therapeutics for celiac disease, had been following this antibody and a growing body of scientific literature suggesting IL-15’s central role in refractory celiac disease and non-responsive celiac disease. Dr. Leon believed AMG 714 was a ready tool to test the hypothesis that blocking IL-15 could benefit celiac patients.

Praise in Partnership
Intrigued, Amgen struck an agreement with Celimmune, where Dr. Leon serves as CEO and chief medical officer. Amgen has licensed AMG 714 to Celimmune, which has rights to develop, manufacture and commercialize AMG 714 on a worldwide basis excluding Japan. In connection with the license, Celimmune granted Amgen an exclusive option to acquire Celimmune, and thus to reacquire AMG 714, upon completion of certain clinical studies in patients with celiac disease. "We do not hesitate in going on record to speak to the ‘best-in-industry’ licensing and post-transactional alliance management support we have been so privileged to experience to date with Amgen," said Ashleigh Palmer, Executive Chairman, Celimmune weeks after the deal’s completion.

"Dr. Leon’s conviction was so strong and his credentials so compelling, we couldn’t help but take notice," said Jeremy Grunstein, an executive director from Amgen’s Business Development team. "Celimmune provided not only an avenue to test this important hypothesis, but also a mechanism for Amgen to reprioritize the program in its pipeline. It’s the kind of deal structure we’d like to replicate."

Celiac disease is a chronic hereditary systemic autoimmune and inflammatory disease triggered by gluten consumption, which can cause gastrointestinal dysfunction and debilitating symptoms including nutritional malabsorption. Celimmune plans to initiate Phase 2 studies of AMG 714 for the treatment of diet non-responsive celiac disease and type II refractory celiac disease (RCD-II), an in situ small bowel T-cell lymphoma.

Dr. Leon stated, "Celiac disease is the only common autoimmune disease without any approved medication. Published literature demonstrates that a gluten-free diet is not a solution for the majority of patients. As such, Celimmune is delighted to have an opportunity to license an experimental therapeutic that will test one of the main hypotheses in the pathophysiology of celiac disease, namely that IL-15 plays a central role in RCD-II and non-responsive celiac disease."

Ashleigh Palmer, Celimmune’s Executive Chairman, concurred, "AMG 714 could be the first drug to market for a celiac indication and there’s room for growth. In addition to celiac, AMG 714 could have longer-term expansion and life cycle management opportunities within adjacent gastrointestinal autoimmune diseases."

With this deal, Amgen is still making a bet on external innovation, but with science that originated from within Amgen.

"This deal is win-win-win. If Celimmune is successful, both parties will be rewarded and most importantly, patients will be one step closer to the first medicine available for celiac disease," said Grunstein.

On May 05, 2016 Emergent BioSolutions Inc. (NYSE:EBS) reported financial results for the quarter ended March 31, 2016 (Press release, Emergent BioSolutions, MAY 5, 2016, View Source;p=RssLanding&cat=news&id=2165800 [SID:1234511995]).

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Q1 2016 FINANCIAL HIGHLIGHTS
Total revenues of $111.0 million
GAAP net income of $4.0 million, or $0.10 per diluted share
Adjusted net income of $7.5 million, or $0.16 per diluted share
EBITDA of $17.3 million, or $0.36 per diluted share
Adjusted EBITDA of $19.6 million, or $0.40 per diluted share
RECENT BUSINESS ACCOMPLISHMENTS

Centers for Disease Control and Prevention (CDC) confirmed intent to award a follow-on procurement contract for BioThrax (Anthrax Vaccine Adsorbed) on October 1, 2016
Supplemental Biologics License Application (sBLA) for Building 55 licensure submitted to the Food and Drug Administration
Form 10 filed with the Securities and Exchange Commission to advance the Company’s spin-off of Aptevo Therapeutics
Emergard (military-grade auto-injector device) selected by the U.S. Department of Defense and Battelle as a platform for nerve agent antidote delivery
RSDL (Reactive Skin Decontamination Lotion Kit) for removal and neutralization of chemical warfare agents approved in Israel
"We achieved strong first quarter financial results and accomplished key operational goals, including submitting the sBLA for Building 55, our large-scale BioThrax manufacturing facility, and filing the Form 10 to advance our spin-off of Aptevo Therapeutics," said Daniel J. Abdun-Nabi, President and Chief Executive Officer of Emergent BioSolutions. "We are extremely pleased that the CDC has now confirmed its intention to award a follow-on BioThrax procurement contract on October 1, 2016. With our large-scale manufacturing facility coming online, we anticipate this will be a multi-year contract requiring significantly increased deliveries in order to satisfy the U.S. government’s stated requirements for a licensed anthrax vaccine in the Strategic National Stockpile."

UPDATE ON CDC BIOTHRAX PROCUREMENT CONTRACT
By letter dated April 1, 2016, the CDC informed the Company of its intent to award a follow-on BioThrax procurement contract, thereby ensuring an uninterrupted supply of BioThrax into the Strategic National Stockpile. The Company’s current BioThrax procurement contract with the CDC is scheduled to expire on September 30, 2016. The CDC reaffirmed their intent in a follow-up letter dated April 26, 2016, in which the CDC stated that their acquisition planning process is ongoing and that they project to issue an award for a follow-on BioThrax procurement contract on October 1, 2016.

In its April 26 letter, the CDC further stated that it anticipates continuing to purchase doses of BioThrax in Q2 and Q3 of 2016 under the Company’s current procurement contract, although it did not specify the number of doses to be purchased. The CDC did state that they anticipate the quantity to be less than the total remaining doses available to be purchased under the current contract. The Company believes these letters from the CDC reflect their transition planning associated with procuring BioThrax manufactured from the Company’s large-scale manufacturing facility, Building 55, under a new multi-year follow-on contract expected to be in place on October 1, 2016.

Until such time as the Company can secure greater clarity on the number of BioThrax doses to be delivered in Q2 and Q3, expected within the next 60 days, the Company believes it is prudent to temporarily postpone its financial guidance for 2016.

2016 FINANCIAL PERFORMANCE
(I) Quarter Ended March 31, 2016 (unaudited)

Revenues

Product Sales
For Q1 2016, product sales were $71.7 million, an increase of 292% as compared to 2015. This increase was driven by an increase in BioThrax sales due to the Company’s decision to suspend shipments to the CDC in the first quarter of 2015 following the discovery of foreign particles in a limited number of vials in two manufactured lots of BioThrax in January 2015. As a result, there were no revenues for BioThrax product sales to the CDC for the three months ended March 31, 2015. The decrease in Other Biodefense revenues is due to a one-time milestone payment of $7 million recognized in 2015 for FDA approval of Anthrasil.

(in millions) Three Months Ended
March 31,
2016 2015 % Change
Product Sales
BioThrax $ 59.10 $ – NA %
Other Biodefense $ 4.70 $ 12.00 (61 )%
Total Biodefense $ 63.80 $ 12.00 433 %
Total Aptevo Products $ 7.90 $ 6.30 26 %
Total Product Sales $ 71.70 $ 18.30 292 %

Contract Manufacturing
For Q1 2016, revenue from the Company’s contract manufacturing operations was $7.6 million, a decrease of 38% as compared to 2015. The decrease was primarily due to the timing of fill/finish services to third parties and revenue from the production of an Ebola vaccine in 2015.

Contracts, Grants and Collaborations
For Q1 2016, contracts, grants and collaborations revenue was $31.7 million, a decrease of 4% as compared to 2015.

Operating Expenses

Cost of Product Sales and Contract Manufacturing
For Q1 2016, cost of product sales and contract manufacturing was $28.5 million, an increase of 52% as compared to 2015. The increase was primarily attributable to increased sales of BioThrax to the CDC.

Research and Development
For Q1 2016, gross research and development (R&D) expenses were $34.2 million, a decrease of 12% as compared to 2015. The decrease primarily reflects lower contract service costs associated with product candidates in the Biodefense business segment and product candidates and technology platform development activities associated with the Aptevo business segment.

For Q1 2016, net R&D expenses were $2.4 million, a decrease of 56% as compared to 2015. Net R&D expenses, which are more representative of the Company’s actual out-of-pocket investment in product development, are calculated as gross research and development expenses less contracts, grants and collaboration revenues.

(in millions) Three Months Ended
March 31,
2016 2015 % Change
Research and Development Expenses (Gross) $ 34.2 $ 38.7 (12 )%
Adjustments:
Contracts, grants and collaborations revenues 31.7 33.1 (4 )%
Net Research and Development Expenses $ 2.4 $ 5.6 (56 )%

Selling, General and Administrative
For Q1 2016, selling, general and administrative expenses were $39.8 million, an increase of 15% as compared to 2015. The increase was primarily attributable to costs associated with the Aptevo spin-off and professional services to support the Company’s strategic growth initiatives.

Net Income

For Q1 2016, GAAP net income was $4.0 million versus a net loss of $21.5 million in 2015. For Q1 2016, GAAP net income per diluted share is computed using the if-converted method. This method requires GAAP net income to be adjusted to reflect the add back 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 per diluted share for Q1 2016 is increased in the amount of $0.9 million, from $4.0 million to $4.9 million. With 48.4 million diluted shares outstanding, GAAP net income per diluted share for Q1 2016 was $0.10.

RECONCILIATION OF GAAP NET INCOME/(LOSS) TO ADJUSTED NET INCOME/(LOSS), EBITDA AND ADJUSTED EBITDA

This press release contains three financial measures (Adjusted Net Income/(Loss), EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization), and adjusted EBITDA) that are considered "non-GAAP" financial measures under applicable Securities & 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/(Loss) 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/(Loss) to Adjusted Net Income/(Loss)
(in millions, except per share value) Three Months Ended March 31,
2016 2015 Source
GAAP Net Income/(Loss) $ 4.0 $ (21.5 ) NA
Adjustments:
Spin-off and acquisition-related costs (transaction & integration) 2.3 1.1 SG&A
Non-cash amortization charges 2.7 2.6 COGS, SG&A,
Other Income
Impact of purchase accounting on inventory step-up - 0.1 SG&A
Tax effect (1.5 ) (1.1 ) NA
Total Adjustments 3.5 2.7 NA
Adjusted Net Income/(Loss)
Adjusted Net Income/(Loss) per Diluted Share $
$ 7.5
0.16 $
$ (18.8
(0.50 )
) NA

Reconciliation of GAAP Net Income/(Loss) to EBITDA and Adjusted EBITDA
(in millions, except per share value) Three Months Ended
March 31,
2016 2015
GAAP Net Income/(Loss) $ 4.0 $ (21.5 )
Adjustments:
+ Depreciation & Amortization 8.5 8.1
+ Provision For/(Benefit From) Income Taxes 3.3 (8.3 )
+ Total Interest Expense 1.5 1.7
Total Adjustments 13.3 1.5
EBITDA
EBITDA per Diluted Share $
$ 17.3
$0.36 $
$ (20.0
(0.53 )
)
Additional Adjustments:
+ Acquisition-related costs (transaction & integration) 2.3 1.1
+ Impact of purchase accounting on inventory step-up - 0.1
Total Additional Adjustments 2.3 1.2
Adjusted EBITDA
Adjusted EBITDA per Diluted Share $
$ 19.6
0.40 $
$ (18.8
(0.50 )
)

On May 5, 2016 Aviragen Therapeutics, Inc. (NASDAQ:AVIR) (formerly Biota Pharmaceuticals, Inc.) reported its financial results for the three month period ended March 31, 2016, which is the third quarter of the Company’s 2016 fiscal year, and also provided an update on recent corporate and clinical developments (Press release, Nabi Biopharmaceuticals, MAY 5, 2016, View Source [SID:1234512028]).

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"This quarter has been very rewarding and highlights significant efforts by the entire team to position the Company for success. We officially changed the name of the Company from Biota to Aviragen to reflect our shift from a drug discovery and early-stage licensing company to one focused on developing next generation antiviral therapies. On the clinical front, we were encouraged by the emerging profile of our RSV fusion inhibitor, BTA585, that successfully completed single and multiple dose Phase 1 trials. Further validating the potential of BTA585 to address significant unmet clinical needs in children and adults infected with RSV was the FDA’s Fast Track designation. The Phase 2a RSV challenge study of BTA585 and Phase 2b HRV SPIRITUS trial of vapendavir are progressing and we look forward to reporting top-line data from both trials in the second half of this year," remarked Joseph M. Patti, PhD, President and Chief Executive Officer of Aviragen Therapeutics.

"We were also successful this quarter in significantly strengthening our balance sheet by divesting our non-core antibiotic intellectual property portfolio and, shortly after the end of the quarter, by adding $20 million of non-dilutive funds from the monetization of a portion of our Inavir royalty. Our enhanced financial position supports our continued investment in advancing our key late-stage product candidates and anti-viral pipeline."

Recent Corporate Highlights

Completed Royalty Deal with Healthcare Royalty Partners for Proceeds of $20 Million.
In April 2016, received gross proceeds of $20 million from HealthCare Royalty Partners from the sale of an undisclosed portion of the Company’s royalty rights related to Inavir, an inhaled neuraminidase inhibitor that is approved in Japan for the treatment and prevention of influenza.

Transitioned Company Name to Aviragen Therapeutics, Inc. (NASDAQ:AVIR) from Biota Pharmaceuticals, Inc. The name change reflects the strategic shift in the organization’s prior focus on drug discovery and early-stage licensing to clinical development of next generation direct-acting antivirals to treat infections that have limited therapeutic options.

Announced Sale of Antibiotic Assets to Spero Therapeutics. Completed the sale of assets related to the Company’s broad spectrum antibiotic program to a newly formed subsidiary of Spero Therapeutics, LLC, a Cambridge-based biopharmaceutical company founded to develop novel therapies for the treatment of bacterial infections.

Recent Clinical Highlights

Initiated Phase 2a Efficacy Study of BTA585 for the Treatment of Respiratory Syncytial Virus (RSV) Infections. Reported the initiation of a double-blind, placebo-controlled, Phase 2a trial that is designed to evaluate the safety, pharmacokinetics, and antiviral activity of orally-dosed BTA585 in healthy volunteers challenged intranasally with RSV. The primary endpoint of the study is reduction in viral load among subjects who test positive for RSV prior to dosing.

Reported Positive Results from Phase 1 Trial for RSV Antiviral BTA585. Reported top-line safety and pharmacokinetic data from a Phase 1 multiple ascending dose (MAD) trial of BTA585. Results from the MAD trial indicated BTA585 was generally well tolerated at all dose levels; there were no serious adverse events, and no drug-related clinically-significant adverse changes were observed in either ECGs or clinical laboratory values.

Received Fast Track Designation for RSV Antiviral BTA585. Granted Fast Track designation by the FDA for BTA585, an oral fusion inhibitor, for the treatment of RSV infections in infants, young children and adults. The FDA Fast Track process is designed to expedite the development and review of drugs for the treatment of serious or life-threatening conditions and which demonstrate potential to address unmet medical needs.

Commenced Dosing in Phase 2 Trial of BTA074 for Topical Treatment of Condyloma. Dosed first subject in a Phase 2 double-blind, randomized, placebo-controlled trial to evaluate the safety, tolerability and efficacy of BTA074 5% gel in male and female patients with condyloma, or anogenital warts, caused by human papillomavirus (HPV) types 6 & 11.

Financial Results for the Three Month Period Ended March 31, 2016

The Company reported a net loss of $5.2 million for the three month period ended March 31, 2016, as compared to net income of $1.2 million in the same quarter of the prior fiscal year. Basic and diluted net loss per share was $0.14 for the three month period ended March 31, 2016, as compared to a basic and diluted net income per share of $0.03 in the same period of 2015.

Revenue decreased to $5.3 million for the three month period ended March 31, 2016 from $5.9 million in the same period in 2015 due to a $0.2 million decrease in royalty revenues from sales of the flu products Relenza and Inavir. The lower royalties were a result of reduced Relenza government stockpiling orders, which were largely offset by higher royalties from Inavir sales in Japan. Also contributing to the lower revenues was a $0.4 million decrease in revenue from services, as a result of the termination of the Company’s contract with BARDA in 2014.

Cost of revenue decreased to zero for the three month period ended March 31, 2016 from $0.3 million in the same period last year due to the termination of the Company’s contract with BARDA in 2014.

Research and development expense increased to $8.5 million for the three month period ended March 31, 2016 from $4.8 million in the same period in 2015. The increase was the result of $4.4 million in higher clinical costs related to: the ongoing Phase 2b SPIRITUS trial for vapendavir; the introduction of BTA585 into clinical trials this year, including a Phase 1 SAD/MAD trial and startup costs for a Phase 2a challenge trial; and expenses for the initiation of a Phase 2 trial for BTA074. These costs were offset in part by a decrease of $0.7 million in depreciation and facility related expenses associated with the closure of the Company’s early-stage research facility in March 2015.

General and administrative expense decreased to $2.3 million for the three month period ended March 31, 2016 from $3.2 million in the same period in 2015, due largely to lower staff-related expenses and the absence this year of professional fees incurred during the acquisition of BTA074 in 2015.

The Company held $50.0 million in cash, cash equivalents, and short and long-term investments as of March 31, 2016. Additionally, in April, the Company received gross proceeds of $20 million from the sale of a portion of the royalties it receives from the flu medication, Inavir, increasing the Company’s available cash to approximately $70 million.