On November 9, 2016 Infinity Pharmaceuticals, Inc. (NASDAQ: INFI) reported its third quarter 2016 financial results and its transition of the company to focus on IPI-549, a potentially first-in-class immuno-oncology product candidate that selectively inhibits PI3K-gamma. IPI-549 is the first and only PI3K-gamma inhibitor in clinical development (Press release, Infinity Pharmaceuticals, NOV 9, 2016, View Source;p=RssLanding&cat=news&id=2221099 [SID1234516562]). In October, Infinity licensed duvelisib, an investigational, oral, dual inhibitor of phosphoinositide-3-kinase (PI3K)-delta and PI3K-gamma, to Verastem, Inc.

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"During the third quarter, we undertook a number of important initiatives to focus Infinity on the advancement of IPI-549, a promising novel approach to targeting the immune-suppressive tumor microenvironment," stated Adelene Perkins, president and chief executive officer. "Refocusing Infinity required a significant organizational restructuring, an amendment to our license agreement from Takeda for both duvelisib and IPI-549, and the license of duvelisib to Verastem. We are pleased that Verastem will now be advancing duvelisib for patients and our corporate imperative going forward is to maximize the value of IPI-549."

"We are encouraged by the initial IPI-549 clinical monotherapy data recently presented, and we expect to begin evaluating IPI-549 in combination with Opdivo, a PD-1 immune checkpoint inhibitor, this fall. We anticipate reporting updated Phase 1 data from the Phase 1 study in the first half of 2017. Data in two recent Nature publications provide a strong rationale for advancing IPI-549 and show that IPI-549 in combination with immune checkpoint inhibitors may overcome resistance to checkpoint blockade," Ms. Perkins continued.

Recent developments include the following:

IPI-549

Entered clinical collaboration with BMS to evaluate IPI-549 in combination with Opdivo: Earlier today, Infinity and Bristol-Myers Squibb announced a clinical trial collaboration to evaluate IPI-549 in combination with Bristol-Myers Squibb’s Opdivo (nivolumab) in patients with advanced solid tumors. The dose-escalation portion exploring IPI-549 as a monotherapy in Infinity’s Phase 1 study is continuing, and the first dose-escalation cohort studying IPI-549 in combination with Opdivo is expected to begin this fall.
The ongoing Phase 1 clinical study of IPI-549 is designed to explore the activity, safety, tolerability, pharmacokinetics and pharmacodynamics of IPI-549 as a monotherapy and in combination with Opdivo in approximately 175 patients with advanced solid tumors. Once the dose-escalation phase evaluating IPI-549 plus Opdivo is completed, an expansion phase is planned to evaluate the combination in patients with selected solid tumors, including non-small cell lung cancer (NSCLC), melanoma and squamous cell carcinoma of the head and neck (SCCHN).

Initial clinical data presented at AACR (Free AACR Whitepaper) cancer immuno-therapy conference: In September, Infinity announced initial clinical data for IPI-549. Preliminary Phase 1 results from nine patients with advanced solid tumors showed that the safety, pharmacokinetics and pharmacodynamics of IPI-549 monotherapy treatment appeared favorable. These data were presented in a poster session at the Second CRI-CIMT-EATI-AACR International Cancer Immunotherapy Conference (CIMT) (Free CIMT Whitepaper): Translating Science into Survival.1
Preclinical data on IPI-549 published in two Nature articles: Earlier today, Infinity announced the publication of new findings by research collaborators, including Drs. Jedd Wolchok and Taha Merghoub at Memorial Sloan Kettering Cancer Center, and Infinity scientists in the November 9 online issue of Nature. The paper, entitled "Overcoming resistance to checkpoint blockade by targeting PI3K-gamma in tumor-infiltrating myeloid cells," 2 describes research showing that the presence of suppressive myeloid cells play a critical role in tumor resistance to checkpoint inhibitors and that IPI-549 is able to help recover sensitivity to checkpoint inhibition in this setting by remodeling the immune-suppressive tumor microenvironment primarily through its effects on myeloid cells.
In September, Infinity announced the first Nature publication on PI3K-gamma by research collaborators, including Dr. Judith Varner, at University of California San Diego School of Medicine and Moores Cancer Center and Infinity scientists in the September 19 online issue of Nature. The paper, entitled "PI3K-gamma is a molecular switch that controls immune suppression," 3 describes preclinical data showing that macrophage PI3K-gamma signaling promotes immune suppression by inhibiting activation of anti-tumor T cells. Additionally, blocking PI3K-gamma activated the immune response and significantly suppressed growth of implanted tumors in animal models. Inhibiting PI3K-gamma also boosted sensitivity of some tumors to existing anti-cancer drugs and showed synergy with existing immuno-therapies.

These two articles will publish back-to-back in the November 17, 2016, print edition of Nature. Taken together, these findings reinforce the therapeutic potential of IPI-549 to alter the immune-suppressive microenvironment, promoting an anti-tumor immune response that may lead to tumor growth inhibition and providing a strong rationale for the ongoing Phase 1 study.

Corporate

Amended license of duvelisib from Takeda: In September, Infinity amended its agreement with Takeda for the license of duvelisib and IPI-549. Under the amended agreement with Takeda, upon entry into the Verastem Agreement, Infinity’s milestone obligations for its first licensed compound (duvelisib) were terminated and deemed satisfied. In exchange, Infinity and Takeda will share equally in potential future royalties on net sales of duvelisib that Infinity is eligible to receive from Verastem. Additionally by satisfying milestone obligations on duvelisib under the Takeda license, IPI-549 now qualifies for the lower milestone obligations of the second licensed compound. As a result, Infinity’s potential regulatory milestone payments to Takeda related to IPI-549 have been reduced by up to $120 million, from up to $170 million to up to $50 million. Development milestones of $5.0 million, as well as potential commercial milestones, remain unchanged by the amendment.
Duvelisib licensed to Verastem: In November, Infinity and Verastem announced that the companies entered into a license agreement for exclusive worldwide rights to develop and commercialize duvelisib. Under the agreement, Infinity is eligible to receive up to a total of $28 million across two milestone payments: $6.0 million upon positive data from the Phase 3 DUO study in patients with relapsed/refractory chronic lymphocytic leukemia, and $22 million upon the first regulatory approval of duvelisib inside or outside of the U.S. Verastem is also obligated to pay Infinity tiered mid-to-high single-digit royalties on net sales of duvelisib and will be responsible for the royalties on net sales of duvelisib owed by Infinity to Mundipharma International Corporation Limited and Purdue Pharmaceutical Products L.P.
Reduced facility lease commitments: In November, Infinity and Alexandria Real Estate Equities (ARE) entered into an agreement to terminate Infinity’s lease for its facilities at 780 Memorial Drive in Cambridge, MA, effective as of October 31, 2016. In connection with the termination, Infinity paid ARE a termination payment of approximately $1.8 million. Infinity elected to terminate its lease to consolidate its facilities as part of its strategic restructuring efforts.
Third Quarter 2016 Financial Results

At September, 2016, Infinity had total cash, cash equivalents and available-for-sale securities of $112.3 million, compared to $146.4 million at June 30, 2016.
Infinity did not record any revenue during the third quarter of 2016. Revenue for the third quarter of 2015 was $90.7 million for research and development (R&D) services associated with the previous collaboration with AbbVie for duvelisib in oncology.
R&D expense for the third quarter of 2016 was $12.8 million compared to $37.7 million for the same period in 2015. The decrease in R&D expense was primarily related to a decrease in activities for duvelisib and a decrease in compensation as a result of the restructuring announced earlier this year.
General and administrative (G&A) expense was $7.1 million for the third quarter of 2016, compared to $9.8 million for the same period in 2015. The decrease in G&A expense was primarily related a decrease in commercial-readiness activities for duvelisib.
Net loss for the third quarter of 2016 was $19.5 million, or a basic and diluted earnings per common share of $0.39, compared to a net income of $42.5 million, or a basic earnings per common share of $0.85 and diluted earnings per common share of $0.84, for the same period in 2015.
Cash and Investments Outlook
Following the license agreement with Verastem and further restructuring activities, Infinity today provided an update on its anticipated year-end 2016 cash and investments balance and expected cash runway.

Infinity expects to end 2016 with a year-end cash and investments balance ranging from $70 million to $80 million, compared to prior expectations of $45 million to $55 million.
Infinity expects that its existing cash, cash equivalents and available-for-sale securities at September 30, 2016, will be adequate to satisfy the company’s capital needs into the first quarter of 2018 based on its current operational plans, compared to previous guidance of cash runway into the third quarter of 2017.
The company’s updated financial guidance is in the absence of additional funding or business development activities and has expenses related to duvelisib beyond November 1, 2016, capped at $4.5 million. Additionally, Infinity’s updated cash runway expectation excludes any potential milestone payments from Verastem related to duvelisib.

Valeant has filed a 10-Q – Quarterly report [Sections 13 or 15(d)] with the U.S. Securities and Exchange Commission (Filing, 10-Q, Valeant, NOV 9, 2016, View Source [SID1234516648]).

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On November 3, 2016 La Jolla Pharmaceutical Company (NASDAQ: LJPC) (the Company or La Jolla), a leader in the development of innovative therapies intended to significantly improve outcomes in patients suffering from life-threatening diseases, reported financial results for the three and nine months ended September 30, 2016 and recent corporate progress (Filing, Q3, La Jolla Pharmaceutical, 2016, NOV 9, 2016, View Source [SID1234516680]).

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Recent Corporate Progress

In September 2016, La Jolla reported positive results from a multicenter, open-label, dose-escalation Phase 1 trial of LJPC-401, the Company’s novel formulation of synthetic human hepcidin, in patients at risk for iron overload due to conditions such as hereditary hemochromatosis (HH), beta thalassemia, sickle cell disease (SCD) and myelodysplastic syndrome (MDS). Fifteen patients were dosed at escalating dose levels ranging from 1 to 20 mg. LJPC-401 was well tolerated, and there were no dose-limiting toxicities observed. A dose-dependent, statistically significant reduction in serum iron was observed (p=0.008 for dose response; not adjusted for multiple comparisons). At the 20 mg dose level, LJPC-401 reduced serum iron by an average of 58.1% from baseline to hour 8 (p=0.001; not adjusted for potential regression to the mean effect), and serum iron had not returned to baseline through day 7 (21.2% reduction from baseline to the end of day 7).

In September 2016, La Jolla reached agreement with the European Medicines Agency (EMA) on the design of a pivotal trial of LJPC-401, the Company’s novel formulation of synthetic human hepcidin. The pivotal trial will be a randomized, controlled, multicenter trial in beta thalassemia patients suffering from iron overload, a major unmet need in an orphan patient population. The primary endpoint will be a clinically relevant measurement directly related to iron overload. La Jolla plans to initiate this pivotal trial in mid-2017.

In October 2016, the EMA Committee for Orphan Medicinal Products (COMP) issued a positive opinion recommending LJPC-401, synthetic human hepcidin, for designation as an orphan medicinal product for the treatment of SCD.

"The first nine months of 2016 have been productive for La Jolla, highlighted by continued enrollment of our ATHOS 3 Phase 3 trial of LJPC-501 and encouraging results from our Phase 1 trial of LJPC-401, which demonstrated a clear dose-dependent effect of LJPC-401 on serum iron, a clinically important measure," said George Tidmarsh, M.D., Ph.D., La Jolla’s President and Chief Executive Officer. "We look forward to building on this positive momentum, with the anticipation of reporting results from our ATHOS 3 Phase 3 trial of LJPC-501 in the first quarter of 2017 and initiation of our pivotal trial for LJPC-401 in mid-2017."

Results of Operations

As of September 30, 2016, La Jolla had $85.0 million in cash and cash equivalents, compared to $126.5 million as of December 31, 2015. The decrease in cash and cash equivalents was primarily due to net cash used for operating activities. Based on current operating plans and projections, La Jolla believes that its current cash and cash equivalents are sufficient to fund operations into 2018.

La Jolla’s net cash used for operating activities for the nine months ended September 30, 2016 was $40.1 million, compared to net cash used for operating activities of $16.7 million for the same period in 2015. La Jolla’s net loss for the three and nine months ended September 30, 2016 was $21.3 million and $53.3 million, or $1.23 per share and $3.10 per share, respectively, compared to a net loss of $10.5 million and $30.1 million, or $0.70 per share and $1.99 per share, respectively, for the same periods in 2015. During the three and nine months ended September 30, 2016, La Jolla recognized contract revenue of approximately $44,000 and $531,000, respectively. The net loss includes non-cash, share-based compensation expense of $3.9 million and $11.0 million for the three and nine months ended September 30, 2016, respectively, compared to $3.1 million and $10.3 million, respectively, for the same periods in 2015.

The increases in net cash used for operating activities and net loss in the 2016 periods as compared to the 2015 periods were primarily due to increased development costs associated with our ATHOS 3 Phase 3 trial of LJPC-501 in patients with catecholamine-resistant hypotension and our Phase 1 trial of LJPC-401 in patients with iron overload.

Ziopharm has filed a 10-Q – Quarterly report [Sections 13 or 15(d)] with the U.S. Securities and Exchange Commission (Filing, 10-Q, Ziopharm, NOV 9, 2016, View Source [SID1234516791]).

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On November 9, 2016 Intrexon Corporation (NYSE: XON), a leader in the engineering and industrialization of biology to improve the quality of life and health of the planet, reported its third quarter financial results for 2016 (Press release, Intrexon, NOV 9, 2016, View Source [SID1234516564]).

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Intrexon Corporation logo
Changes to non-GAAP financial measures:

Beginning this quarter, the Company has redefined its Adjusted EBITDA and Adjusted EBITDA per share measures, which will no longer include an adjustment for the impact of the change in deferred revenue related to upfront and milestone payments, to comply with new interpretations on non-GAAP financial measures recently issued by the SEC staff. The prior period non-GAAP financial measures have been revised to conform to the current presentation. Refer to the Appendix to this earnings release for a reconciliation of the revised and previously defined Adjusted EBITDA measures in the current and prior periods. Going forward, the Company will no longer present Adjusted EBITDA based on the previous definition. However, supplemental information about the impact of the change in deferred revenue related to upfront and milestone payments will continue to be provided in future periods. Adjusted EBITDA as previously defined can be calculated by adding the redefined Adjusted EBITDA measure and the impact of the change in deferred revenue related to upfront and milestone payments.

Business Highlights and Recent Developments:

Oxitec opened its new 5,000 m² large scale Friendly Aedes mosquito production facility in Piracicaba, Brazil. It has the capacity to produce 60 million Friendly Aedes per week which can help protect up to 3 million people by reducing local populations of the dangerous Aedes aegypti mosquito, the primary vector of Zika, chikungunya, dengue and other damaging viruses;
Oxitec and Piracicaba City Hall announced deployment of Friendly Aedes in ten additional downtown neighborhoods in September which along with São Judas comprise the entire area of the Friendly Aedes project expansion in Piracicaba to help protect an additional 60,000 residents;
The Cayman Islands Mosquito Research and Control Unit commenced the "FriendlyAedes aegypti Project", an operational roll-out of Oxitec’s Friendly technology in an hotspot area of West Bay;
A bipartisan coalition of 61 Florida House members issued a letter urging the U.S. Federal Government to take proactive steps including Emergency Use Authorization to allow Florida’s state and local governments to use Oxitec’s genetically engineered Friendly Aedes;
Okanagan Specialty Fruits (OSF) achieved the first commercial harvest of its non-browning Arctic Golden apple variety which will be sold as fresh sliced apples in test markets across North America in early 2017;
OSF’s non-browning Arctic Fuji apple variety was granted deregulated status by the U.S. Department of Agriculture’s Animal and Plant Health Inspection Service and found to be as safe and nutritious as conventional apples, joining OSF’s Arctic Golden and Arctic Granny varieties;
AquaBounty Technologies, Inc., Intrexon’s majority-owned subsidiary, reported Canada’s Federal Court of Appeal upheld the AquAdvantage Salmon approval, and the company is advancing its business plan to prepare for expanded production and commercial launch, which includes identification of additional aquaculture facilities in the U.S.;
AquaBounty filed a Form 10 registration statement for listing its Common Shares on the NASDAQ exchange. Intrexon has agreed to an equity subscription and will convert all of the outstanding convertible debt it holds to help satisfy the initial listing requirements. Intrexon also plans to distribute a portion of its holding of AquaBounty common shares via a stock dividend to its shareholders while retaining a majority ownership stake;
Collaborator ZIOPHARM Oncology, Inc. (Nasdaq:ZIOP) announced the publication of data in the Journal of Clinical Investigation (JCI) from first-in-human trials highlighting benefits of using the non-viral Sleeping Beauty system to genetically modify T-cells to express chimeric antigen receptors (CAR) for use against leukemia and lymphomas;
ZIOPHARM presented data at the European Society for Medical Oncology 2016 Congress in Copenhagen, Denmark, demonstrating activation of anti-tumor immune response using Ad-RTS-hIL-12 in patients with advanced breast cancer;
Collaborator Fibrocell Science, Inc. (NASDAQ:FCSC) completed enrollment in the NC1+ cohort and enrolled first subject for the NC1- cohort in the Phase I/II clinical trial of FCX-007, Fibrocell’s orphan gene-therapy product candidate, for the treatment of Recessive Dystrophic Epidermolysis Bullosa;
Collaborator Oragenics, Inc. (NYSE MKT: OGEN) received supportive feedback from the U.S. Food and Drug Administration in response to request for a Type C meeting concerning Phase 2 study protocols for its oral mucositis therapeutic candidate, AG013;
Oragenics announced selection of a second generation lantibiotic, OG716, an orally-active homolog that has exhibited positive results in an animal model for treatment of Clostridium difficile, and plans to begin IND enabling studies;
New animal model data advancing the understanding of hypertrophic cardiomyopathy (HCM) utilizing Exemplar Genetics’ custom miniswine research model of HCM created for Myokardia, Inc. will be highlighted at the American Heart Association Scientific Sessions 2016 in New Orleans on November 15th;
Two publications in the JCI demonstrated the potential of Exemplar Genetics ExeGen CFTR miniswine research models to help define and develop effective gene therapies for cystic fibrosis;
Entered into Exclusive Channel Collaborations with Genten Therapeutics, Inc. and CRB Bio, Inc., two startups backed by the Harvest Intrexon Enterprise Fund. Genten Therapeutics will center efforts on ActoBiotics expression of gluten peptides to reestablish immune tolerance for patients with celiac disease. CRS Bio will focus on targeted delivery of antibodies for treatment of chronic rhinosinusitis leading to improved breathing and patients’ quality of life; and
Appointed Lieutenant General (Ret.) Thomas P. Bostick, Ph.D., P.E., who most recently served as the 53rd U.S. Army Chief of Engineers and the Commanding General of the U.S. Army Corps of Engineers, as Senior Vice President and Head of the Environment Sector. He will oversee the Company’s strategies and programs to deploy biologically based solutions for the protection and remediation of the environment.
Third Quarter Financial Highlights:

Total revenues of $49.0 million, a decrease of 8% from the third quarter of 2015;
Net loss of $29.0 million attributable to Intrexon, or $(0.24) per basic share, including non-cash charges of $25.5 million;
Adjusted EBITDA (as redefined) of $(3.7) million, or $(0.03) per basic share;
Adjusted EBITDA (as previously defined) of $(5.6) million, or $(0.05) per basic share;
The net decrease in deferred revenue related to upfront and milestone payments, which represents the cash and stock received from collaborators less the amount of revenue recognized during the period, was $1.8 million compared to $4.0 million in the third quarter of 2015;
Cash consideration received for reimbursement of research and development services covered 60% of cash operating expenses (exclusive of operating expenses of consolidated subsidiaries);
Total consideration received for technology access fees, reimbursement of research and development services and products and services revenues covered 80% of consolidated cash operating expenses; and
Cash, cash equivalents, and short-term and long-term investments totaled $280.7 million, the value of investment in preferred stock totaled $123.7 million, and the value of equity securities totaled $39.4 million at September 30, 2016.
Year-to-Date Financial Highlights:

Total revenues of $144.9 million, an increase of 10% over the nine months ended September 30, 2015;
Net loss of $142.5 million attributable to Intrexon, or $(1.21) per basic share, including non-cash charges of $120.1 million;
Adjusted EBITDA (as redefined) of $(20.8) million, or $(0.18) per basic share;
Adjusted EBITDA (as previously defined) of $107.0 million, or $0.91 per basic share;
The net increase in deferred revenue related to upfront and milestone payments was $127.8 million compared to $51.8 million in the nine months ended September 30, 2015;
Cash consideration received for reimbursement of research and development services covered 58% of cash operating expenses (exclusive of operating expenses of consolidated subsidiaries); and
Total consideration received for technology access fees, reimbursement of research and development services and products and services revenues covered 150% of consolidated cash operating expenses.
"While maintaining our capital efficiency, our team has made good progress across multiple dimensions," commented Randal J. Kirk, Chairman and Chief Executive Officer of Intrexon. "We have devoted considerable resources toward bringing to market the more mature portion of our portfolio, while advancing a large number of developmental projects, both partnered and internal, and growing our capabilities – through the addition of personnel, now numbering approximately 900, improving our leadership team and expanding our technologic capabilities."

Mr. Kirk concluded, "We anticipate a very strong finish for this excellent year of accomplishment. Our strategy, resources, team, plans, ongoing projects and the engagement we currently enjoy give us great confidence that we truly can and should lead the bioindustrial revolution, a development that is becoming more obvious and more needed by the day."

Third Quarter 2016 Financial Results Compared to Prior Year Period

Total revenues were $49.0 million for the quarter ended September 30, 2016 compared to $53.4 million for the quarter ended September 30, 2015, a decrease of $4.4 million, or 8%. Collaboration and licensing revenues decreased $4.1 million from the quarter ended September 30, 2015 due to the recognition in 2015 of previously deferred revenue related to collaboration agreements for which the Company satisfied all of its obligations or which were terminated during the quarter ended September 30, 2015. This decrease was offset by (i) the recognition of deferred revenue for upfront payments received from collaborations signed by the Company between October 1, 2015 and September 30, 2016 and the recognition of the payment received in June 2016 from ZIOPHARM to amend their collaborations; and (ii) increased research and development services for these collaborations and for the progression or the addition of new programs with previously existing collaborators. Product revenues were $9.3 million for the quarter ended September 30, 2016 compared to $9.4 million for the quarter ended September 30, 2015, a decrease of $0.1 million, or 2%. Gross margin on products improved in the current period primarily due to a decline in the average cost of cows. Service revenues were $8.7 million for the quarter ended September 30, 2016 compared to $8.9 million for the quarter ended September 30, 2015, a decrease of $0.2 million, or 3%. Gross margin on services decreased in the current period primarily due to an increase in service related costs in the current period driven by increased headcount to support future revenue growth.

Total operating expenses were $77.8 million for the quarter ended September 30, 2016 compared to $61.3 million for the quarter ended September 30, 2015, an increase of $16.5 million, or 27%. Research and development expenses increased $7.4 million, or 34%, due primarily to increases in (i) salaries, benefits and other personnel costs for research and development employees, (ii) lab supplies and consulting expenses, and (iii) depreciation and amortization. Salaries, benefits and other personnel costs increased $2.1 million due to (i) an increase in research and development headcount to support new and expanded collaborations and (ii) a full period of costs for research and development employees assumed in the Company’s acquisition of Oxitec in September 2015. Lab supplies and consulting expenses increased $3.9 million as a result of (i) the progression into the preclinical phase with certain of Intrexon’s collaborators; (ii) the increased level of research and development services provided to the Company’s collaborators; and (iii) a full period of costs incurred as a result of the Company’s September 2015 acquisition of Oxitec. Depreciation and amortization increased $0.9 million primarily as a result of (i) the inclusion of a full period of depreciation and amortization on property, equipment and intangible assets acquired in the Company’s 2015 acquisitions, (ii) amortization of developed technology acquired from EnviroFlight in February 2016, and (iii) amortization related to AquaBounty’s intangible assets upon regulatory approval in November 2015. Selling, general and administrative (SG&A) expenses increased $10.8 million, or 47%, over the third quarter of 2015. Legal and professional expenses increased $4.5 million due to (i) consulting expenses payable in shares of Intrexon’s common stock pursuant to the Company’s services agreement with Third Security, LLC, or Third Security, which the Company entered into in November 2015; (ii) expenses incurred to support domestic and international government affairs for regulatory and other approvals necessary to commercialize the Company’s products and services; (iii) increased legal fees to defend ongoing litigation; and (iv) incremental costs incurred to support the ongoing operations of the Company’s 2015 acquisitions. Salaries, benefits and other personnel costs for SG&A employees increased $5.3 million due to increased headcount, including the hiring of two new executive officers and additional business development professionals, to support the Company’s expanding operations, as well as its acquisition of Oxitec in September 2015.

Year-to-Date 2016 Financial Results Compared to Prior Year Period

Total revenues were $144.9 million for the nine months ended September 30, 2016 compared to $132.1 million for the nine months ended September 30, 2015, an increase of $12.8 million, or 10%. Collaboration and licensing revenues increased $15.5 million over the nine months ended September 30, 2015 primarily due to (i) the recognition of deferred revenue for upfront payments received from collaborations signed by the Company between October 1, 2015 and September 30, 2016, including the payment received in June 2016 from ZIOPHARM to amend their collaborations; and (ii) increased research and development services for these collaborations and for the progression of programs or the addition of new programs with previously existing collaborators. This increase is partially offset by the recognition in 2015 of previously deferred revenue related to collaboration agreements for which the Company satisfied all of its obligations of which were terminated during 2015. Product revenues were $28.7 million for the nine months ended September 30, 2016 compared to $32.6 million for the nine months ended September 30, 2015, a decrease of $3.9 million, or 12%. The decrease in product revenues primarily relates to a decrease in quantities sold of livestock previously used in production and live calves sold due to lower customer demand. These decreases were partially offset by an increase in the quantity of weaned calves sold due to higher customer demand. Gross margin on products decreased due to a decline in the average sales prices of livestock previously used in production and also of live calves, and is partially offset by an increase in gross margin on sales of pregnant cows due to a decline in the average cost of cows. Service revenues were $33.3 million for the nine months ended September 30, 2016 compared to $32.2 million for the nine months ended September 30, 2015, an increase of $1.1 million, or 4%. The increase relates to an increase in the number of in vitro fertilization cycles performed due to higher customer demand. Gross margin on services was consistent period over period.

Total operating expenses were $237.5 million for the nine months ended September 30, 2016 compared to $244.6 million for the nine months ended September 30, 2015, a decrease of $7.1 million, or 3%. Research and development expenses declined $38.0 million, or 31%, due primarily to the inclusion in 2015 of a $59.6 million payment in common stock for an exclusive license to certain technologies owned by the University of Texas MD Anderson Cancer Center. This decrease was partially offset by increases in (i) salaries, benefits and other personnel costs for research and development employees, (ii) lab supplies and consulting expenses, and (iii) depreciation and amortization. Salaries, benefits and other personnel costs increased $6.7 million due to (i) an increase in research and development headcount to support new and expanded collaborations and (ii) costs for research and development employees assumed in the Company’s acquisition of Oxitec in September 2015. Lab supplies and consulting expenses increased $10.1 million as a result of (i) the progression into the preclinical phase with certain of Intrexon’s collaborators; (ii) the increased level of research and development services provided to the Company’s collaborators; and (iii) costs incurred as a result of the Company’s September 2015 acquisition of Oxitec. Depreciation and amortization increased $4.7 million primarily as a result of (i) the inclusion of a full period of depreciation and amortization on property, equipment and intangible assets acquired in the Company’s 2015 acquisitions and (ii) amortization related to AquaBounty’s intangible assets upon regulatory approval in November 2015. SG&A expenses increased $32.6 million, or 44%, over the nine months ended September 30, 2015. Salaries, benefits and other personnel costs for SG&A employees increased $9.2 million due to (i) increased headcount, including the hiring of two new executive officers and additional business development professionals, to support the Company’s expanding operations; (ii) noncash compensation paid to the Company’s CEO pursuant to the compensation agreement entered into in November 2015; (iii) a full period of stock compensation expense for officers hired in 2015; and (iv) salaries, benefits and other personnel costs for employees assumed in the Company’s acquisition of Oxitec in September 2015. These increases were partially offset by a decrease in stock compensation and other compensation expenses resulting primarily from the departure of certain officers of the Company in 2016. Legal and professional expenses increased $13.9 million primarily due to (i) consulting expenses payable in shares of Intrexon’s common stock pursuant to the Company’s services agreement with Third Security which the Company entered into in November 2015; (ii) expenses incurred to support domestic and international government affairs for regulatory and other approvals necessary to commercialize the Company’s products and services; (iii) increased legal fees for trial and post-trial activities in Trans Ova Genetics, L.C.’s, or Trans Ova, litigation with XY, LLC, and to defend ongoing litigation; and (iv) incremental costs incurred to support the ongoing operations of the Company’s 2015 acquisitions and other business development activities. In 2016, the Company also recorded $4.2 million in litigation expenses arising from the entrance of a court order in Trans Ova’s trial with XY, LLC.

Total other income (expense), net, was $(39.1) million for the nine months ended September 30, 2016 compared to $65.1 million for the nine months ended September 30, 2015, a decrease of $104.2 million, or 160%. This decrease was attributable to the $81.4 million realized gain recognized upon the special stock dividend of all of Intrexon’s shares of ZIOPHARM to the Company’s shareholders in June 2015 and the decrease in fair value of the Company’s equity securities portfolio.