On November 7, 2017 BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX) reported financial results for the third quarter ended September 30, 2017 (Press release, BioCryst Pharmaceuticalsa, NOV 7, 2017, View Source [SID1234521627]).

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

                  Schedule Your 30 min Free Demo!

"Now that we have completed our end of Phase 2 regulatory interactions with the FDA and EMA and have agreement on the requirements for marketing authorization applications of BCX7353, we are focused on executing the Phase 3 program to support NDA and MAA filings in 2019," said Jon P. Stonehouse, President & Chief Executive Officer. "We expect to start the single required Phase 3 efficacy and the long-term safety trials in first quarter 2018."

Third Quarter Financial Results

For the three months ended September 30, 2017, revenues increased to $8.8 million from $7.8 million in the third quarter of 2016. The increase in revenue was primarily due to a $5.0 million milestone payment associated with the U.S. Food and Drug Administration (FDA) approval of a supplemental New Drug Application (sNDA) for RAPIVAB (peramivir injection), extending its availability for the treatment of acute uncomplicated influenza to pediatric patients two years and older, and the recognition of $1.5 million of peramivir product sales to the Company’s commercial partner, Green Cross Corporation. These increases were offset by a $3.1 million decrease in RAPIACTA royalties primarily due to lower government stockpiling sales by the Company’s commercial partner in Japan, Shionogi & Co. Ltd. (Shionogi), and lower collaboration revenue under U.S. Government development contracts.

Research and Development (R&D) expenses for the third quarter of 2017 increased to $17.5 million from $14.1 million in the third quarter of 2016, primarily due to increased spending on the Company’s hereditary angioedema (HAE) portfolio, including the achievement of a performance-based stock option grant related to the successful completion of the APeX-1 clinical trial. These increases were offset by a decrease in the Company’s galidesivir expenses under U.S. Government development contracts.

General and administrative (G&A) expenses for the third quarter of 2017 increased to $3.3 million compared to $2.8 million of expense in the third quarter of 2016. The increase was primarily due to the achievement of a performance-based stock option grant related to the successful completion of the APeX-1 clinical trial.

Interest expense was $2.1 million in the third quarter of 2017 as compared to $1.5 million in the third quarter of 2016, an increase related primarily to the September 2016 closing of a $23 million senior credit facility. Also, a $84,000 mark-to-market gain on the Company’s foreign currency hedge was recognized in the third quarter of 2017, as compared to a $931,000 mark-to-market loss in the third quarter of 2016. These changes result from periodic changes in the U.S. dollar/Japanese yen exchange rate. During the third quarter of 2017, the Company also realized a currency gain of $45,000 from the exercise of a U.S. Dollar/Japanese yen currency option within its foreign currency hedge.

The net loss for the third quarter of 2017 was $15.1 million, or $0.18 per share, compared to a net loss of $11 .5 million, or $0.16 per share, for the third quarter 2016.

Cash, cash equivalents and investments totaled $169.3 million at September 30, 2017, and reflect an increase from $65.1 million at December 31, 2016. Net operating cash use for the third quarter of 2017 was $10.6 million, and was $31.6 million for the first nine months of 2017, which excludes net proceeds from the March 2017 ($47.8 million) and September 2017 ($85.8 million) public offerings.

Year to Date Financial Results

For the nine months ended September 30, 2017, revenues increased to $21.3 million from $17.4 million in the first nine months of 2016. The increase in revenue was primarily due to $7.0 million of milestone payments associated with the Canadian regulatory and FDA sNDA approvals of RAPIVAB, and to a lesser extent a $1.2 million increase in royalty revenue from Shionogi & Co. Ltd., Green Cross Corporation and Seqirus. The increase in royalty revenue was largely the result of continued Japanese Government stockpiling of RAPIACTA. Future government stockpiling orders are difficult to predict, as they are subject to the relevant appropriation and stockpiling processes. These revenue increases were offset by a $5.5 million decrease in collaboration revenue under U.S. Government development contracts.

R&D expenses for the nine months of 2017 increased to $50.0 million from $48.9 million in the first nine months of 2016, primarily due to the achievement of a performance-based stock option grant related to the successful completion of the APeX-1 clinical trial. These increases were offset by a decrease in galidesivir expenses under U.S. Government development contracts.

G&A expenses for the nine months of 2017 increased to $9.2 million compared to $8.7 million in the first nine months of 2016. The increase was due to the achievement of a performance-based stock option grant related to the successful completion of the APeX-1 clinical trial.

In the nine months of 2017 and 2016, interest expense was $6.3 million and $4.4 million, respectively. The increase in interest expense was related primarily to the September 2016 closing of a $23 million senior credit facility. A $1.9 million mark-to-market loss on the Company’s foreign currency hedge was recognized in the first nine months of 2017, as compared to a $7.4 million mark-to-market loss in the first nine months of 2016. These losses result from periodic changes in the U.S. dollar/Japanese yen exchange rate. During 2017 and 2016, we also realized currency gains of $966,000 and $811,000, respectively, from the exercise of a U.S. Dollar/Japanese yen currency option within our foreign currency hedge.

The net loss for the nine months of 2017 was $46.2 million, or $0.58 per share, compared to a net loss of $50.6 million, or $0.69 per share for the same period last year.

Clinical Development Update & Outlook

In the fourth quarter, BioCryst completed end of Phase 2 regulatory interactions with the FDA and European Medicines Agency (EMA) resulting in finalizing the marketing authorization requirements, including agreement on the design of a single Phase 3 clinical trial and the details regarding a long-term safety trial.

On November 1, 2017, the FDA granted orphan drug designation to BCX7353 for the prevention and treatment of angioedema attacks in patients diagnosed with HAE.

On September 5, BioCryst announced positive final results from its Phase 2 APeX-1 clinical trial in HAE. APeX-1 was a 3-part dose ranging trial designed to evaluate the efficacy, safety, tolerability, pharmacokinetics and pharmacodynamics of orally administered once-daily BCX7353 for 28 days, as a preventative treatment to reduce the frequency of attacks in HAE patients.

On September 15, BioCryst announced the completion of an underwritten public offering of 17,864,078 shares of its common stock, including 2,330,097 shares sold pursuant to the exercise in full of the underwriters’ option to purchase additional shares. The gross proceeds from this offering, including from the shares sold pursuant to the underwriters’ option to purchase additional shares, were $92 million before deducting underwriting discounts and commissions and other estimated offering expenses.

On September 21, BioCryst announced that the U.S. FDA approved a sNDA for RAPIVAB (peramivir injection), an intravenous (i.v.) neuraminidase inhibitor, extending its availability for the treatment of acute uncomplicated influenza to pediatric patients two years and older who have been symptomatic for no more than two days.
Financial Outlook for 2017

Based upon development plans and our awarded government contracts, BioCryst expects its 2017 net operating cash use to be in the upper half of its previously disclosed range of $30 to $50 million, and its 2017 operating expenses to be in the upper half of its previously disclosed range of $53 to $73 million. Our operating expense range excludes equity-based compensation expense due to the difficulty in reliably projecting this expense, as it is impacted by the volatility and price of the Company’s stock, as well as by the vesting of the Company’s outstanding performance-based stock options.

Conference Call and Webcast

BioCryst’s leadership team will host a conference call and webcast Tuesday, November 7, 2017 at 11:00 a.m. Eastern Time to discuss these financial results and recent corporate developments. To participate in the conference call, please dial 1-877-303-8027 (United States) or 1-760-536-5165 (International). No passcode is needed for the call. The webcast can be accessed by logging onto www.BioCryst.com. Please connect to the website at least 15 minutes prior to the start of the conference call to ensure adequate time for any software download that may be necessary.

About BCX7353

Discovered by BioCryst, BCX7353 is a novel, oral, once-daily, selective inhibitor of plasma kallikrein currently in development for the prevention and treatment of angioedema attacks in patients diagnosed with HAE. BCX7353 was generally safe and well tolerated in the recently completed Phase 2 APeX-1 clinical trial for the prophylaxis of angioedema attacks in patients with HAE and in clinical pharmacology studies in healthy volunteers.

About RAPIVAB (peramivir injection)

Approved by FDA in December 2014, RAPIVAB (peramivir injection) is an intravenous viral neuraminidase inhibitor approved for the treatment of acute uncomplicated influenza in patients two years and older who have been symptomatic for no more than two days. Efficacy of RAPIVAB is based on clinical trials of naturally occurring influenza in which the predominant influenza infections were influenza A virus and a limited number of patients infected with influenza B virus. Visit View Source to learn more.

On November 7, 2017 Cambrex Corporation (NYSE: CBM), a leading manufacturer of small molecule innovator and generic Active Pharmaceutical Ingredients (APIs), reported results for the third quarter 2017 (Press release, Cambrex, NOV 7, 2017, View Source [SID1234521628]).

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

                  Schedule Your 30 min Free Demo!

Highlights

Net Revenue increased 13% to $112.6 million compared to $99.4 million in the same quarter last year. Excluding the impact of foreign exchange, net revenue increased 12%.
GAAP Diluted EPS from continuing operations increased 24% to $0.52 from $0.42 in the same quarter last year. Adjusted Diluted EPS increased 20% to $0.55 compared to $0.46 in the same quarter last year.
EBITDA increased 29% to $33.3 million compared to the same quarter last year (see table at the end of this press release).
Net cash was $118.4 million at the end of the quarter, an increase of $24.2 million during the quarter.
The Company continued to execute on its strategic growth plan, investing in new manufacturing capacity and analytical laboratory space at its facilities in Charles City, High Point, Karlskoga, and Milan.
The Company continues to expect full year 2017 Net Revenue, excluding the impact of foreign currency, to increase between 7% and 11% compared to 2016, Adjusted EBITDA to be between $171 and $177 million, an 11% to 15% increase compared to 2016 and Adjusted income from continuing operations to be between $3.00 – $3.12 per share.
The Company now expects 2017 free cash flow to be between $60 and $70 million, an increase of $5 million from the mid-point and capital expenditures to be between $65 and $70 million, a reduction of $5 million from the mid-point (see Financial Expectations – Continuing Operations section below for related explanations and additional financial guidance).
"We are pleased with our financial performance in the third quarter, and when combined with an expected strong fourth quarter, we are positioned to finish 2017 within our financial expectations. Continued strong performance at our manufacturing facilities resulted in higher profit margins in the quarter and year-to-date," commented Steven M. Klosk, President and Chief Executive Officer of Cambrex.

"We recently completed the installation of new, large scale manufacturing capacity at our Karlskoga and Charles City facilities. Construction of the new High Potency facility at our Charles City plant has begun, and the recently announced investment in R&D and manufacturing capabilities to support the development of generic APIs at our Milan facility should be completed by the end of this year. In addition, we are adding pilot plant capacity and new analytical laboratories at our High Point location. These investments will enable Cambrex to increase its capabilities and ensure our facilities continue to address favorable industry trends and the evolving demands of our customers."

Basis of Reporting

The Company has provided a reconciliation of GAAP amounts to adjusted (i.e. Non-GAAP) amounts at the end of this press release. Cambrex management believes that the adjusted amounts provide useful information to investors due to the magnitude and nature of certain expenses recorded in the GAAP amounts.

Third Quarter 2017 Operating Results – Continuing Operations

Net revenue was $112.6 million, an increase of $13.2 million, or 13%, compared to the third quarter of 2016. Excluding a 1% favorable impact of foreign exchange compared to the third quarter of 2016, net revenue increased 12%. The increase primarily reflects higher volumes partially offset by lower pricing. The increase in volumes was driven primarily by growth in all product categories, as well as the addition of Cambrex High Point.

Gross margin increased to 42% from 38% compared to the same quarter last year. The increase was primarily driven by high capacity utilization, manufacturing efficiency improvements and favorable product mix, partially offset by lower pricing.

Selling, general and administrative expenses were $17.6 million, compared to $15.0 million in the same quarter last year. The increase was mainly due to the addition of Cambrex High Point, higher personnel related expenses, and higher expenses related to the evaluation of acquisition opportunities.

Research and development expenses were $4.2 million, compared to $3.2 million in the same quarter last year. The increase was mainly driven by costs to develop new generic drug products.

Operating profit increased to $25.1 million from $19.5 million in the same quarter last year. The increase was primarily the result of higher gross profits in 2017 partially offset by higher operating expenses as described above. Adjusted EBITDA was $33.3 million compared to $25.9 million in the same quarter last year (see table at the end of this press release).

Income tax expense was $7.5 million resulting in an effective tax rate of 30% compared to $5.4 million and an effective tax rate of 28% in the same quarter last year. Excluding the favorable impact of immediately recognizing certain effects of share-based compensation as required by a recently adopted accounting standard, the effective tax rate in the current period would have been 33%.

Income from continuing operations was $17.3 million or $0.52 per share compared to $13.7 million or $0.42 per share in the same quarter last year. Adjusted income from continuing operations was $18.5 million or $0.55 per share, compared to $15.1 million or $0.46 per share in the same quarter last year (see table at the end of this press release).

Capital expenditures and depreciation were $14.9 million and $7.7 million, respectively, compared to $11.7 million and $6.2 million, respectively, in the same quarter last year.

Net cash was $118.4 million at the end of the third quarter, an increase of $24.2 million during the quarter.

Financial Expectations – Continuing Operations

The following table shows the Company’s current expectations for its full year 2017 financial performance versus its previous expectations:

Current Expectations Previous Expectations
Net revenue increase 7% – 11% 7% – 11%
Adjusted EBITDA $171 – $177 million $171 – $177 million
Adjusted income from continuing operations per share $3.00 – $3.12 $3.00 – $3.12
Free cash flow $60 – $70 million $55 – $65 million
Capital expenditures $65 – $70 million $70 – $75 million
Depreciation and amortization $32 – $34 million $32 – $34 million
Adjusted effective tax rate 31% – 33% 31% – 33%

Consistent with the Company’s usual guidance practices, these financial expectations are for continuing operations and exclude the impact of any potential acquisitions, divestitures, restructuring activities and outcomes of tax disputes. Net revenue expectations exclude the impact of foreign exchange. EBITDA, Adjusted EBITDA and Adjusted income from continuing operations per share for 2017 will be computed on a basis consistent with the reconciliation of the third quarter 2017 financial results in the tables at the end of this press release. Free cash flow is defined as the change in debt, net of cash during the year. Adjusted effective tax rate excludes certain effects of share-based payments that were possibly deferred under the previous guidance. The tax rate will be sensitive to the Company’s geographic mix of income, changes in the tax codes within the countries in which the Company operates and the effects of certain share-based payments.

The financial information contained in this press release is unaudited, subject to revision and should not be considered final until the Company’s Form 10-Q for third quarter 2017 is filed with the SEC.Conference Call and Webcast

A conference call to discuss the Company’s third quarter 2017 results will begin at 8:30 a.m. Eastern Time on November 7, 2017 and can be accessed by calling 1-866-548-4713 for domestic and +1-323-794-2093 for international. Please use the passcode 1511082 and call approximately 10 minutes prior to the start time. A webcast will be available in the Investors section on the Cambrex website located at www.cambrex.com. A telephone replay of the conference call will be available through November 14, 2017 by calling 1-888-203-1112 for domestic and +1-719-457-0820 for international. Please use the passcode 1511082 to access the replay.

On November 7, 2017 Curis, Inc. (NASDAQ:CRIS), a biotechnology company focused on the development and commercialization of innovative and effective drug candidates for the treatment of human cancers, reported its financial results for the third quarter ended September 30, 2017 (Press release, Curis, NOV 7, 2017, View Source [SID1234521629]).

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

                  Schedule Your 30 min Free Demo!

"We are pleased to announce the acceptance of our Investigational New Drug (IND) application for CA-4948, an inhibitor of IRAK4 kinase, which we expect to enter the clinic soon for the treatment of lymphomas with specific mutations," said Ali Fattaey, President and CEO. "In addition, we are continuing to enroll patients in the Phase 1 trial of CA-170, an oral, small molecule, dual immune checkpoint inhibitor, to determine the recommended dose and most promising areas of future development for this molecule. We look forward to presenting additional preliminary data from the ongoing Phase 1 trial at the upcoming 2017 Society for Immunotherapy of Cancer (SITC) (Free SITC Whitepaper) Meeting. In our CUDC-907 program, we expect to present data supporting its clinical benefit in patients with MYC-altered DLBCL at the upcoming American Society of Hematology (ASH) (Free ASH Whitepaper) conference in December, and are planning for our discussions regarding these results with the FDA. And, on the financial front, our recently completed offering of common stock in September provides us operating capital to support these programs well into 2019."

Third Quarter 2017 Financial Results

Curis reported a net loss of $15.5 million, or $0.11 per share, on both a basic and diluted basis for the third quarter of 2017, as compared to a net loss of $28.3 million, or $0.21 per share, on both a basic and diluted basis for the same period in 2016. Curis reported a net loss of $45.3 million, or $0.31 per share, on both a basic and diluted basis for the nine months ended September 30, 2017, as compared to a net loss of $49.1 million, or $0.38 per share on both a basic and diluted basis for the same period in 2016. The net loss for the prior year period includes a non-cash in-process research and development charge of $18.0 million related to the amendment of Curis’s license agreement with Aurigene.

Revenues for the third quarter of 2017 were $2.4 million, as compared to $1.8 million for the same period in 2016. Revenues for the nine months ended September 30, 2017 were $6.6 million, as compared to $5.2 million for the same period in 2016. Revenues for both periods comprise primarily royalty revenues recorded on Genentech and Roche’s net sales of Erivedge.

Operating expenses were $16.9 million for the third quarter of 2017, as compared to $29.5 million for the same period in 2016.

Operating expenses for the nine months ended September 30, 2017 were $49.3 million, as compared to $52.4 million for the same period in 2016, and comprised the following:

Costs of Royalty Revenues. Costs of royalty revenues, primarily relates to amounts due to third-party university patent licensors in connection with Genentech and Roche’s Erivedge net sales, were $0.1 million for both the third quarter of 2017 and 2016. Cost of royalty revenues for the nine months ended September 30, 2017 and 2016 were $0.3 million for both periods.

In-Process Research and Development Expense. No in-process research and development expenses were recorded for the nine months ended September 30, 2017 as compared to $18.0 million recorded during the third quarter of 2016 associated with the issuance of 10,208,333 shares of Curis common stock to Aurigene as consideration for the rights granted under the terms of the September 2016 amendment to our collaboration agreement.

Research and Development Expenses. Research and development expenses were $13.4 million for the third quarter of 2017, as compared to $6.8 million for the same period in 2016. The increase was primarily due to a payment to Aurigene of $3.8 million for an exclusivity option in September 2017 and increased direct spending related to clinical activities of CA-170 and increased employee-related expenses primarily due to additional headcount. Research and development expenses were $38.2 million for the nine months ended September 30, 2017 as compared to $22.4 million for the same period in 2016.­

General and Administrative Expenses. General and administrative expenses were $3.4 million for the third quarter of 2017 as compared to $4.7 million for the same period in 2016. The decrease in general and administrative expenses was driven primarily by a one-time stock-based compensation modification expense incurred in 2016 and lower legal, professional, consulting and other administrative expenses. General and administrative expenses were $10.8 million for the nine months ended September 30, 2017, as compared to $11.7 million for the same period in prior 2016.

Other expense, net was $1.0 million for the third quarter of 2017, as compared to $0.6 million for the same period in 2016. Other expense, net primarily consisted of interest expense related to Curis Royalty’s (a wholly owned subsidiary of Curis) debt obligations. Other expense, net was $2.7 million and $1.8 million for the nine months ended September 30, 2017 and 2016, respectively.

As of September 30, 2017, Curis’s cash, cash equivalents, marketable securities and investments totaled $69.2 million and there were approximately 164.0 million shares of common stock outstanding. On a fully-diluted basis, which includes 17.0 million options, there were 181.0 million shares outstanding.

Immuno-oncology (CA-170: PD-L1 / VISTA antagonist program; Aurigene collaboration):

In September 2017, Curis presented preliminary data from the dose escalation stage of the CA-170 Phase 1 trial at the European Society for Medical Oncology (ESMO) (Free ESMO Whitepaper) 2017 Congress.

Following evidence in Phase 1 of tumor shrinkage, multiple patients remaining on CA-170 treatment for extended periods, and compelling signals for biomarkers of immune modulation in patient blood and tumor samples, Curis’s partner Aurigene announced a decision to fund a jointly-designed Phase 2 study at sites in India.

Precision oncology (CA-4948, IRAK4 inhibitor program):

Curis announces U.S. FDA acceptance of the IND to test CA-4948 in a Phase 1 trial in patients with hematologic malignancies, and in particular those with MYD88 gene mutations. A Phase 1 trial is expected to begin in the fourth quarter of 2017.

Precision oncology (CUDC-907: MYC-altered DLBCL program):

In August 2017, Curis reported data from the interim analysis of the Phase 2 trial of CUDC-907 in patients with MYC-altered diffuse large B-cell lymphoma (DLBCL). The company is preparing for discussions with the FDA regarding these results.

CA-327 (an orally bioavailable inhibitor of PDL1 and TIM3 immune checkpoints):

Curis expects to file an IND in the first half of 2018.

Upcoming Activities

Curis expects that it will make presentations at the following conferences through December 2017:

An oral presentation on preliminary data from the ongoing Phase 1 trial of CA-170 at the Society for Immunotherapy of Cancer (SITC) (Free SITC Whitepaper) 32nd Annual Meeting (Nov. 8-12, 2017) in Oxon Hill, Maryland

Poster presentation on oral small molecule combination therapy targeting PD-L1, VISTA and Tim-3 checkpoints at the Society for Immunotherapy of Cancer (SITC) (Free SITC Whitepaper) 32nd Annual Meeting (Nov. 8-12, 2017) in Oxon Hill, Maryland

Presentation as part of an analyst-moderated fireside chat at the Cowen IO NEXT Summit (Nov. 10, 2017) in Oxon Hill, Maryland

CUDC-907 poster presentation at the 59th American Society of Hematology (ASH) (Free ASH Whitepaper) Annual Meeting and Exposition (Dec. 9-12, 2017) in Atlanta

Overview of Company’s pipeline at the Guggenheim Securities Healthcare Conference (Dec. 13, 2017) in Boston

Conference Call Information

Curis management will host a conference call today, Nov. 7, 2017, at 8:30 a.m. EST to discuss these financial results and provide a corporate update.

To access the live conference call, please dial (877) 868-1829 from the United States or (253) 237-1135 from other locations shortly before 8:30 a.m. EST. The conference ID number is 6198027. The conference call can also be accessed on the Curis website at www.curis.com in the Investors section.

On November 7, 2017 Vericel Corporation (NASDAQ:VCEL), a leading developer of expanded autologous cell therapies for the treatment of patients with serious diseases and conditions, reported financial results for the third quarter ended September 30, 2017 (Press release, Vericel, NOV 7, 2017, View Source [SID1234521634]).

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

                  Schedule Your 30 min Free Demo!

Total net revenues for the quarter ended September 30, 2017 were $14.3 million, which included $9.9 million of MACI (autologous cultured chondrocytes on porcine collage membrane) net revenues and $4.4 million of Epicel (cultured epidermal autografts) net revenues, compared to $8.3 million of Carticel (autologous cultured chondrocytes) net revenues and $2.6 million of Epicel net revenues, respectively, in the third quarter of 2016. Total net revenues increased 30% compared to the third quarter of 2016, with MACI revenues increasing 19% and Epicel revenues increasing 67%, respectively, compared to the same period in 2016.

Gross profit for the quarter ended September 30, 2017 was $7.1 million, or 50% of net revenues, compared to $4.1 million, or 37% of net revenues, for the third quarter of 2016.

Research and development expenses for the quarter ended September 30, 2017 were $2.9 million compared to $3.4 million in the third quarter of 2016. The reduction in third-quarter research and development expenses is primarily due to a reduction in clinical trial expenses.

Selling, general and administrative expenses for the quarter ended September 30, 2017 were $8.2 million compared to $7.0 million for the same period in 2016. The increase in selling, general and administrative expenses is primarily due to an increase in expenses for marketing initiatives related to the launch of MACI and an increase in personnel costs primarily related to an increase in the MACI sales force.

Loss from operations for the quarter ended September 30, 2017 was $4.0 million, compared to $6.4 million for the third quarter of 2016. Material non-cash items impacting the operating loss for the quarter included $0.8 million of stock-based compensation expense and $0.4 million in depreciation expense.

Other expense for the quarter ended September 30, 2017 was $1.4 million compared to $0.3 million for the same period in 2016. The change in other expense for the quarter is primarily due to the change in the fair value of warrants in the third quarter of 2017 compared to the same period in 2016 and interest expense on the company’s outstanding revolving credit agreement and term loans.

Vericel’s net loss for the quarter ended September 30, 2017 was $5.4 million, or $0.16 per share, compared to a net loss of $6.7 million, or $0.38 per share, for the same period in 2016.

As of September 30, 2017, the company had $15.5 million in cash compared to $23.0 million in cash at December 31, 2016.

"We had a very strong third quarter in which we achieved record third quarter revenues and the second straight quarter of 30% or higher revenue growth compared to the same quarter of the prior year," said Nick Colangelo, president and CEO of Vericel. "Our significant revenue growth and gross margin expansion were driven by both the accelerating uptake of MACI as well as substantial growth for Epicel in the quarter."

Recent Business Highlights
During and since the third quarter of 2017, the company:

Achieved record third quarter revenues and the second straight quarter of 30% or greater revenue growth versus same quarter of the prior year;
Achieved 19% growth in MACI net revenues for the third quarter of 2017 compared to Carticel revenues for the same period in 2016;
Achieved 67% growth in Epicel net revenues for the third quarter of 2017 compared to the same period in 2016;
Achieved gross margins of 50% of net revenues in the third quarter of 2017 versus 37% of net revenues in the same period in 2016;
Trained more than 440 surgeons on the MACI surgical procedures to date, with approximately 50% of trained surgeons coming from former Carticel user and non-Carticel user segments;
Increased MACI biopsies 44% in the third quarter of 2017 compared to the same period in 2016;
Announced that medical benefit policies have been updated to include MACI at multiple commercial plans including UnitedHealthcare; at this time, the number of covered lives for commercial plans providing access to MACI is approximately equivalent to the number of covered lives for commercial plans that previously covered Carticel; and
Announced plans to expand the MACI sales force from 28 to 40 sales representatives.
"Based on the expanding surgeon customer base and the increasing volume of MACI biopsies and implants, we believe that demand for MACI will far exceed that for Carticel," added Mr. Colangelo. "Given the MACI launch momentum and expanded patient access, we have initiated another sales force expansion in order to drive continued strong revenue growth in 2018 and beyond."

Conference Call Information
Today’s conference call will be available live at 8:00am Eastern time in the Investors section of the Vericel website at View Source." target="_blank" title="View Source." rel="nofollow">View Source Please access the site at least 15 minutes prior to the scheduled start time in order to download the required audio software if necessary. To participate in the live call by telephone, please call (877) 312-5881 and reference Vericel Corporation’s third-quarter 2017 investor conference call. If calling from outside the U.S., please use the international phone number (253) 237-1173.

If you are unable to participate in the live call, the webcast will be available at View Source until November 7, 2018. A replay of the call will also be available until 11:00am (EST) on November 11, 2017 by calling (855) 859-2056, or from outside the U.S. (404) 537-3406. The conference ID is 7097908.

On November 7, 2017 Valeant Pharmaceuticals International, Inc. (NYSE: VRX) (TSX: VRX) ("Valeant" or the "Company" or "we") reported its third-quarter 2017 financial results (Press release, Valeant, NOV 7, 2017, View Source [SID1234521635]).

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

                  Schedule Your 30 min Free Demo!

"Our strong third-quarter performance demonstrates our continued progress in the turnaround of Valeant. Driven by solid execution in our Bausch + Lomb/International segment and our Salix business, we delivered strong organic revenue growth1 across approximately 77% of our business in the quarter," said Joseph C. Papa, chairman and chief executive officer, Valeant.

"Valeant is a very different company today than it was a year ago. Under a new management team, we have strengthened our balance sheet and stabilized the Company by simplifying our business and allocating resources more efficiently," Mr. Papa continued. "We realize there is more progress to be made, and we will continue to hold ourselves accountable for delivering on our commitments to best serve our shareholders, employees, customers, and most importantly, patients."

Company Highlights

Executing on Core Businesses

Increased revenue in the Bausch + Lomb/International segment by 1% compared to the third quarter of 2016; excluding foreign exchange and divestitures, revenue grew organically1 in the segment by 6% compared to the third quarter of 2016
Global Consumer revenue decreased by 2% compared to the third quarter of 2016; Consumer revenue grew organically1 by 6% compared to the third quarter of 2016, driven by strong growth of PreserVision vitamins
Grew revenue in the Global Vision Care business by 5% compared to the third quarter of 2016 and generated organic growth1 of 8% compared to the third quarter of 2016
Advanced Bausch + Lomb business
Received approval from the U.S. Food and Drug Administration (FDA) for VYZULTA, a new treatment option for glaucoma
Introduced Biotrue ONEday for Astigmatism daily disposable contact lenses in 20 European countries
Received Voluntary Action Indicated inspection classification from the FDA for the Bausch + Lomb manufacturing facility in Tampa, Fla., eliminating manufacturing uncertainties related to regulatory submissions for products manufactured there
Grew revenue in the Salix business by 3% compared to the third quarter of 2016 and grew revenue organically1 by 6% compared to the third quarter of 2016
XIFAXAN revenue increased by 5% compared to the third quarter of 2016
APRISO prescriptions grew by 7% compared to the third quarter of 2016
Continued to focus on stabilizing the Ortho Dermatologics business
Launched SILIQ injection in July 2017 as the lowest-priced injectable biologic for moderate-to-severe plaque psoriasis in the United States based on total annual cost; early market access has been better than expected with 75% of dispensed prescriptions covered
Presented multiple data sets on the dermatology pipeline and SILIQ, including 2-year findings demonstrating the long-term efficacy profile of SILIQ, at the 2017 Fall Clinical Dermatology Conference
Received FDA filing acceptance for IDP-118 topical lotion for the treatment of plaque psoriasis
Received FDA 510(k) clearance for the Thermage FLX System to non-invasively smooth skin on the face, eyes and body
Strengthening the Balance Sheet

As of Nov. 7, 2017, reduced total debt by approximately $6 billion since the end of the first quarter of 2016
Exceeded $5 billion commitment to pay down debt from divestiture proceeds and free cash flow earlier than the previously stated timing of February 2018
Completed sale of iNova Pharmaceuticals business and used net proceeds to pay down $923 million of senior secured term loans on Oct. 5, 2017
Utilized cash from operations to repay $100 million of amounts outstanding under the Company’s revolving credit facility during the quarter, and, on Nov. 2, 2017, paid down $125 million of senior secured term loans
Used net proceeds from sale of Dendreon Pharmaceuticals LLC to pay down $811 million of senior secured term loans in July 2017
Expect to complete sale of Obagi Medical Products business before the end of the year and will use net proceeds to pay down senior secured term loans
Redeemed remaining $500 million aggregate principal amount of our outstanding 6.75% Senior Notes due 2018, using cash on hand, on Aug. 15, 2017
Issued $1 billion aggregate principal amount of 5.500% senior secured notes due 2025 on Oct. 17, 2017
Used net proceeds, along with cash on hand, to repurchase $1 billion aggregate principal amount of outstanding 7.000% Senior Notes due 2020 and 6.375% Senior Notes due 2020 and pay fees and expenses
Eliminated all long-term debt maturities until 2020 and all mandatory amortization requirements
As of Nov. 7, 2017, approximately 80% of the Company’s debt is fixed rate debt
Delivered GAAP net income of $1,301 million and Adjusted EBITDA (non-GAAP) of $951 million
Achieved dismissals or other positive outcomes in resolving and managing litigation and investigations in 21 historical matters since the end of second-quarter 2017
Third-Quarter Revenue Performance
Total revenues were $2,219 million for the third quarter of 2017, as compared to $2,479 million in the third quarter of 2016, a decrease of $260 million, or 10%. The decrease was primarily driven by decreases in volume in the U.S. Diversified Products and Branded Rx segments attributed to the previously reported loss of exclusivity for a basket of products and also reflects the impact of divestitures and discontinuations and the unfavorable impact of foreign exchange. The decline was partially offset by increased sales in our Bausch + Lomb/International segment and Salix business.

Revenues by segment for the third quarter of 2017 were as follows:

(in millions)

2017

2016

Reported
Change

Reported
Change

Change at
Constant
Currency2

Organic1

Change

Segment

Bausch + Lomb/International

$1,254

$1,243

$11

1%

2%

6%

Branded Rx

$633

$766

($133)

(17%)

(17%)

(7%)

U.S. Diversified Products

$332

$470

($138)

(29%)

(29%)

(29%)

Total Revenues

$2,219

$2,479

($260)

(10%)

(10%)

(4%)

Bausch + Lomb/International Segment
Bausch + Lomb/International segment revenues were $1,254 million for the third quarter of 2017, as compared to $1,243 million for third quarter of 2016, an increase of $11 million, or 1%. Excluding the impact of divestitures and discontinuations, primarily the skin care divestiture,3 and foreign exchange, the Bausch + Lomb/International segment organically1 grew by approximately 6% compared to the third quarter of 2016, driven by increased volumes in the Global Consumer, International and Global Vision Care businesses.

Branded Rx Segment
Branded Rx segment revenues were $633 million for the third quarter of 2017, as compared to $766 million for third quarter of 2016, a decrease of $133 million, or 17%. The decrease in sales primarily reflects lower volumes in the Ortho Dermatologics business and the loss of sales due to the divestiture of Dendreon Pharmaceuticals LLC. The decline was partially offset by increased sales in the Salix business, including XIFAXAN and APRISO. Compared to the third quarter of 2016, the Salix business grew revenue by 3% and experienced organic growth1 of 6%.

U.S. Diversified Products Segment
U.S. Diversified Products segment revenues were $332 million for the third quarter of 2017, as compared to $470 million for third quarter of 2016, a decrease of $138 million, or 29%. The decline was primarily driven by decreases in volume and price attributed to the previously reported loss of exclusivity for a basket of products.

Operating Income
Operating income was $38 million for the third quarter of 2017, as compared to an operating loss of $863 million for the third quarter of 2016, an increase of $901 million. The increase in operating income primarily reflects the impact of goodwill impairment charges of $1,049 million recorded in the third quarter of 2016. Additionally, the increase in operating income was partially attributed to a net increase of $325 million in other income, primarily due to the gain on the sale of the iNova Pharmaceuticals business, offset by a goodwill impairment of $312 million related to a reporting unit in the Branded Rx segment, as well as a net decrease of approximately $100 million that includes (i) an impairment of the Company’s Sprout Pharmaceuticals (Sprout) subsidiary upon its classification as held for sale and (ii) a fair value adjustment associated with future royalty payments (contingent consideration) related to Sprout.

Net income for the three months ended Sept. 30, 2017 was $1,301 million, as compared to a net loss of $1,218 million for the same period in 2016, an improvement of $2,519 million. The change in net income is mainly attributed to the increase in the benefit of income taxes for the three months ended Sept. 30, 2017, which is primarily due to the completion of the internal tax reorganization efforts we began in the fourth quarter of 2016. The completion of these efforts generated a tax benefit of $1,397 million in the quarter.

Cash provided by operating activities was $490 million for the third quarter of 2017. Year-to-date GAAP cash flow was $1,712 million. Proactive management of working capital continued to provide positive results on the quarter and year-to-date performance.

GAAP Earnings Per Share (EPS) Diluted – for the third quarter of 2017 came in at $3.69 as compared to ($3.49) in the third quarter of 2016.

Adjusted EBITDA(non-GAAP)
Adjusted EBITDA (non-GAAP) was $951 million for the third quarter of 2017, as compared to $1,163 million for the third quarter of 2016, a decrease of $212 million, primarily due to revenue declines coming from the loss of exclusivity impact on the U.S. Diversified Products segment, volume declines in the Ortho Dermatologics business and the previously announced divestitures, partially offset by lower Selling, General and Administrative and Research and Development expenses.

2017 Guidance
Valeant has updated guidance for 2017, as follows:

Updates Full-Year Revenues in the range of $8.65 – $8.80 billion from $8.70 – $8.90 billion
Maintains Full-Year Adjusted EBITDA (non-GAAP) in the range of $3.60 – $3.75 billion despite asset divestitures
This updated guidance reflects the impact of the sales of the CeraVe, AcneFree and AMBI skin care brands; the sale of Dendreon Pharmaceuticals LLC; the sale of the iNova Pharmaceuticals business; and the sale of the Obagi Medical Products business, which is expected to close before the end of this year.

Other than with respect to GAAP Revenues, the Company only provides guidance on a non-GAAP basis. The Company does not provide a reconciliation of forward-looking Adjusted EBITDA (non-GAAP) to GAAP net income (loss), due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation. In periods where significant acquisitions or divestitures are not expected, the Company believes it might have a basis for forecasting the GAAP equivalent for certain costs, such as amortization, which would otherwise be treated as non-GAAP to calculate projected GAAP net income (loss). However, because other deductions (such as restructuring, gain or loss on extinguishment of debt and litigation and other matters) used to calculate projected net income (loss) vary dramatically based on actual events, the Company is not able to forecast on a GAAP basis with reasonable certainty all deductions needed in order to provide a GAAP calculation of projected net income (loss) at this time. The amount of these deductions may be material and, therefore, could result in projected GAAP net income (loss) being materially less than projected Adjusted EBITDA (non-GAAP).

Additional Highlights

Valeant’s cash, cash equivalents and restricted cash (including non-current) were $1,969 million at Sept. 30, 2017
The Company’s availability under the Revolving Credit Facility was approximately $980 million at Sept. 30, 2017
Valeant’s corporate credit ratings remained unchanged during the third quarter of 2017
Conference Call Details

Date:

Tuesday, Nov. 7, 2017

Time:

8:00 a.m. EST

Web cast:

http://ir.valeant.com/events-and-presentations

Participant Event Dial-in:

(844) 428-3520 (North America)

(409) 767-8386 (International)

Participant Passcode:

91700211

Replay Dial-in:

(855) 859-2056 (North America)

(404) 537-3406 (International)

Replay Passcode:

91700211 (replay available until Jan. 7, 2018)