On August 9, 2016 Celsion Corporation (NASDAQ:CLSN), a leading oncology drug development company, reported that it has signed a long-term Technology Transfer, Manufacturing and Commercial Supply Agreement (the "Agreement") with Zhejiang Hisun Pharmaceutical Co. Ltd. (SSE Code:600267), a leading pharmaceutical company in China, to pursue an expanded partnership for the technology transfer relating to the clinical and commercial manufacture and supply of GEN-1, Celsion’s proprietary gene mediated, IL-12 immunotherapy, for the greater China territory, with the option to expand into other countries in the rest of the world after all necessary regulatory approvals are in effect (Press release, Celsion, AUG 9, 2016, View Source [SID:1234514409]). GEN-1 is currently being evaluated by Celsion in first line ovarian cancer patients.

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The Agreement will help to support supply for both ongoing and planned clinical studies in the United States, and for potential future studies of GEN-1 in China. Hisun is one of the largest manufacturers of oncology agents globally, including ThermoDox, Celsion’s heated activated liposomal dosage form of doxorubicin, and is also a leading manufacturer for multinational pharmaceutical companies.

"Hisun has already proven itself to be an exceptional partner through our existing ThermoDox collaboration, and has been the source of high quality, cost-effective manufacturing. We are delighted to have the opportunity to expand our relationship, and to further harness their state-of-the-art manufacturing expertise and facilities through this newly established GEN-1 Agreement," said Michael H. Tardugno, Celsion’s Chairman, President and Chief Executive Officer. "Our partnership with Hisun serves multiple strategic purposes towards successful GEN-1 approval and eventual product launch both in China and internationally. Hisun’s expertise may provide an advantage when seeking China Food and Drug Administration (CFDA) approval, as well as securing a long-term supply for one of the largest markets for ThermoDox in the world."

Key provisions of the partnership are as follows:

The Agreement has targeted unit costs for clinical supplies of GEN-1 that are substantially competitive with the Company’s current suppliers;
Once approved, the cost structure for GEN-1 will support rapid market adoption and significant gross margins across global markets;
Celsion will provide Hisun a percentage certain of China’s commercial unit demand, and separately of global commercial unit demand, subject to regulatory approval;
Hisun and Celsion will commence technology transfer activities relating to the manufacture of GEN-1, including all studies required by CFDA for site approval; and
Hisun will collaborate with Celsion around the regulatory approval activities for GEN-1 with the CFDA. A local China partner affords Celsion access to accelerated CFDA review and potential regulatory exclusivity for the approved indication.
Mr. Hua Bai, CEO and Chairman of Hisun, stated "It is a pleasure to continue our relationship with Celsion, and we are delighted to be their partner of choice as they continue forward with the development of GEN-1, which may hold the potential to address a significant public health issue not only in China, but globally. We look forward to formalizing this long-term commercial supply agreement, and to continuing our transition from a traditional generics business to a branded global oncology franchise. With the wide prevalence of cancers in China, Hisun is well-positioned to aid in Celsion’s global effort to develop this important immuno-oncology therapeutic for this vast territory."

In June 2012, Celsion and Hisun signed a long-term commercial supply agreement for the production of ThermoDox, Celsion’s proprietary heat-activated liposomal encapsulation of doxorubicin. Hisun is one the largest manufacturers of chemotherapy agents globally, including doxorubicin. In July 2013, the ThermoDox collaboration was expanded to focus on next generation liposomal formulation development with the goal of creating safer, more efficacious versions of marketed cancer chemotherapeutics. During 2015, Hisun successfully completed the manufacture of three registration batches for ThermoDox and has obtained regulatory approvals to supply ThermoDox to participating clinical trial sites in all of the countries of Southeast Asia, Europe and North America, as well as to the European Union countries allowing for early access to ThermoDox. The future manufacturing of clinical and commercial supplies by Hisun will result in a cost structure allowing Celsion to profitably access all global markets, including third world countries, and help accelerate the Company’s product development program in China for ThermoDox in primary liver cancer and other indications.

About GEN-1 Immunotherapy

GEN-1 is a development stage immunotherapeutic. It is currently being evaluated as a first line treatment in combination with chemotherapy in a Phase I study of newly diagnosed ovarian cancer patients. GEN-1 is designed using the TheraPlas platform technology, is an IL-12 DNA plasmid vector encased in a nanoparticle delivery system which enables cell transfection followed by persistent, local secretion of the IL-12 protein. IL-12 is one of the most active cytokines for the induction of potent anti-cancer immunity acting through the induction of T-lymphocyte and natural killer (NK) cell proliferation. The Company has previously reported positive safety and encouraging Phase I results in previous trials of GEN-1 given as monotherapy in patients with peritoneally metastasized ovarian cancer and in combination with PEGylated doxorubicin in patients with platinum resistant ovarian cancer. The application of GEN-1 in ovarian cancer provides for a unique approach using immunotherapy for this indication.

On August 9, 2016 Medivation, Inc. (NASDAQ: MDVN) reported its financial results for the quarter ended June 30, 2016 and reaffirmed full-year 2016 financial guidance (Press release, Medivation, AUG 9, 2016, View Source [SID:1234514430]).

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U.S. net sales of XTANDI (enzalutamide) capsules, as recorded by Astellas, were $330.3 million for the quarter ended June 30, 2016, an increase of $31.8 million (+11% compared to the second quarter of 2015). The year-over-year net sales growth was driven by an 18% increase in underlying demand, partially offset by a lower net selling price resulting from a higher gross-to-net rate. Ex-U.S. net sales of XTANDI, as recorded by Astellas, were approximately $265 million for the quarter, an increase of $76 million (+41% compared to the second quarter of 2015).

"For the second consecutive quarter, XTANDI was the leading novel hormonal agent in the U.S. We continue to see increases in duration of therapy and new patient starts as well as accelerating uptake in the urology market," said David Hung, M.D., Founder, President and Chief Executive Officer of Medivation. "In addition, we anticipate a very exciting second half of 2016 for XTANDI as we prepare commercially for the October 22 PDUFA date for a potential U.S. label amendment to include head-to-head data of enzalutamide versus bicalutamide. We also expect top-line results from our Phase II ER/PR positive breast cancer trial and our PLATO trial before year end. Looking ahead into next year, we anticipate the completion of enrollment for PROSPER, our Phase III trial in non-metastatic castration-resistant prostate cancer, as well as potentially top-line results from this study."

"Moreover, we have made important strides in advancing the development of talazoparib, having completed successful meetings with the FDA to align on clinical development plans in several indications. We anticipate initiating multiple, including some potentially registrational, studies for talazoparib in non-gBRCA breast cancer, prostate cancer, small cell lung cancer and ovarian cancer in 2016 and glioblastoma multiforme, non-small cell lung cancer and potentially other indications in 2017. We also expect to read out top-line results from our first talazoparib registrational study, EMBRACA, in germline-BRCA mutated breast cancer in the first half of 2017. And finally, given the overall survival results we have recently reported with pidilizumab in a rare childhood brain tumor called diffuse intrinsic pontine glioma, or DIPG, we plan to meet with the FDA to discuss potential approval pathways for this wholly owned, late-stage asset."

Key Highlights Include:

XTANDI maintained its lead in the novel hormonal therapy (NHT) market with 51% share
The European Medicines Agency updated the XTANDI European label to include data from the head-to-head TERRAIN trial of enzalutamide versus bicalutamide
Announced plans to initiate the Phase III ENDEAR trial investigating enzalutamide in patients with diagnostic-positive triple-negative breast cancer with enrollment expected to begin in the fourth quarter 2016
Received the 2016 Health Science Award from American Urologic Association for outstanding support of physician and patient education in prostate cancer
Announced activation of the talazoparib-containing arm of the investigator-sponsored I-SPY 2 trial investigating talazoparib in combination with low-dose irinotecan in the neoadjuvant setting in patients with newly diagnosed, locally advanced HER2-negative breast cancer
Held two successful meetings with the FDA to discuss and align on potential registrational trials for talazoparib in castration resistant prostate cancer and small cell lung cancer
Announced results from a Phase I/II study of pidilizumab, an investigational antibody with immune-mediated anti-tumor effects, that demonstrated potential clinical benefit in pediatric patients with diffuse intrinsic pontine glioma
Named one of the San Francisco Bay Area’s Top Workplaces for the fourth year in a row by the San Francisco Bay Area News Group.
GAAP and Non-GAAP Financial Results:

Revenues:

Medivation’s collaboration revenue on a GAAP basis for the second quarter of 2016 was $206.2 million, compared with $175.7 million for the same period in 2015 (+17% vs. prior year). Non-GAAP collaboration revenue for the second quarter of 2016 was $206.2 million, compared with $174.8 million, for the same period in 2015 (+18% vs. prior year). Medivation’s collaboration revenue related to U.S. net sales of XTANDI for the second quarter 2016 was $165.1 million, compared with $149.2 million for the same period in 2015 (+11% vs. prior year). Medivation’s collaboration revenue related to ex-U.S. net sales of XTANDI for the second quarter 2016 was $41.0 million, compared with $25.6 million for the same period in 2015 (+60% vs. prior year).

Expenses:

Research and Development (R&D) expenses on a GAAP basis for the second quarter of 2016 were $73.4 million, compared with $47.3 million for the same period in 2015.

Non-GAAP R&D expenses for the second quarter of 2016 were $60.5 million, compared with $41.3 million for the same period in 2015 (+47% vs. prior year). The increase in non-GAAP R&D expenses primarily relates to expenses associated with Medivation’s talazoparib program, which Medivation acquired in the fourth quarter of 2015. On a sequential quarter-over-quarter basis, non-GAAP R&D expenses decreased approximately 12%.

Selling, general and administrative (SG&A) expenses on a GAAP basis for the second quarter of 2016 were $758.4 million, compared with $74.7 million for the same period in 2015. The increase in SG&A expenses was primarily due to a non-cash charge of $674.0 million due to an increase in the fair value of the contingent consideration liability related to Medivation’s acquisition of talazoparib from BioMarin Pharmaceutical Inc. Medivation recorded an increase in the fair value of this liability due to various market and development-specific events that occurred during the quarter, including the announcement of positive Phase III data for Tesaro’s PARP inhibitor product candidate, positive feedback received from regulatory authorities on two potentially registrational studies for talazoparib and recently generated clinical data for talazoparib.

Non-GAAP SG&A expenses for the second quarter of 2016 were $68.0 million, compared with $57.5 million for the same period in 2015 (+18% vs. prior year). The increase in non-GAAP SG&A expenses primarily relates to expenses related to higher sales and marketing costs following the expansion of Medivation’s salesforce, higher royalties, and talazoparib.

Net Income:

Medivation reported a GAAP net loss of $403.9 million, or $2.45 per diluted share, for the quarter ended June 30, 2016, compared with GAAP net income of $25.8 million, or $0.15 per diluted share, for the same period in 2015. Medivation’s second quarter net loss was a result of the non-cash increase to SG&A expenses related to the increase in Medivation’s contingent consideration liability for talazoparib, as discussed above.

Non-GAAP net income for the second quarter of 2016 was $50.0 million, or $0.29 per diluted share, compared with non-GAAP net income of $48.7 million, or $0.29 per diluted share, for the same period in 2015.

Cash Position:

At June 30, 2016, cash, cash equivalents and investments were $348.7 million, compared with $225.9 million at December 31, 2015, an increase of $122.9 million.

2016 Financial Guidance:

Medivation is reaffirming its 2016 full-year financial guidance as set forth below. For R&D expenses and SG&A expenses (and, as a result, total operating expenses, tax rate and diluted earnings per share), Medivation is not providing guidance regarding GAAP results because it is unable to reliably forecast the items excluded from non-GAAP expenses, such as contingent consideration and transaction-related advisory expenses, except to the extent reflected in the footnotes to the table below. Certain of the excluded items have been material through June 30, 2016, and these and other excluded items can be expected to be material for the full year 2016.


MEDIVATION FULL-YEAR 2016 FINANCIAL GUIDANCE

Year Ending December 31, 2016
U.S. net sales of XTANDI $1.425 to $1.525 billion(1)
Collaboration revenue $900 to $970 million(2)
Non-GAAP operating expenses $555 to $600 million(3)
Non-GAAP R&D expenses $280 to $300 million(4)
Non-GAAP SG&A expenses $275 to $300 million(5)
Non-GAAP tax rate 35.5% – 36%
Non-GAAP diluted earnings per share $1.30 – $1.40(6)
(1) U.S. net sales of XTANDI, as reported by Astellas, represents Medivation’s projection of U.S. net sales at the Astellas level.
(2) Collaboration revenue includes (i) Medivation’s collaboration revenue related to U.S. net sales of XTANDI and (ii) Medivation’s collaboration revenue related to ex-U.S. net sales of XTANDI, in the form of a royalty payment earned from Astellas. In prior periods, non-GAAP collaboration revenue excluded upfront and milestone-related payments from Astellas. No such payments are anticipated in 2016 or thereafter.
(3) Non-GAAP operating expenses, net of cost-sharing payments to/from Astellas, exclude the items described in notes (4) and (5) below.
(4) Non-GAAP R&D expenses exclude stock-based compensation expense ($11.9 million through June 30, 2016 and estimated to be $25-30 million for the full year 2016), change in fair value of contingent purchase consideration ($10.1 million through June 30, 2016), upfront license and milestone-related payments to third parties ($4.5 million through June 30, 2016), transaction-related advisory services ($0.1 million through June 30, 2016) and impairments of in-process R&D ($4.5 million through June 30, 2016).
(5) Non-GAAP SG&A expenses exclude stock-based compensation expense ($17.0 million through June 30, 2016 and estimated to be $35-40 million for the full year 2016), change in fair value of contingent purchase consideration ($680.2 million through June 30, 2016) and transaction-related advisory expenses ($6.3 million through June 30, 2016).
(6) Non-GAAP diluted earnings per share excludes items described in (2)-(5) in addition to non-cash interest expense related to the Revolving Credit Facility ($0.2 million through June 30, 2016). In prior periods, non-GAAP diluted earnings per share also excluded non-cash interest expense and loss on extinguishment related to the Convertible Notes, which were fully redeemed in 2015.


MEDIVATION, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
(unaudited)

June 30, 2016 December 31, 2015
ASSETS
Current assets:
Cash and cash equivalents $ 267,761 $ 225,853
Short-term investments 59,432 -
Receivable from collaboration partner 227,310 391,558
Prepaid expenses and other current assets 49,653 15,877
Restricted cash 1,449 930
Total current assets 605,605 634,218
Property and equipment, net 60,994 58,142
Long-term investments 21,515 -
Intangible assets 648,799 644,299
Deferred income tax assets, non-current 284,933 57,011
Restricted cash, net of current 11,687 12,206
Goodwill 18,643 18,643
Other non-current assets 7,331 7,072
Total assets $ 1,659,507 $ 1,431,591
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable, accrued expenses and other current liabilities $ 135,026 $ 186,203
Borrowings under Revolving Credit Facility - 75,000
Contingent consideration 4,951 4,900
Current portion of build-to-suit lease obligation 127 -
Total current liabilities 140,104 266,103
Contingent consideration 952,604 262,368
Build-to-suit lease obligation, excluding current portion 17,244 17,406
Other non-current liabilities 15,881 13,035
Total liabilities 1,125,833 558,912
Stockholders’ equity:
Preferred stock, $0.01 par value per share; 1,000,000 shares authorized; no shares issued and outstanding - -
Common stock, $0.01 par value per share; 340,000,000 shares authorized; 165,555,633 and 163,905,342 shares issued and outstanding at June 30, 2016 and December 31, 2015, respectively 1,656 1,639
Additional paid-in capital 745,475 684,841
Accumulated other comprehensive loss (550 ) -
Retained earnings (accumulated deficit) (212,907 ) 186,199
Total stockholders’ equity 533,674 872,679
Total liabilities and stockholders’ equity $ 1,659,507 $ 1,431,591


MEDIVATION, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)

Three Months Ended Six Months Ended
June 30, June 30,
2016 2015 2016 2015
Collaboration revenue $ 206,165 $ 175,657 $ 388,662 $ 304,845
Operating expenses:
Research and development expenses 73,375 47,294 150,962 91,970
Selling, general and administrative expenses 758,431 74,708 855,258 158,647
Total operating expenses 831,806 122,002 1,006,220 250,617
Income (loss) from operations (625,641 ) 53,655 (617,558 ) 54,228
Other income (expense), net:
Loss on extinguishment of Convertible Notes - (7,868 ) - (7,871 )
Interest expense (475 ) (5,309 ) (1,155 ) (10,917 )
Other, net (23 ) (52 ) (232 ) 88
Total other income (expense), net (498 ) (13,229 ) (1,387 ) (18,700 )
Income (loss) before income tax expense (626,139 ) 40,426 (618,945 ) 35,528
Income tax (expense) benefit 222,217 (14,600 ) 219,839 (12,820 )
Net income (loss) $ (403,922 ) $ 25,826 $ (399,106 ) $ 22,708
Basic net income (loss) per common share $ (2.45 ) $ 0.16 $ (2.42 ) $ 0.14
Diluted net income (loss) per common share $ (2.45 ) $ 0.15 $ (2.42 ) $ 0.14
Weighted average common shares used in the calculation of basic net income (loss) per common share 164,926 158,505 164,586 157,576
Weighted average common shares used in the calculation of diluted net income (loss) per common share 164,926 168,690 164,586 162,995


MEDIVATION, INC.
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
(in thousands, except per share amounts)
(unaudited)

Three Months Ended Six Months Ended
June 30, June 30,
2016 2015 2016 2015
Collaboration revenue reconciliation:
GAAP collaboration revenue $ 206,165 $ 175,657 $ 388,662 $ 304,845
Upfront and milestone-related payments from Astellas(a) - (846 ) - (2,257 )
Non-GAAP collaboration revenue $ 206,165 $ 174,811 $ 388,662 $ 302,588
Research and development expenses reconciliation:
GAAP research and development expenses $ 73,375 $ 47,294 $ 150,962 $ 91,970
Stock-based compensation expense(b) (5,858 ) (6,109 ) (11,895 ) (11,920 )
Contingent consideration(c) (8,997 ) 70 (10,137 ) (930 )
Upfront license and milestone-related payments to third party(d) (2,500 ) - (4,500 ) -
Transaction-related advisory services expense(d) (8 ) - (8 ) -
Change in fair value of intangible asset(d) 4,500 - 4,500 -
Non-GAAP research and development expenses $ 60,512 $ 41,255 $ 128,922 $ 79,120
Selling, general, and administrative expenses reconciliation:
GAAP selling, general, and administrative expenses $ 758,431 $ 74,708 $ 855,258 $ 158,647
Stock-based compensation expense(b) (8,836 ) (7,969 ) (17,010 ) (15,530 )
Contingent consideration(c) (675,331 ) (1,083 ) (680,150 ) (4,083 )
Transaction-related advisory services expense(d) (6,298 ) - (6,298 ) -
Upfront license and milestone-related payments to third party(d) - (8,108 ) - (14,057 )
Non-GAAP selling, general, and administrative expenses $ 67,966 $ 57,548 $ 151,800 $ 124,977
Other expense (income), net reconciliation:
GAAP other expense (income), net $ 498 $ 13,229 $ 1,387 $ 18,700
Non-cash interest expense(e) (85 ) (5,309 ) (170 ) (9,219 )
Loss on extinguishment of Convertible Notes(f) - (7,868 ) - (7,871 )
Non-GAAP other expense (income), net $ 413 $ 52 $ 1,217 $ 1,610
Income tax expense (benefit) reconciliation:
GAAP income tax expense (benefit) $ (222,217 ) $ 14,600 $ (219,839 ) $ 12,820
Income tax effect on non-GAAP adjustments(g) 249,473 12,668 257,726 21,963
Non-GAAP income tax expense $ 27,256 $ 27,268 $ 37,887 $ 34,783
Net income (loss) reconciliation:
GAAP net income (loss) $ (403,922 ) $ 25,826 $ (399,106 ) $ 22,708
Milestone-related payments from Astellas(a) - (846 ) - (2,257 )
Stock-based compensation expense(b) 14,694 14,078 28,905 27,450
Contingent consideration(c) 684,328 1,013 690,287 5,013
Upfront license and milestone-related payments to third party(d) 2,500 8,108 4,500 14,057
Transaction-related advisory services expense(d) 6,306 - 6,306 -
Change in fair value of intangible asset(d) (4,500 ) - (4,500 ) -
Non-cash interest expense(e) 85 5,309 170 9,219
Loss on extinguishment of Convertible Notes(f) - 7,868 - 7,871
Income tax adjustments(g) (249,473 ) (12,668 ) (257,726 ) (21,963 )
Non-GAAP net income $ 50,018 $ 48,688 $ 68,836 $ 62,098
Diluted net income (loss) per share reconciliation:
GAAP diluted net income (loss) $ (403,922 ) $ 25,826 $ (399,106 ) $ 22,708
Non-GAAP adjustments after-tax 453,940 22,862 467,942 39,390
Interest expense related to Convertible Notes, net of taxes(h) - - - 1,098
Non-GAAP diluted net income $ 50,018 $ 48,688 $ 68,836 $ 63,196
Non-GAAP diluted net income per share $ 0.29 $ 0.29 $ 0.41 $ 0.37
Shares used in per share calculation (diluted):
GAAP shares used in per share calculation (diluted)(i) 164,926 168,690 164,586 162,995
Dilutive impact of common stock equivalents 5,030 - 4,621 -
Dilutive impact of potential common shares for Convertible Notes - - - 7,440
Non-GAAP shares used in per share calculation (diluted)(i) 169,956 168,690 169,207 170,435
Non-GAAP adjustment summary:
Collaboration revenue $ - $ (846 ) $ - $ (2,257 )
Research and development expenses 12,863 6,039 22,040 12,850
Selling, general and administrative expenses 690,465 17,160 703,458 33,670
Other expense (income), net 85 13,177 170 17,090
Total non-GAAP adjustments before tax 703,413 35,530 725,668 61,353
Income tax effect (249,473 ) (12,668 ) (257,726 ) (21,963 )
Total non-GAAP adjustments after tax $ 453,940 $ 22,862 $ 467,942 $ 39,390
(a) Upfront and milestone-related payments from Astellas: Upfront and milestone payments are excluded from non-GAAP financial measures because they occur at irregular intervals and are not related to Medivation’s long term core business going forward; such exclusion facilitates understanding of the ongoing economics of the business, facilitates period over period comparison and is reflective of how Medivation manages its business.
(b) Stock-based compensation expense: Stock-based compensation expense is excluded from non-GAAP financial measures because of the nature of this charge, varying available valuation methodologies, subjective assumptions and the variety of award types; such exclusion facilitates comparison of Medivation’s operating results to peer companies.
(c) Contingent consideration: The effects of contingent consideration valuation are excluded from non-GAAP financial measures because of the nature of this item, which is related to the change in fair value of the liability for contingent consideration related to the acquisition of worldwide rights to talazoparib from BioMarin Pharmaceutical Inc., and Medivation’s license agreement with CureTech, Inc. for pidilizumab; such exclusion facilitates comparisons of Medivation’s operating results to peer companies.
(d) Upfront license and milestone-related payments to third party and other adjustments: These payments and adjustments are excluded from non-GAAP financial measures because they occur at irregular intervals and are not related to Medivation’s long term core business going forward or are non-cash charges; such exclusion facilitates understanding of the ongoing economics of the business, facilitates period over period comparison and is reflective of how Medivation manages its business.
(e) Non-cash interest expense related to the Revolving Credit Facility and Convertible Notes: The effects of non-cash interest expense related to the Revolving Credit Facility and Convertible Notes are excluded from non-GAAP financial measures because these expenses are non-cash expenses; such exclusion facilitates comparison of Medivation’s cash operating results to peer companies and is reflective of how Medivation manages its business.
(f) Loss on extinguishment of Convertible Notes: The effects of loss on extinguishment of Convertible Notes are excluded from non-GAAP financial measures because this expense is a non-cash charge; such exclusion facilitates comparison of Medivation’s cash operating results to peer companies and is reflective of how Medivation manages its business.
(g) Income tax adjustments: Adjustments to income tax expense for non-GAAP financial measures consist of the income tax effect of the non-GAAP adjustments.
(h) Interest expense related to Convertible Notes: For the six months ended June 30, 2015, cash interest expense is added back to non-GAAP net income for the purposes of the non-GAAP diluted income per share calculation.
(i) Shares used in per share calculation (diluted): In periods in which Medivation reports a GAAP or non-GAAP net loss, all common stock equivalents are deemed anti-dilutive and basic and diluted weighted average shares are equal. Because Medivation had non-GAAP net income for the three and six months ended June 30, 2016, the dilutive effect of common stock equivalents is included in the non-GAAP diluted net income per share calculation for those periods.

In periods in which Medivation reports GAAP or non-GAAP net income, the effect of contingently issuable shares is considered in the calculation of diluted net income per share. For the three months ended June 30, 2015, Medivation included the impact of approximately 4.8 million contingently issuable shares related to Convertible Notes in the diluted net income per share calculation for both GAAP and non-GAAP purposes. For the six months ended June 30, 2015, Medivation included the effect of approximately 7.4 million contingently issuable shares related to the Convertible Notes in the diluted net income per share calculation for non-GAAP purposes. The effect of the Convertible Notes is excluded from the diluted net income per share calculation for GAAP purposes for the six months ended June 30, 2015 because their effect is anti-dilutive.

To supplement Medivation’s financial results presented on a U.S. GAAP basis, Medivation uses certain non-GAAP financial measures as shown in the tables above. Medivation believes that these non-GAAP financial measures are helpful in understanding Medivation’s past financial performance and potential future financial results. These non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable U.S. GAAP financial measures, and they should be read in conjunction with Medivation’s consolidated financial statements prepared in accordance with U.S. GAAP. Medivation’s management uses these non-GAAP financial measures for planning, budgeting, forecasting and performance measurement, to assess historical operating performance and make financial and operational business decisions, and also to provide forecasts and financial guidance to investors on this basis. In addition, Medivation believes that the presentation of these non-GAAP financial measures is useful to investors because it enhances the ability of investors to compare Medivation’s financial results period over period and allows for greater transparency with respect to key financial metrics Medivation uses in making operating decisions, and also because Medivation’s investors and analysts regularly use them to model or track Medivation’s financial performance. Medivation believes that the non-GAAP financial measures provide investors with a meaningful understanding of its historical and potential future financial results because they exclude certain non-cash charges such as stock-based compensation which is substantially dependent on changes in the market price of Medivation’s common stock and the timing of equity awards, impairment charges, changes in fair value of intangible assets and contingent purchase consideration; revenues and expenses that occur at irregular intervals, such as milestone payments earned from collaboration partners and related payments to licensors of technology, and transaction-related advisory expenses; and non-cash interest expense and losses related to Convertible Notes. Investors should note that these non-GAAP financial measures are not prepared under any comprehensive set of accounting rules or principles and do not reflect all of the amounts associated with Medivation’s results of operations as determined in accordance with U.S. GAAP. Investors should also note that these non-GAAP financial measures have no standardized meaning prescribed by U.S. GAAP and, therefore, have limits in their usefulness to investors. In addition, from time-to-time in the future there may be other items that Medivation may exclude for the purposes of its non-GAAP financial measures; likewise, Medivation may in the future cease to exclude items that Medivation has historically excluded for the purpose of Medivation’s non-GAAP financial measures. Medivation’s non-GAAP financial measures may not be comparable with non-GAAP financial measures provided by other companies.

Conference Call/Webcast Information

To participate by telephone in today’s live call beginning at 4:30 p.m. Eastern Time, please call 877-303-2523 from the U.S. or +1-253-237-1755 internationally. Individuals may access the live audio webcast by visiting View Source A replay of the webcast will be available on Medivation’s website for a limited time following the live event.

About XTANDI

XTANDI (enzalutamide) capsules is an androgen receptor inhibitor that blocks multiple steps in the androgen receptor signaling pathway within the tumor cell. In preclinical studies, enzalutamide has been shown to competitively inhibit androgen binding to androgen receptors, and inhibit androgen receptor nuclear translocation and interaction with DNA. The clinical significance of this MOA is unknown.

XTANDI is approved by the U.S. Food and Drug Administration for the treatment of patients with metastatic castration-resistant prostate cancer (CRPC).

Important Safety Information

Contraindications

XTANDI is not indicated for women and is contraindicated in women who are or may become pregnant. XTANDI can cause fetal harm when administered to a pregnant woman.

Warnings and Precautions

Seizure

In Study 1, conducted in patients with metastatic castration-resistant prostate cancer (CRPC) who previously received docetaxel, seizure occurred in 0.9% of XTANDI patients and 0% of placebo patients. In Study 2, conducted in patients with chemotherapy-naive metastatic CRPC, seizure occurred in 0.1% of XTANDI patients and 0.1% of placebo patients. There is no clinical trial experience re- administering XTANDI to patients who experienced a seizure, and limited safety data are available in patients with predisposing factors for seizure. Study 1 excluded the use of concomitant medications that may lower threshold; Study 2 permitted the use of these medications. Because of the risk of seizure associated with XTANDI use, patients should be advised of the risk of engaging in any activity during which sudden loss of consciousness could cause serious harm to themselves or others. Permanently discontinue XTANDI in patients who develop a seizure during treatment.

Posterior Reversible Encephalopathy Syndrome (PRES)

In post approval use, there have been reports of PRES in patients receiving XTANDI. PRES is a neurological disorder which can present with rapidly evolving symptoms including seizure, headache, lethargy, confusion, blindness, and other visual and neurological disturbances, with or without associated hypertension. A diagnosis of PRES requires confirmation by brain imaging, preferably MRI. Discontinue XTANDI in patients who develop PRES.

Adverse Reactions

The most common adverse reactions (≥ 10%) reported from two combined clinical studies that occurred more commonly (≥ 2% over placebo) in XTANDI patients were asthenia/fatigue, back pain, decreased appetite, constipation, arthralgia, diarrhea, hot flush, upper respiratory tract infection, peripheral edema, dyspnea, musculoskeletal pain, weight decreased, headache, hypertension, and dizziness/vertigo.

In Study 1, Grade 3 and higher adverse reactions were reported among 47% of XTANDI patients and 53% of placebo patients. Discontinuations due to adverse events were reported for 16% of XTANDI patients and 18% of placebo patients. In Study 2, Grade 3-4 adverse reactions were reported in 44% of XTANDI patients and 37% of placebo patients. Discontinuations due to adverse events were reported for 6% of both study groups.

Lab Abnormalities: Grade 1-4 neutropenia occurred in 15% of XTANDI patients (1% Grade 3-4) and 6% of placebo patients (0.5% Grade 3-4). Grade 1-4 thrombocytopenia occurred in 6% of XTANDI patients (0.3% Grade 3-4) and 5% of placebo patients (0.5% Grade 3-4). Grade 1-4 elevations in ALT occurred in 10% of XTANDI patients (0.2% Grade 3-4) and 16% of placebo patients (0.2% Grade 3-4). Grade 1-4 elevations in bilirubin occurred in 3% of XTANDI patients (0.1% Grade 3-4) and 2% of placebo patients (no Grade 3-4).
Infections: In Study 1, 1% of XTANDI patients, compared to 0.3% of placebo patients died from infections or sepsis. In Study 2, 1 patient in each treatment group (0.1%) had an infection resulting in death.
Falls (including fall-related injuries), occurred in 9% of XTANDI patients and 4% of placebo patients. Falls were not associated with loss of consciousness or seizure. Fall-related injuries were more severe in XTANDI patients, and included non-pathologic fractures, joint injuries, and hematomas.
Hypertension occurred in 11% of XTANDI patients and 4% of placebo patients. No patients experienced hypertensive crisis. Medical history of hypertension was balanced between arms. Hypertension led to study discontinuation in < 1% of all patients.
Drug Interactions

Effect of Other Drugs on XTANDI

Avoid strong CYP2C8 inhibitors, as they can increase the plasma exposure to XTANDI. If co-administration is necessary, reduce the dose of XTANDI.

Avoid strong CYP3A4 inducers as they can decrease the plasma exposure to XTANDI. If co-administration is necessary, increase the dose of XTANDI.

Effect of XTANDI on Other Drugs

Avoid CYP3A4, CYP2C9, and CYP2C19 substrates with a narrow therapeutic index, as XTANDI may decrease the plasma exposures of these drugs. If XTANDI is co-administered with warfarin (CYP2C9 substrate), conduct additional INR monitoring.

For Full Prescribing Information for XTANDI (enzalutamide) capsules, please visit www.XtandiHCP.com/PI.

You are encouraged to report negative side effects of prescription drugs to the FDA. Visit www.fda.gov/medwatch or call 1 ‐ 800 ‐ FDA ‐ 1088.

On August 9, 2016 Incyte Corporation (Nasdaq: INCY) reported 2016 second-quarter financial results, including strong revenue growth driven by increased sales of Jakafi (ruxolitinib) in the U.S. as well as continued growth in the royalties from ex-U.S. sales of Jakavi (ruxolitinib) by Novartis (Press release, Incyte, AUG 9, 2016, View Source [SID:1234514389]).

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The long-term clinical profile of Jakafi was reinforced by the presentation of five-year overall survival data from the COMFORT-I trial in patients with myelofibrosis at the recent American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) meeting and the successful results from the RESPONSE-2 Phase 3 trial in patients with uncontrolled polycythemia vera highlighted at the European Hematology Association (EHA) (Free EHA Whitepaper) congress. Additionally, ruxolitinib has been granted Breakthrough Therapy Designation by the U.S. Food and Drug Administration (FDA) for the treatment of patients with acute GVHD.

Baricitinib, currently under global regulatory review for the treatment of patients with rheumatoid arthritis, may provide Incyte with a further valuable source of revenue, given the potential for milestones and royalties under the Company’s license agreement with Eli Lilly and Company. The first regulatory approval for baricitinib is anticipated in the first quarter of next year.
Incyte has a growing international footprint, which was accelerated by the recent ARIAD transaction in Europe, and now has a development, medical and commercial organization in Europe to complement its fully-integrated U.S. business. The expanded European team is fully operational, and will continue to grow the Iclusig (ponatinib) brand as well as contribute to the clinical development of Incyte’s portfolio of 14 product candidates.

Within the R&D group, and during the second quarter of 2016, Incyte initiated the first pivotal Phase 3 trial of epacadostat, added a new clinical program with the initiation of a first-in-man trial of INCAGN1876, an anti-GITR agonist antibody, and signed a drug discovery alliance with the Moffitt Cancer Center – collectively illustrating the depth and breadth of Incyte’s discovery and development programs.

"Incyte is in an excellent position both financially and operationally as we enter the second half of the year," stated Hervé Hoppenot, Incyte’s Chief Executive Officer. "Jakafi continues to grow rapidly in the U.S., and we have successfully incorporated our expanded European team. The recent initiation of the first Phase 3 trial of epacadostat was a significant milestone for Incyte, and we are preparing to launch the pivotal program for ruxolitinib in GVHD."

2016 Second-Quarter Financial Results
Revenues For the quarter ended June 30, 2016, net product revenues of Jakafi were $208 million as compared to $142 million for the same period in 2015, representing 46 percent growth. For the six months ended June 30, 2016, net product revenues of Jakafi were $391 million as compared to $258 million for the same period in 2015, representing 52 percent growth. For the quarter and six months ended June 30, 2016, net product revenues of Iclusig were $4 million. For the quarter and six months ended June 30, 2016, product royalties from sales of Jakavi outside of the United States received from Novartis were $26 million and $48 million, respectively, as compared to $17 million and $33 million, respectively, for the same periods in 2015. For the quarter and six months ended June 30, 2016, contract revenues were $8 million and $66 million, respectively, as compared to $3 million and $31 million, respectively, for the same periods in 2015. The increase in contract revenues relates to milestone payments earned. For the quarter ended June 30, 2016, total revenues were $246 million as compared to $163 million for the same period in 2015. For the six months ended June 30, 2016, total revenues were $510 million as compared to $322 million for the same period in 2015.

Year Over Year Revenue Growth
(in thousands, unaudited)

Three Months Ended Six Months Ended
June 30, % June 30, %
2016 2015 Change 2016 2015 Change
Revenues:
Jakafi net product revenue $ 208,126 $ 142,406 46% $ 391,393 $ 257,736 52%
Iclusig net product revenue 3,990 - - 3,990 - -
Product royalty revenues 25,958 17,364 49% 47,860 33,037 45%
Contract revenues 8,214 3,214 - 66,429 31,429 -
Other revenues - - - 80 58 -
Total revenues $ 246,288 $ 162,984 51% $ 509,752 $ 322,260 58%

Research and development expenses Research and development expenses for the quarter and six months ended June 30, 2016 were $120 million and $277 million, respectively, as compared to $112 million and $231 million, respectively, for the same periods in 2015. Included in research and development expenses for the quarter and six months ended June 30, 2016 were non-cash expenses related to equity awards to our employees of $14 million and $27 million, respectively. The increase in research and development expenses for the six months ended June 30, 2016 was primarily due to the previously announced $35 million upfront payment to acquire the rights from Lilly to develop ruxolitinib for the treatment of patients with GVHD and the expansion of the Company’s clinical portfolio.

Selling, general and administrative expenses Selling, general and administrative expenses for the quarter and six months ended June 30, 2016 were $67 million and $131 million, respectively, as compared to $52 million and $97 million, respectively, for the same periods in 2015. Included in selling, general and administrative expenses for the quarter and six months ended June 30, 2016 were non-cash expenses related to equity awards to our employees of $8 million and $16 million, respectively. Increased selling, general and administrative expenses are driven primarily by additional costs related to the commercialization of Jakafi.

Unrealized loss on long term investment Unrealized loss on long term investment of $1 million and $4 million for the quarter and six months ended June 30, 2016 represents the fair market value adjustments of the Company’s investment in Agenus.

Net income / (loss) Net income for the quarter ended June 30, 2016 was $34 million, or $0.18 per basic and diluted share, as compared to net income of $9 million, or $0.05 per basic and diluted share for the same period in 2015. Net income for the six months ended June 30, 2016 was $58 million, or $0.31 per basic and $0.30 per diluted share, as compared to net loss of $9 million, or $0.05 per basic and diluted share for the same period in 2015.

Cash, cash equivalents and marketable securities position As of June 30, 2016, cash, cash equivalents and marketable securities totaled $629 million, as compared to $708 million as of December 31, 2015.

2016 Financial Guidance
The Company has updated its full year 2016 financial guidance, as detailed below.

Current Previous
Jakafi net product revenues $825-$835 million $815-$830 million
Iclusig net product revenues $25-$30 million Unchanged
Research and development expenses $620-$630 million $635-$660 million
Selling, general and administrative expenses $285-$310 million Unchanged

Corporate Update
In June 2016, Jonathan Dickinson joined the Executive Management team as Senior Vice President and General Manager, Europe, leading the commercial and medical affairs functions for Incyte in Europe. He joined Incyte from ARIAD Pharmaceuticals (Europe) Sàrl where he held the position of General Manager, Europe. Prior to his tenure at ARIAD, Jonathan worked at Bristol-Myers Squibb as the European oncology brand lead and at Hoffmann-La Roche where he had assignments both in the U.S. and Switzerland.

Portfolio Update
Cancer – Targeted Therapies
In April 2016, Incyte announced an agreement with Lilly, enabling Incyte to develop and commercialize ruxolitinib in the U.S. for the treatment of GVHD, and an agreement granting Novartis exclusive research, development and commercialization rights for ruxolitinib in GVHD ex-U.S. Incyte recently announced that the FDA has granted Breakthrough Therapy Designation for ruxolitinib in patients with acute GVHD.

A proof-of-concept trial of INCB39110, a selective JAK1 inhibitor, in patients with GVHD has completed recruitment and initial data is expected before the end of 2016.

In April 2016, preliminary data from an open-label Phase 1 dose escalation trial of INCB50465, Incyte’s second-generation, highly selective PI3K delta inhibitor, was presented at AACR (Free AACR Whitepaper) 2016. INCB50465 showed promising efficacy in B-cell malignancies and was generally well tolerated at all doses tested.

A Phase 2 trial of INCB54828, a selective FGFR inhibitor, in patients with bladder cancer harboring FGFR pathway alterations is expected to start in the second half of 2016.

Indication Status Update
Ruxolitinib (JAK1/JAK2) Graft versus host disease Pivotal program expected to begin in the second half of 2016
INCB39110 (JAK1) Graft versus host disease Phase 1/2 fully recruited, data expected before the end of 2016
INCB39110 (JAK1) Lung cancer Phase 1/2 in combination with osimertinib (EGFR) expected to initiate in the second half of 2016
INCB52793 (JAK1) Advanced malignancies Phase 1/2 dose-escalation
INCB50465 (PI3Kδ) B-cell malignancies Phase 1/2 as monotherapy and in combination with INCB39110 (JAK1)
INCB54828 (FGFR) Bladder cancer Phase 2 expected to initiate in the second half of 2016
INCB54329 (BRD) Advanced malignancies Phase 1/2 dose-escalation
INCB53914 (PIM) Advanced malignancies Phase 1/2 dose-escalation
INCB59872 (LSD1) Acute myeloid leukemia, small cell lung cancer Phase 1/2 dose-escalation

Cancer – Immune Therapies
The Phase 3 ECHO-301 study evaluating epacadostat in combination with the anti-PD-1 antibody, pembrolizumab, for the first-line treatment of patients with advanced or metastatic melanoma is now recruiting patients. The randomized, double-blind and placebo controlled trial, is planned to enroll 600 patients and to have dual-primary endpoints of progression-free survival and overall survival.
Updated data from the Phase 1 portion of ECHO-202, which was initially presented at SITC (Free SITC Whitepaper) 2015 and drove the decision to initiate the Phase 3 trial, have been accepted for presentation at the European Society for Medical Oncology (ESMO) (Free ESMO Whitepaper) congress taking place in Copenhagen in October 2016.
In June 2016, the proof-of-concept trial of INCAGN1876, an anti-GITR agonist antibody being co-developed with Agenus, began dosing patients with solid tumors.

Indication Status Update
Epacadostat First line, advanced melanoma Phase 3 (ECHO-301) in combination with pembrolizumab (PD-1)
Multiple tumor types Phase 2 (ECHO-202) expansion cohorts in combination with pembrolizumab (PD-1)
Multiple tumor types Phase 2 (ECHO-204) expansion cohorts in combination with nivolumab (PD-1)
Multiple tumor types Phase 2 (ECHO-203) expansion cohorts in combination with durvalumab (PD-L1)
Non-small cell lung cancer Phase 1/2 (ECHO-110) dose-escalation in combination with atezolizumab (PD-L1)
INCSHR1210 (PD-1, licensed from Hengrui)
Solid tumors Phase 1/2 dose-escalation
INCAGN1876 (GITR, co-developed with Agenus)
Solid tumors Phase 1/2 dose-escalation
INCAGN1949 (OX40, co-developed with Agenus)
Solid tumors Phase 1/2 expected to initiate in the second half of 2016

PD-1 platform study Solid tumors Phase 1/2, pembrolizumab (PD-1) in combination with INCB39110 (JAK1) or INCB50465 (PI3Kδ)
JAK1 platform study Solid tumors Phase 1/2, INCB39110 (JAK1) in combination with epacadostat (IDO1) or INCB50465 (PI3Kδ)

Non Oncology
In October 2015, Incyte initiated a Phase 2 trial of topical ruxolitinib for the treatment of alopecia areata. This study builds on published data showing the efficacy of oral JAK inhibitors, including ruxolitinib, in alopecia areata.

Indication Status Update
Topical ruxolitinib (JAK1/JAK2) Alopecia areata Phase 2

Partnered
Baricitinib, a JAK1/JAK2 inhibitor licensed to Lilly, is under global regulatory review for the treatment of patients with rheumatoid arthritis. If approved, Incyte will become eligible to earn regulatory and commercial milestones as well as royalties on global net sales. Baricitinib is also in Phase 2 trials for the treatment of patients with atopic dermatitis and systemic lupus erythematosus.
In June 2016, safety and efficacy data from several Phase 1 and Phase 2 trials of capmatinib, Incyte’s potent and selective c-MET inhibitor licensed to Novartis, as single agent and in combination with gefitinib in patients with c-MET positive non-small cell lung cancer and liver cancer, were presented at ASCO (Free ASCO Whitepaper). Novartis anticipates submitting an NDA for capmatinib in 2018.

Indication Status Update
Baricitinib (JAK1/JAK2, licensed to Lilly) Rheumatoid arthritis NDA & MAA submitted
Atopic dermatitis, systemic lupus erythematosus Phase 2
Capmatinib (c-MET, licensed to Novartis) Non-small cell lung cancer, glioblastoma, liver cancer Phase 2 in EGFR wild-type ALK negative NSCLC patients with c-MET amplification and mutation

On August 9, 2016 Spectrum Pharmaceuticals, Inc. (NasdaqGS: SPPI), a biotechnology company with fully integrated commercial and drug development operations with a primary focus in Hematology and Oncology, reported financial results for the three-month period ended June 30, 2016 (Press release, Spectrum Pharmaceuticals, AUG 9, 2016, View Source [SID:1234514431]).

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“I am very pleased with the progress we have made on our pipeline and our commercial portfolio,” said Rajesh C. Shrotriya, MD, Chairman and Chief Executive Officer of Spectrum Pharmaceuticals. “Our advanced development pipeline includes treatments for chemotherapy-induced neutropenia, breast cancer, and bladder cancer. The success of any of these drugs could transform the company. We are currently enrolling patients in the pivotal program for SPI-2012, which we believe has shown a compelling clinical profile in Phase 2 studies. In addition, Poziotinib has the potential to be a best in class pan-HER inhibitor, and we recently started enrolling breast cancer patients who have failed other HER2-directed therapies in a Phase 2 trial. Qapzola for post-surgical treatment of non-muscle invasive bladder cancer is under FDA review and we look forward to presenting our case to an FDA advisory panel next month. We are making advances in our pipeline that could lead to novel cancer therapies that would benefit both patients and shareholders.”

Pipeline Update:

SPI-2012 (eflapegrastim), a novel long-acting GCSF: A pivotal Phase 3 study was initiated under a Special Protocol Assessment (SPA) from the FDA in Q1 2016 to evaluate SPI-2012 in the management of chemotherapy-induced neutropenia in approximately 580 patients with breast cancer. Enrollment is on track and the company expects to file a BLA in 2018. Moderate to severe neutropenia is a serious side effect of certain chemotherapeutic agents which can lead to infection, hospitalization, and even death. The Phase 2 data demonstrated that SPI-2012 was non-inferior to pegfilgrastim at the middle dose tested, and statistically superior in terms of duration of severe neutropenia at the highest dose tested. SPI-2012 was also shown to have an acceptable safety profile with no significant dose-related or unexpected toxicities.
Poziotinib, a potential best-in-class, novel, pan-HER inhibitor: Spectrum is continuing to enroll a Phase 2 breast cancer program in the U.S., based on promising Phase 1 efficacy data in breast cancer patients who had failed multiple other HER2-directed therapies. In addition, multiple Phase 2 studies are being conducted in South Korea by Hanmi Pharmaceuticals and National OncoVenture.
Qapzola, a potent tumor-activated drug being investigated for non-muscle invasive bladder cancer: The FDA is expected to make a decision on Qapzola’s approval by the PDUFA date of December 11, 2016. The FDA plans to hold an advisory committee meeting on September 14, 2016. The Company is actively enrolling an additional randomized, placebo-controlled Phase 3 trial under a SPA agreement. The Phase 3 study has been specifically designed to build on learnings from the previous studies, as well as recommendations from the FDA.
Three-Month Period Ended June 30, 2016 (All numbers are approximate)

GAAP Results

Total product sales were $30.9 million in the second quarter of 2016. Product sales in the second quarter included: FUSILEV (levoleucovorin) net sales of $10.5 million, FOLOTYN (pralatrexate injection) net sales of $11.0 million, ZEVALIN (ibritumomab tiuxetan) net sales of $2.8 million, MARQIBO (vinCRIStine sulfate LIPOSOME injection) net sales of $2.1 million, BELEODAQ (belinostat for injection) net sales of $3.7 million and EVOMELA (melphalan) for injection net sales of $0.9 million.

Spectrum recorded net loss of $24.3 million, or $(0.35) per basic and diluted share in the three-month period ended June 30, 2016, compared to net loss of $2.3 million, or $(0.04) per basic and diluted share in the comparable period in 2015. Total research and development expenses were $14.3 million in the quarter, as compared to $9.6 million in the same period in 2015. Selling, general and administrative expenses were $27.6 million in the quarter, compared to $22.6 million in the same period in 2015.

Non-GAAP Results

Spectrum recorded non-GAAP net loss of $3.7 million, or $(0.05) per basic and diluted share in the three-month period ended June 30, 2016, compared to non-GAAP net loss of $0.5 million, or $(0.01) per basic and diluted share in the comparable period in 2015. Non-GAAP research and development expenses were $12.9 million, as compared to $9.1 million in the same period of 2015. Non-GAAP selling, general and administrative expenses were $16.1 million, as compared to $19.7 million in the same period in 2015.