On August 4, 2016 Radius Health, Inc. ("Radius" or the "Company") (Nasdaq:RDUS), a science-driven biopharmaceutical company that is committed to developing innovative therapeutics in the areas of osteoporosis, oncology and endocrine diseases, reported its financial results for the second quarter ended June 30, 2016, and provided a business update (Press release, Radius, AUG 4, 2016, View Source [SID:1234514295]). As of June 30, 2016, Radius had $400.9 million in cash, cash equivalents and marketable securities.

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"We are pleased to be working with the U.S. Food and Drug Administration and European Medicines Agency as they review our regulatory submissions for abaloparatide-SC for the treatment of postmenopausal osteoporosis. In anticipation of our first potential launch, we are building our commercial organization in the U.S. and continuing our productive partnering discussions," said Robert Ward, President and Chief Executive Officer of Radius. "At the same time, we continue to make steady progress in the development of an optimized transdermal patch line extension for abaloparatide as well as the advancement of our two oncology programs, both of which we believe can add substantial value to Radius."

Pipeline Updates

Abaloparatide-SC

In May 2016, Radius’ new drug application ("NDA") in the United States for abaloparatide-SC for the treatment of postmenopausal women with osteoporosis was accepted for filing by the FDA and was granted a Prescription Drug User Fee Act (PDUFA) date of March 30, 2017. Radius’ marketing authorisation application ("MAA") to the European Medicines Agency ("EMA"), was validated in December 2015 and is currently undergoing regulatory review. We anticipate a CHMP scientific opinion in late 2016 or 2017.

Abaloparatide-TD

Radius is developing abaloparatide-transdermal, or abaloparatide-TD, based on 3M’s patented Microstructured Transdermal System technology for potential use as a short wear-time transdermal patch. Radius commenced a human replicative clinical evaluation of the optimized abaloparatide-TD patch in December 2015 with the goal of achieving comparability to abaloparatide-SC. An abstract submitted to the American Society for Bone Mineral Research 2016 Annual Meeting (ASBMR) was accepted as an oral late-breaking presentation to be made on September 19, 2016 in Atlanta, Georgia.

RAD1901

In December 2014, Radius commenced a Phase 1 multicenter, open-label, two-part, dose-escalation study of RAD1901 in postmenopausal women with estrogen receptor positive (ER+) and HER2-negative advanced breast cancer in the United States. The Phase 1 study is designed to evaluate escalating doses of RAD1901 in Part A. The Part B expansion cohorts allow for an evaluation of additional safety, tolerability and preliminary efficacy. In addition, in December 2015, Radius commenced a Phase 1 FES-PET study in patients with ER+, HER2-negative advanced breast cancer in the European Union, which includes the use of FES-PET imaging to assess estrogen receptor occupancy in tumor lesions following RAD1901 treatment.

As of the end of July, the Phase I Part B expansion cohort for RAD1901 that initiated in March 2016 at 400 mg daily in ER+, HER2-negative advanced breast cancer has enrolled 19 out of 20 patients. We continue to enroll patients in the European Phase I FES-PET trial — the first three-patient dosing cohort is enrolled. We are pleased with the progress across these trials and expect to provide an update on the RAD1901 program at an upcoming scientific meeting.

RAD140

We have reported that RAD140 in preclinical xenograft models of breast cancer has demonstrated potent tumor growth inhibition when administered alone or in combinations with CDK4/6 inhibitors. It is estimated that 77% of breast cancers show expression of the androgen receptor. Our preclinical data suggest that RAD140 activity at the androgen receptor stimulates up-regulation of a tumor suppression pathway. We expect to provide an update on the RAD140 program at an upcoming scientific meeting.

Radius Expects the Following Upcoming Milestones

Abaloparatide-SC
Receive opinion from the Committee for Medicinal Products for Human Use regarding the EMA’s review of the abaloparatide-SC MAA in late 2016 or 2017
FDA PDUFA date of March 30, 2017
Enter into a collaboration for the potential commercialization of abaloparatide-SC outside the U.S. prior to commercial launch
Three abstracts accepted for poster presentations at ASBMR from the Phase 3 ACTIVE clinical trial
Abaloparatide-TD
Oral late-breaker presentation of the results of the human replicative PK pilot study of an optimized abaloparatide transdermal patch at ASBMR, on September 19, 2016 in Atlanta, Georgia
RAD1901
Expect to provide an update on the RAD1901 program at an upcoming scientific meeting.
RAD140
Expect to provide an update on the RAD140 program at an upcoming scientific meeting.
Radius Expects To Make Presentations at the Following Upcoming Conferences

Radius President and CEO, Robert E. Ward will make a presentation and company management will host one-on-ones at the Canaccord Genuity Growth Conference, August 10, 2016 at the InterContinental Hotel in Boston, MA.
Radius President and CEO, Robert E. Ward, will make a presentation and company management will host one-on-ones at the Rodman & Renshaw 18th Annual Global Investment Conference at the Lotte New York Palace Hotel in New York on September 12.
Four abstracts for abaloparatide were accepted for presentation at ASBMR September 16-19, 2016 in Atlanta, Georgia. Three data presentations are from the Phase 3 ACTIVE trial for abaloparatide-SC, and the fourth is an oral presentation in the Late-Breaking Abstracts session from the pilot PK human replicative study of an optimized transdermal patch titled: "Clinical Development of an Optimized Abaloparatide Transdermal Patch" on September 19, 2016 at 11:36 AM — 11:48 AM.
Recent Corporate Highlights

In July 2016, Radius entered into a pre-clinical collaboration with Takeda Pharmaceutical Company Limited to evaluate the combination of investigational drug RAD1901 with investigational drug TAK-228, an oral mTORC 1/2 inhibitor in Phase 2b development for the treatment of breast, endometrial and renal cancer, with the goal of potentially exploring such combination in a clinical study.

In June, Radius announced the opening of its Wayne, Pennsylvania office, which will serve as the Company’s Commercial and Medical hub and house marketing, sales, human resources, IT, pharmacovigilance, health economics, outcomes research, medical education, clinical affairs and medical affairs staff.

In May, Radius announced that its New Drug Application (NDA) for abaloparatide—SC had been accepted for filing by the U.S. Food and Drug Administration (FDA). The acceptance of the NDA reflects the FDA’s determination that the application is sufficiently complete to permit a substantive review. A PDUFA date of March 30, 2017 has been assigned.
Abaloparatide-SC as a treatment for postmenopausal women with osteoporosis is an investigational product and its safety and efficacy have not been established.

Second Quarter 2016 Financial Results

For the three months ended June 30, 2016, Radius reported a net loss of $43.4 million, or $1.01 per share, as compared to a net loss of $23.0 million, or $0.61 per share for the three months ended June 30, 2015. The increase in net loss for the three months ended June 30, 2016 as compared to the three months ended June 30, 2015 was primarily due to an increase in research and development and general and administrative expenses, partially offset by a decrease in interest expense and an increase in interest income.

Research and development expenses for the three months ended June 30, 2016 were $26.9 million, compared to $16.3 million for the same period in 2015. This increase was primarily driven by higher professional contract services costs associated with the development of RAD1901 to support a Phase 1 study in metastatic breast cancer that commenced in late 2014 and a Phase 2b study in postmenopausal vasomotor symptoms that commenced in December 2015. This increase was also a result of an increase in compensation expense, including stock-based compensation, due to an increase in headcount from June 30, 2015 to June 30, 2016.

General and administrative expenses for the three months ended June 30, 2016 were $17.2 million, compared to $6.0 million for the same period in 2015. This increase was primarily attributable to an increase in professional support costs and legal fees, including the costs associated with increasing headcount and preparing for the potential commercialization of abaloparatide-SC, subject to a favorable regulatory review.
This increase was also driven by an increase in compensation expense due to an increase in headcount from June 30, 2015 to June 30, 2016.

As of June 30, 2016, Radius had $400.9 million in cash, cash equivalents and marketable securities. Based upon Radius’ cash, cash equivalents and marketable securities balance, Radius believes that, prior to the consideration of revenue from the potential future sales of any of its investigational products that may receive regulatory approval or proceeds from collaboration activities, it has sufficient capital to fund its development plans, U.S. commercial scale-up and other operational activities into 2018.

On August 4, 2016 PTC Therapeutics, Inc. (NASDAQ: PTCT) reported a corporate update and reported financial results for the second quarter ending June 30, 2016 (Press release, PTC Therapeutics, AUG 4, 2016, View Source [SID:1234514293]).

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"Making Translarna available to all Duchenne muscular dystrophy patients globally who may benefit continues to be our top priority," said Stuart W. Peltz, Ph.D., Chief Executive Officer, PTC Therapeutics, Inc. "Global sales are on a strong growth trajectory as we continue to expand access outside of the U.S. We are excited patients in England can now access reimbursed Translarna and have received our first commercial order in England following NICE’s final guidance recommending Translarna. On the regulatory front, we are optimistic that our interactions with the EMA will support the renewal of Translarna’s marketing authorization coupled with an obligation to conduct an agreed upon clinical trial, and we look forward to our next steps in the appeal process of the FDA’s Refuse to File letter."

Key Second Quarter and Other Corporate Highlights:

Translarna revenue of $15.4M in second quarter represents 150% year-over-year growth. PTC continues to grow its global commercial footprint and expand access to Translarna. In addition to Europe, PTC is now providing Translarna to patients on a commercial basis in the Middle East and Latin America.
NICE issues final guidance recommending Translarna for patients in England. The National Institute for Health and Care Excellence (NICE) issued final guidance recommending Translarna for the treatment of ambulatory patients aged five years and older with nmDMD in England in connection with a Managed Access Agreement (MAA) with National Health Services (NHS) England. As part of the MAA, NHS England is waiving the typical three-month implementation period under local regulation, making Translarna immediately available to patients in England.
EMA review of European marketing authorization for Translarna continues. Over the last several months, PTC has been engaged in constructive discussions with the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) regarding the renewal of Translarna’s marketing authorization. The company has been informed that the renewal assessment procedure cannot be completed by mid-year 2016. The CHMP has agreed to the proposal by PTC to submit a draft clinical trial protocol for further discussion, which includes seeking scientific advice from the EMA. The company is optimistic that these interactions will support the renewal of the marketing authorization of Translarna coupled with an obligation to conduct an agreed upon clinical trial.
PTC has submitted an appeal to the FDA via the formal dispute resolution process. PTC has appealed the Refuse to File (RTF) letter issued on February 22, 2016 with respect to the company’s New Drug Application (NDA) for Translarna for the treatment of nmDMD. This process elevates the discussion to the next level of FDA management and exists to encourage open, prompt discussion of scientific and procedural disputes that arise during the drug development process between FDA and companies.
ACT CF Phase 3 clinical trial remains on track while EMA review of cystic fibrosis filing for Translarna is ongoing. PTC’s confirmatory Phase 3 ACT CF trial is currently ongoing with the results from this trial expected in early 2017. The EMA is currently reviewing the company’s variation submission to Translarna’s marketing authorization, which requests EMA approval for the treatment of nonsense mutation cystic fibrosis (nmCF). Based on recent interactions with the CHMP, PTC no longer anticipates that the CHMP will issue its opinion regarding this submission in 2016 and believes that ACT CF results may be required prior to any approval in this indication.
Phase 2 Clinical Trial of Translarna for nmDMD in pediatric patients initiated. PTC has initiated a Phase 2 clinical trial of Translarna for the treatment of nmDMD in patients between the ages of two and five years of age. This open-label, multiple-dose study will evaluate the safety and pharmacokinetics of Translarna in pediatric patients and will support the potential expansion of Translarna’s label to younger patients.
Second Quarter Financial Highlights:

Translarna net product sales were $15.4 million for the second quarter of 2016, representing a 150% increase versus $6.2 million in the second quarter of 2015. The increase in sales is a result from the continued global commercial expansion and access to Translarna. Translarna net product sales decreased sequentially from $18.9 million reported in the first quarter of 2016. In the first quarter, Translarna net product sales were positively impacted by a significant order from Brazil, where purchasing is often fulfilled in national bulk orders. The effect of larger but less frequent orders from Brazil may result in fluctuations in quarterly sales reporting during the course of the year.
Total revenues for the second quarter of 2016 were $15.6 million compared to $6.8 million in the same period of 2015. The change in total revenue was a result of the expanded commercial launch of Translarna, partially offset by lower grant revenue.
GAAP R&D expenses were relatively flat at $28.8 million for the second quarter of 2016 compared to $28.2 million for the same period in 2015. Non-GAAP R&D expenses were $24.7 million for the second quarter of 2016, excluding $4.1 million in non-cash, stock-based compensation expense, compared to $24.2 million for the same period in 2015, excluding $4.0 million in non-cash, stock-based compensation expense.
GAAP SG&A expenses were $23.4 million for the second quarter of 2016 compared to $17.2 million for the same period in 2015. Non-GAAP SG&A expenses were $18.7 million for the second quarter of 2016, excluding $4.6 million in non-cash, stock-based compensation expense, compared to $12.8 million for the same period in 2015, excluding $4.4 million in non-cash, stock-based compensation expense. The increase in SG&A expense for the second quarter 2016 as compared to the prior year period primarily resulted from additional costs associated with commercial activities in support of Translarna across Europe and other regions.
Net interest expense for the second quarter of 2016 was $2.1 million compared to net interest income of $0.5 million in the same period in 2015. The increase in interest expense is primarily a result of the $150 million convertible debt offering completed during the third quarter 2015. The debt was recorded on PTC’s balance sheet at a discount, which will be amortized over the life of the bond.
Net loss for the second quarter of 2016 was $38.9 million compared to a net loss of $38.4 million for the same period in 2015.
During the first quarter of 2016, PTC announced a workforce reduction of approximately 18% of its employees and contractors, which resulted in a one-time charge of approximately $2.5 million. PTC incurred $0.6 million of this charge in the second quarter.
Cash, cash equivalents, and marketable securities totaled approximately $273 million at June 30, 2016 compared to approximately $339 million at December 31, 2015.
Shares issued and outstanding as of June 30, 2016 were 34.3 million, which includes 0.2 million shares of unvested restricted stock.
2016 Guidance:

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

In this press release, PTC’s financial results and financial guidance are provided in accordance with accounting principles generally accepted in the United States (GAAP) and using certain non-GAAP financial measures. In particular, non-GAAP financial results exclude stock-based compensation expense. These results are provided as a complement to results reported in GAAP, because management uses these non-GAAP financial measures when assessing and identifying operational trends. In management’s opinion, these non-GAAP measures are useful to investors and other users of our financial statements by providing greater transparency into the operating performance at PTC and the company’s future outlook.

PTC Therapeutics, Inc.

Consolidated Statements of Operations

(In thousands, except per share data)

Three Months Ended

Six Months Ended

June 30,

June 30,

2016

2015

2016

2015

Revenues:

Net product revenue
$15,437

$6,161

$34,314

$11,230

Collaboration and grant revenue
196

613

214

3,026

Total revenues
15,633

6,774

34,528

14,256

Operating expenses:

Research and development (1)
28,827

28,190

60,226

56,128

Selling, general and administrative (2)
23,366

17,210

49,304

34,825

Total operating expenses
52,193

45,400

109,530

90,953

Loss from operations
(36,560)

(38,626)

(75,002)

(76,697)

Interest (expense) income, net
(2,060)

498

(4,016)

1,022

Other (expense) income, net
(387)

(88)

(1,107)

(456)

Loss before income tax expense
(39,007)

(38,216)

(80,125)

(76,131)

Income tax benefit (expense)
93

(145)

(22)

(145)

Net loss
($38,914)

($38,361)

($80,147)

($76,276)

Weighted-average shares outstanding (in shares):

Basic and diluted
34,000,333

33,600,653

33,959,751

33,335,674

Net loss per share – basic and diluted (in dollars per share)
($1.14)

($1.14)

($2.36)

($2.29)

(1) Research and development reconciliation

GAAP research and development
$28,827

$28,190

$60,226

$56,128

Less stock-based compensation expense
4,087

3,957

8,415

8,624

Non-GAAP research and development
$24,740

$24,233

$51,811

$47,504

(2) Selling, general and administrative reconciliation

GAAP selling, general and administrative
$23,366

$17,210

$49,304

$34,825

Less stock-based compensation expense
4,649

4,371

9,236

9,452

Non-GAAP selling, general and administrative
$18,717

$12,839

$40,068

$25,373

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

June 30,

December 31,

2016

2015
Cash, cash equivalents and marketable securities
$272,893

$338,925
Total assets
$305,563

$365,281

Total debt
$94,936

$91,848
Total deferred revenue
726

139
Total liabilities
$139,939

$139,280

Total stockholders’ equity (34,083,319 and 33,916,559 common shares

issued and outstanding at June 30, 2016 and December 31, 2015, respectively)
165,624

226,001
Total liabilities and stockholders’ equity
$305,563

$365,281
Upcoming Events:

PTC will participate in the following upcoming conference:

2016 Wedbush PacGrow Healthcare Conference, August 17th at 1:20 p.m. in New York, NY
The presentation will be webcast live on the Events and Presentations page under the investor relations section of PTC’s website at www.ptcbio.com and will be archived for two weeks following the presentation. PTC’s current investor presentation is available at the same website location.

On August 4, 2016 Progenics Pharmaceuticals, Inc. (Nasdaq:PGNX) reported financial and business results for the second quarter 2016 (Press release, Progenics Pharmaceuticals, AUG 4, 2016, View Source [SID:1234514291]).

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"The clear highlight in recent weeks was the approval of RELISTOR tablets, which triggered a $50 million milestone payment from our partner Valeant, strengthening our balance sheet as we prepare for a potential AZEDRA launch and continue to advance development of our prostate cancer pipeline," said Mark Baker, Chief Executive Officer of Progenics. "Our cash, together with the potential to earn significant additional royalties and sales milestones from the RELISTOR franchise, puts us in a strong position to achieve multiple value-creating milestones. In particular, our ultra-orphan radiotherapeutic candidate AZEDRA represents a meaningful near-term commercialization opportunity for Progenics, and we are on track to announce registrational topline data later this year or in early 2017. We are also advancing development of our portfolio of prostate cancer imaging agents and therapeutics, which has the potential to significantly improve how we find, fight, and follow all stages of prostate cancer."

Key Business Highlights

RELISTOR, treatment for opioid-induced constipation (partnered with Valeant Pharmaceuticals International, Inc.)

On July 19, the Company Announced that the FDA has approved RELISTOR tablets for the treatment of opioid induced constipation in adults with chronic non-cancer pain. The approval triggered a $50 million milestone payment on July 25 from Progenics’ partner, Valeant, as well as subsequent royalties and up to $200 million in sales milestones.

RELISTOR SC Net Sales for the Second Quarter 2016 Total $15.9 Million. The second quarter 2016 sales, as reported to the Company by Valeant, translated to $2.4 million in royalty revenue for the second quarter of 2016.
AZEDRA, Ultra-orphan radiotherapeutic candidate

AZEDRA Topline Results Expected Between December 2016 and March 2017. In late 2016 or early 2017, Progenics expects to report topline results from its ongoing registrational trial of AZEDRA. If the AZEDRA trial meets the endpoints of the SPA, the Company expects to submit an NDA to the FDA during the first half of 2017.
PSMA-Targeted Prostate Cancer Pipeline

Granted an Exclusive License to Bayer for the Development and Commercialization of Therapeutic Antibodies Combining Progenics’ PSMA Antibody Technology with Bayer’s Targeted Thorium Conjugate Technology. Progenics recognized revenue of $5 million in the second quarter of 2016, constituting the $4 million upfront payment and the first pre-clinical development milestone of $1 million. Under terms of the agreement, the Company is entitled to up to an additional $48 million in potential clinical and regulatory development milestones, single digit royalties on net sales, and potential sales milestone payments up to an aggregate of $130 million.

Enrollment in Pivotal Phase 3 Study of 1404 is Ongoing. The study will enroll up to 450 patients with newly-diagnosed or low-grade prostate cancer who are candidates for active surveillance. The Company’s plans for an interim analysis during the fourth quarter of 2016 to assess futility and evaluate the need for a sample size re-estimation remain unchanged.

Presented Data from its PSMA-Targeted Prostate Cancer Imaging Programs at the Society of Nuclear Medicine and Molecular Imaging 2016 Annual Meeting in San Diego. The data highlighted the potential of the Company’s SPEC/CT imaging agent 1404 and PET/CT imaging agent PyL to detect prostate cancer.

On-Track to Initiate Phase 2/3 Trial of PyL by Year-End. The study is designed to assess the diagnostic accuracy of PyL PET/CT imaging in patients with high risk and/or metastatic prostate cancer.

Company Remains On-Track to Initiate a Phase 1 Trial of 1095 in the Fourth Quarter of 2016. The Phase 1 Study of 1095, a PSMA-Targeted Therapeutic for Metastatic Prostate Cancer, will be conducted at Memorial Sloan Kettering Cancer Center.
Second Quarter 2016 Financial Results

Net loss attributable to Progenics for the quarter was $5.6 million or $0.08 per diluted share, compared to a net loss of $11.7 million or $0.17 per diluted share in the 2015 period. Progenics ended the quarter with cash and cash equivalents of $60.1 million, a decrease of $5.5 million in the quarter.

Second quarter revenue totaled $8.5 million, up from $1.9 million in 2015, reflecting RELISTOR royalty income of $2.4 million compared to $1.8 million in the 2015 period, based on net sales reported to Progenics by Valeant. The increase was primarily attributable to upfront and milestone revenue of $5 million under the Bayer license agreement.

Second quarter and year-to-date research and development expenses increased by $1.3 million and $3.9 million, respectively, compared to the prior year periods, resulting from higher clinical trial and contract manufacturing expenses for AZEDRA, 1404 and PyL, partially offset by lower expenses for PSMA ADC. Second quarter general and administrative expenses decreased by $0.5 million from the prior year period, primarily attributable to lower legal fees as the prior year included costs related to litigation with a former employee. Year-to-date general and administrative expenses increased by $1.6 million compared to prior year period, primarily resulting from higher depreciation expense as a result of a reduction in the remaining useful lives of our leasehold improvements at our Tarrytown, NY location, and higher compensation and consulting expenses. The Company also recorded a non-cash charge of $0.6 million in the second quarter related to an increase in the fair value estimate of the contingent consideration liability.

On August 4, 2016 PDL BioPharma, Inc. (PDL or the Company) (NASDAQ: PDLI) reported financial results for the second quarter ended June 30, 2016 including:

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Total revenues of $21.0 million and $124.2 million for the three and six months ended June 30, 2016, respectively (Press release, PDL BioPharma, AUG 4, 2016, View Source [SID:1234514289]).

GAAP diluted EPS of $0.03 and $0.37 for the three and six months ended June 30, 2016, respectively.

GAAP net income of $4.1 million and $60.0 million for the three and six months ended June 30, 2016, respectively.

Non-GAAP diluted earnings per share (EPS) of $0.09 and $0.61 for the three and six months ended June 30, 2016, respectively.

Non-GAAP net income of $15.1 million and $100.2 million for the three and six months ended June 30, 2016, respectively.

The largest component of the difference in non-GAAP measure compared to GAAP is the exclusion of mark-to-market reduction in fair value of our investments in royalty rights. A full reconciliation of all components of the GAAP to non-GAAP quarterly financial results can be found in Table 4 at the end of this release.

Revenue Highlights
Total revenues of $21.0 million for the three months ended June 30, 2016 included:
Royalties from PDL’s licensees to the Queen et al. patents of $14.2 million, which consisted of royalties earned on sales of Tysabri under a license agreement associated with the Queen et al. patents;
Net royalty payments from acquired royalty rights and a change in fair value of the royalty rights assets of negative $0.9 million, which consisted of the change in estimated fair value of our royalty right assets and primarily related to the Depomed, Inc., University of Michigan and Viscogliosi Brothers, LLC royalty rights acquisitions;
Interest revenue from notes receivable financings to late-stage healthcare companies of $7.3 million; and
License and other revenues of $0.3 million.

Total revenues decreased by 85 percent for the three months ended June 30, 2016, when compared to the same period in 2015.

The decrease in royalties from PDL’s licensees to the Queen et al. patents is due to the expiration of the patent license agreement with Genentech, Inc. PDL continues to receive Queen et al. patent royalties on sales of Tysabri based on the sales of product manufactured prior to patent expiry, the amount and timing of which is uncertain.

The decrease in royalty rights – change in fair value was driven by the $7.4 million decrease in the fair value of the Depomed royalty rights assets primarily as a result of higher gross-to-net adjustments for Glumetza, and a $7.6 million decrease in the fair value of the University of Michigan royalty right asset as a result of a delay in national pricing and reimbursement decisions in the European Union and Japan.

PDL received $14.7 million in net cash royalty payments and milestone payments from its acquired royalty rights in the second quarter of 2016, compared to $1.2 million for the same period of 2015. Of these payments from its acquired royalty rights, $6.0 million was related to the FDA approval milestone for Jentadueto XR.

The decrease in interest revenues was primarily due to ceasing to accrue interest due from Direct Flow Medical, Inc. as a result of the loan being impaired.

Total revenues decreased by 57 percent for the six months ended June 30, 2016, when compared to the same period in 2015.
The decrease in royalties from PDL’s licensees to the Queen et al. patents is due to the expiration of the patent license agreement with Genentech, Inc.

The decrease in royalty rights – change in fair value was driven by the $55.3 million decrease in the fair value of the Depomed royalty rights assets, and a $6.0 million decrease in the fair value of the University of Michigan royalty right asset.
PDL received $31.9 million in net cash royalty payments and milestone payments from its acquired royalty rights in the six months ended June 30, 2016, compared to $2.1 million for the same period of 2015.

The decrease in interest revenues was primarily due to reduced interest from Direct Flow Medical, Inc.
Operating Expense Highlights

Operating expenses were $9.9 million for the three months ended June 30, 2016, compared to $7.4 million for the same period of 2015. The increase in operating expenses for the three months ended June 30, 2016, as compared to the same period in 2015, was primarily a result of acquisition-related costs of $3.0 million for the Noden Pharma DAC (Noden) transactions which were advanced to Noden, and are expected to be repaid to PDL by year end through an intercompany arrangement.

Operating expenses were $19.8 million for the six months ended June 30, 2016, compared to $15.1 million for the same period of 2015. The increase in operating expenses for the six months ended June 30, 2016, as compared to the same period in 2015, was a result of the acquisition-related costs from the Noden transactions.

Other Financial Highlights
PDL had cash, cash equivalents, and investments of $190.9 million at June 30, 2016, compared to $220.4 million at December 31, 2015.

The decrease was primarily attributable to the restriction of $105.9 million in cash for the Noden transactions, repayment of the March 2015 Term Loan for $25.0 million, payment of dividends of $16.4 million, and an additional note receivable purchase of $5.0 million, partially offset by proceeds from royalty right payments of $31.9 million and cash generated by operating activities of $94.8 million.

Net cash provided by operating activities in the six months ended June 30, 2016 was $94.8 million, compared with $155.9 million in the same period in 2015.

Recent Developments

Noden Transactions
The acquisition of Tekturna by Noden and PDL’s funding of the equity investment in Noden occurred on July 1, 2016.
PDL expects to make equity contributions to Noden Pharma DAC and an affiliate totaling $107 million in the first year of the transaction, which includes an initial equity investment of $75 million and an additional $32 million equity contribution commitment which will be made on the one-year anniversary of the closing of the transaction. In addition, PDL provided Noden with a loan and loan commitments of up to an aggregate of $75 million, the majority of which PDL expects will be repaid in the next 45 days once Noden secures a debt facility from a third party. PDL also may contribute additional amounts of funding depending on the total amount of debt obtained by Noden, and as needed for specified milestone payments or other purposes.

Noden closed its transaction relating to a purchase agreement with Novartis AG (Novartis) to acquire exclusive worldwide rights to manufacture, market, and sell the branded prescription medicine product sold under the name Tekturna and Tekturna HCT in the United States and Rasilez and Rasilez HCT in the rest of the world. The product’s active ingredient is aliskiren, which is indicated for the treatment of hypertension. The drug was previously marketed by Novartis and had global sales in 2015 of $154 million.

PDL has a majority equity interest ownership in Noden. Given this majority ownership by PDL, the financial statements of Noden will be consolidated with PDL beginning in Q3 2016, and is expected to be accretive to PDL’s cash earnings.
ARIAD Royalty Agreement Second Tranche Payment
On July 28, 2016, PDL funded the second tranche of $50.0 million due on the first anniversary of the closing date under the terms of the ARIAD Royalty Agreement.

As a result of the second tranche payment, PDL’s royalty percentage will increase to 5.0% of the U.S. and European net revenues of Iclusig and 5.0% of the payments ARIAD receives elsewhere in the world until December 31, 2018. Beginning January 1, 2019 and thereafter, the royalty rate will increase to 6.5% in all jurisdictions.

Dividend Policy
On August 3, 2016, the PDL board of directors decided to eliminate the quarterly cash dividend payment.

On August 4, 2016 Pacira Pharmaceuticals, Inc. (NASDAQ:PCRX) reported updates on EXPAREL (bupivacaine liposome injectable suspension) for postsurgical pain in the United States and announced consolidated financial results for the second quarter ended June 30, 2016 (Press release, Pacira Pharmaceuticals, AUG 4, 2016, View Source;p=RssLanding&cat=news&id=2192934 [SID:1234514287]).

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"The second quarter marked another period of double-digit, year-over-year revenue growth as we advanced multiple initiatives to support EXPAREL in the latter half of this year and into 2017," said Dave Stack, Chief Executive Officer and Chairman of Pacira. "Our aggressive investments in patient outreach and clinical development, as well as commercial and educational programs, are progressing as planned. For the rest of this year, we look forward to continuing the strong progress we’ve made with the Phase 4 randomized controlled trials in strategic orthopedic surgeries, Phase 3 nerve block studies, enhanced recovery protocols in soft tissue procedures and data presentations on bundled payments. We also anticipate increasing our public relations and advocacy efforts to bring attention to addressing the opioid epidemic by providing an alternative to opioids in the acute postsurgical setting, where epidemic often starts."

Recent Highlights

Choices Matter Launches in Response to New Research Showing Opioid Addiction and Dependence After Surgery is Significantly Higher than Previously Known: Although the national focus of research has primarily been on opioid addiction as a result of their use to treat chronic pain, new research shows that even prescribing opioids for short-term postsurgical pain can put patients at serious risk, with one in ten patients surveyed indicating they’ve become addicted to or dependent on opioids after being exposed to these powerful medications following an operation. On August 1, Pacira launched the Choices Matter campaign to foster surgeon-patient dialogue and educate patients about their non-opioid options, empowering them to play an active role in the decision-making process related to their postsurgical pain management. The American Society for Enhanced Recovery and former star volleyball player, Gabrielle Reece, whose recent knee replacement surgery has made this issue personal, have joined the campaign.

Preparations in Support of Oral Surgery Launch are Underway: Pacira remains on track for the launch of EXPAREL in oral surgery at the American Association of Oral and Maxillofacial Surgeons (AAOMS) annual meeting in September, where the company will present the results of the study in third molar, or "wisdom teeth," procedures. EXPAREL will provide an alternative to opioids for targeted oral and maxillofacial surgeries. In fact, a recent study in full arch surgery therapy (FAST) dental implant procedures showed that patients receiving EXPAREL experienced significantly less cumulative pain compared to patients receiving standard of care. With this launch, Pacira will also introduce a 10 mL vial and 4 vial package configuration of EXPAREL to the oral surgery marketplace.

Data Continue to Demonstrate Benefits of EXPAREL versus Bupivacaine Across Multiple Surgical Specialties, Including Soft Tissue Procedures: A study was recently published in Anaesthesia assessing patients who received ultrasound-guided transversus abdominis plane (TAP) blocks with EXPAREL versus non-liposomal bupivacaine for postsurgical pain control after undergoing laparoscopic hand-assisted donor nephrectomy. Patients who received EXPAREL experienced a significant decrease in maximal pain scores 24-48 and 48-72 hours after injection, as well as a significant reduction in opioid use 48-72 hours following injection. In July, the Foundation for Women’s Cancer hosted a webinar highlighting the importance of pain management as part of an enhanced recovery strategy for gynecologic oncology surgeries. Dr. Sean Dowdy presented data demonstrating that patients who received an enhanced recovery protocol (ERP) with EXPAREL for pain control for complex cytoreduction achieved a 90% reduction in opioid requirements compared to conservative management.
Second Quarter 2016 Financial Results

EXPAREL net product sales were $65.8 million in the second quarter of 2016, a 15% increase over the $57.0 million reported for the second quarter of 2015.

Total revenues were $69.6 million in the second quarter of 2016, an 18% increase over the $59.1 million reported for the second quarter of 2015.

Total operating expenses were $76.1 million in the second quarter of 2016, compared to $57.3 million in the second quarter of 2015.

GAAP net loss was $8.0 million, or $(0.21) per share (basic and diluted), in the second quarter, compared to GAAP net income of less than $0.1 million, or $0.00 per share (basic and diluted), in the second quarter of 2015.

Non-GAAP net income was $7.9 million, or $0.21 per share (basic) and $0.19 per share (diluted), in the second quarter of 2016, compared to non-GAAP net income of $8.4 million, or $0.23 per share (basic) and $0.20 per share (diluted), in the second quarter of 2015.

Pacira ended the second quarter of 2016 with cash, cash equivalents and short-term investments ("cash") of $162.7 million.

Pacira had 37.2 million basic weighted average shares of common stock outstanding in the second quarter of 2016.

For non-GAAP measures, Pacira had 40.8 million diluted weighted average shares of common stock outstanding in the second quarter of 2016.
2016 Outlook

Pacira updates full year 2016 financial guidance as follows:

EXPAREL net product sales of $270 million to $280 million.

Non-GAAP gross margins of 70% to 73%.

Non-GAAP research and development (R&D) expense of $60 million to $70 million.

Non-GAAP selling, general and administrative (SG&A) expense of $125 million to $135 million.

Stock-based compensation of $30 million to $35 million.
Today’s Conference Call and Webcast Reminder

The Pacira management team will host a conference call to discuss the company’s financial results and recent developments today, Thursday, August 4, 2016, at 9 a.m. ET. The call can be accessed by dialing 1-877-845-0779 (domestic) or 1-720-545-0035 (international) ten minutes prior to the start of the call and providing the Conference ID 12857671.

A replay of the call will be available approximately two hours after the completion of the call and can be accessed by dialing 1-855-859-2056 (domestic) or 1-404-537-3406 (international) and providing the Conference ID12857671. The replay of the call will be available for two weeks from the date of the live call.

The live, listen-only webcast of the conference call can also be accessed by visiting the "Investors & Media" section of the company’s website at investor.pacira.com. A replay of the webcast will be archived on the Pacira website for two weeks following the call.

Non-GAAP Financial Information

This press release contains financial measures that do not comply with U.S. generally accepted accounting principles (GAAP), such as non-GAAP net income, non-GAAP cost of goods sold, non-GAAP gross margins, non-GAAP research and development (R&D) and non-GAAP selling, general and administrative (SG&A) expenses, because such measures exclude stock-based compensation, amortization of debt discount, loss on extinguishment of debt and a termination fee with CrossLink BioScience, LLC. These measures supplement our financial results prepared in accordance with GAAP. Pacira management uses these measures to better analyze its financial results, estimate its future cost of goods sold, gross margins, R&D and SG&A outlook for 2016 and to help make managerial decisions. In management’s opinion, these non-GAAP measures are useful to investors and other users of our financial statements by providing greater transparency into the operating performance at Pacira and the company’s future outlook. Such measures should not be deemed to be an alternative to GAAP requirements or a measure of liquidity for Pacira. Non-GAAP net income measures are also unlikely to be comparable with non-GAAP disclosures released by other companies. See the tables below for a reconciliation of non-GAAP net income to GAAP net income (loss), and a reconciliation of our non-GAAP to GAAP 2016 financial guidance for gross margins, R&D and SG&A.