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Shire reports Q3 2016 results with record revenues and reiterates full year Non GAAP guidance

On November 1, 2016 Shire plc (Shire) (LSE: SHP, NASDAQ: SHPG) reported unaudited results for the three months ended September 30, 2016 (Press release, Shire, NOV 1, 2016, View Source [SID1234516161]).

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Financial Highlights Q3 2016(1) Growth(1) Non GAAP CER(1)(2)
Product sales $3,315 million +110% +111%
Product sales excluding Baxalta products $1,769 million +12% +13%
Total revenues $3,452 million +109% +109%
US GAAP operating loss from continuing operations ($406 million) (189%)
Non GAAP operating income(2) $1,254 million +73% +71%
US GAAP net income margin(3)(4) (11%) (38ppc)
Non GAAP EBITDA margin(2)(4) 38% (5ppc)
US GAAP net loss ($387 million) (185%)
Non GAAP net income(2) $962 million +50%
US GAAP diluted losses per ADS ($1.29) (156%)
Non GAAP diluted earnings per ADS(2) $3.17 (2%) (3%)
US GAAP net cash provided by operating activities $526 million (6%)
Non GAAP cash generation(2) $830 million +41%
Non GAAP free cash flow(2) $395 million (27%)

(1)Results include Baxalta Inc. (Baxalta) (acquired on June 3, 2016) and Dyax Corp. (Dyax) (acquired on January 22, 2016), unless otherwise noted. Percentages compare to equivalent 2015 period.
(2)The Non GAAP financial measures included within this release are explained on pages 27 – 28, and are reconciled to the most directly comparable financial measures prepared in accordance with US GAAP on pages 21 – 23.
(3)US GAAP net income as a percentage of total revenues.
(4) Percentage point change ("ppc").

Financial highlights

Very strong launch results for XIIDRA; 64,732 scripts written through October 21, with a market share of 16%.
Product sales growth of 110% in Q3 2016 to $3.3 billion, driven by record legacy Shire product sales and the inclusion of legacy Baxalta franchises.
Underlying growth in Q3 2016 hematology and immunology businesses largely in line with overall market trends; pro forma sales growth of legacy Baxalta products impacted by the timing of large orders.
Q3 2016 year to date growth for legacy Shire product sales was 15% (16% on a Non GAAP CER basis) and legacy Baxalta was 7% on a pro forma basis (8% on a Non GAAP CER pro forma basis), in line with our expectations.
Baxalta integration

Operating expense synergy initiatives ahead of schedule, including manufacturing footprint optimization review.
Sharp focus on transitioning legacy Baxalta products onto Shire’s commercial platform and operating execution.
Issued $12.1 billion aggregate principal debt at a weighted average interest rate of 2.6%; net proceeds used to fully repay bridge facility for financing Baxalta transaction.
Pipeline progress

Pipeline continuing to deliver with U.S. Food and Drug Administration (FDA) approval of CUVITRU, and European Commission (EC) Marketing Authorization for ONIVYDE accompanied by Orphan Drug Designation.
Fully enrolled Phase 3 study for SHP643 in prophylaxis of hereditary angioedema with results expected in the first half of 2017.
FDA resubmission of SHP465 for the treatment of ADHD on track to be made in Q4 2016.
Flemming Ornskov, M.D., M.P.H., Shire Chief Executive Officer, commented:

"During the third quarter, we made rapid progress integrating our new company while delivering record quarterly product sales growth and remaining on track to meet our full year Non GAAP guidance. The launch of XIIDRA is off to a very strong start, and we are using this momentum to build a leadership position in pharmaceutical ophthalmics. Commercial execution remains a top priority across the business. Also, our robust pipeline is continuing to advance, and we look forward to highlighting key programs during our upcoming Investor Day. The changes we are applying to the legacy Baxalta business are similar to the One Shire initiative we undertook in 2013-2014, which set off a period of strong growth and profitability. I am highly confident about Shire’s future growth prospects."

8-K – Current report

On November 1, 2016 Rigel Pharmaceuticals, Inc. (Nasdaq:RIGL) reported financial results for the third quarter and nine months ended September 30, 2016 (Filing, Q3, Rigel, 2016, NOV 1, 2016, View Source [SID1234516160]).

During the third quarter of 2016, Rigel accomplished a number of noteworthy milestones, most importantly, the announcement of topline results for its FIT Phase 3 clinical studies of fostamatinib in ITP. Additionally, the company undertook a restructuring to focus resources on building a commercial enterprise, and appointed executive-level members to the management team that will move Rigel forward toward its goals.

"We believe that the collective data from the FIT Phase 3 clinical program of fostamatinib support a clear treatment effect, a sustained clinical benefit and a positive benefit-risk profile," said Raul Rodriguez, president and chief executive officer of Rigel. "We look forward to discussing the top-line FIT program results with the FDA in the very near future, and obtaining their feed-back on our plan to submit an NDA. Assuming a successful discussion, we expect to submit the NDA in the first quarter of 2017."

For the third quarter of 2016, Rigel reported a net loss of $22.6 million, or $0.24 per basic and diluted share, compared to a net loss of $6.7 million, or $0.08 per basic and diluted share, in the same period of 2015.

Contract revenues from collaborations of $3.8 million in the third quarter of 2016 represent the remaining amortization of the $30.0 million upfront payment pursuant to Rigel’s collaboration and license agreement with Bristol-Myers Squibb (BMS). Contract revenues from collaborations of $13.0 million in the third quarter of 2015 were primarily comprised of an $8.0 million upfront payment from Aclaris Therapeutics International Limited pursuant to the license agreement executed in August 2015 for the development and commercialization of certain Rigel JAK inhibitors, as well as $4.8 million from the amortization of the upfront payment with BMS.

In September 2016, Rigel announced that it had reduced its workforce by 46 positions, mostly in the research area. Rigel recorded restructuring charges during the third quarter of 2016 of approximately $5.8 million, which included $5.0 million of severance costs paid or to be paid in cash, $319,000 impairment of certain property and equipment, and $499,000 of non-cash stock-based compensation expense as a result of the modification of Rigel’s former executive’s stock options.

Rigel reported total costs and expenses of $26.5 million in the third quarter of 2016, compared to $19.8 million for the same period in 2015. The increase in costs and expenses was primarily due to restructuring charges incurred in the third quarter of 2016.

For the nine months ended September 30, 2016, Rigel reported a net loss of $53.6 million, or $0.58 per basic and diluted share, compared to a net loss of $38.8 million, or $0.44 per basic and diluted share, for the same period of 2015.

As of September 30, 2016, Rigel had cash, cash equivalents and short-term investments of $85.3 million, compared to $126.3 million as of December 31, 2015. Rigel expects this amount to be sufficient to fund its operations through the end of 2017. In this forecast, Rigel has allocated substantial funds to continue efforts in preparation of the potential commercial launch of fostamatinib in ITP in the U.S. Rigel also continues to evaluate ex-U.S. partnerships for fostamatinib and other partnering opportunities across its pipeline.

Company and Portfolio Update

Fostamatinib FIT Phase 3 Program

In August and October 2016, respectively, Rigel announced results of two identical Phase 3 clinical studies, FIT 1 (Study 047) and FIT 2 (Study 048), of fostamatinib in adult chronic/persistent immune thrombocytopenia (ITP). Study 047 met the primary endpoint in a statistically significant manner, with 18% of the patients in the fostamatinib arm achieving stable platelet response of greater than 50,000 platelets per μL of blood on at least four of the last scheduled visits between weeks 14 and 24 of treatment and no patients on placebo meeting the stable platelet response criteria (p=0.0261). Study 048, which also had an 18% responder rate for the fostamatinib subjects, did not achieve a statistically significant distinction between the treatment and placebo cohorts (p=0.15) because a single placebo patient met the stable platelet response criteria. When the data from the two studies are combined (n=150), the difference between the fostamatinib and placebo groups would be statistically significant (p=0.007).

Rigel also announced in October 2016 that as of June 2016, the open-label long-term extension study (Study 049), was tracking the experience of 118 patients who opted to receive treatment with fostamatinib after completing either Study 047 or Study 048. Patients who responded to fostamatinib in the parent studies had achieved a median platelet count of 96,000/μL in Study 049. In addition, there were 36 patients out of 43 who were placebo non-responders in the parent studies who had a minimum of 12 weeks of follow-up in the extension study. Of those, 6 patients (17%) have achieved a prospectively defined stable platelet response, which is statistically significant and similar to the response rate fostamatinib achieved in the parent studies.

Rigel believes that the data from the FIT Phase 3 clinical program (comprised of Study 047, 048 and 049) demonstrate that fostamatinib works effectively for some ITP patients, providing a substantial and enduring clinical benefit in a disease that has proven difficult to manage for many physicians and patients. This benefit was consistent across all sub-groups analyzed including TPO (blood platelet production booster) experienced patients who have limited treatment options remaining.

Rigel is continuing its work on compiling the NDA, which it plans to file in the first quarter of 2017, pending positive feedback from discussions of the data with the FDA.

Restructuring to Focus on Commercialization

Following the release of the results for Study 047, Rigel announced a restructuring and plans to build a commercial organization to support the potential launch of fostamatinib. The restructuring reduced the size of the research department while maintaining Rigel’s most advanced and promising projects. The savings from the restructuring will be devoted to support the commercialization of the company’s first potential drug product as well as extending the company’s financial runway.

As part of the restructuring announcement in September, the first of Rigel’s new management team members was introduced; Eldon Mayer joined the company as its first chief commercial officer. Mr. Mayer will be responsible for establishing and managing a commercial organization that will lead the launch of fostamatinib. He brings pharmaceutical marketing and sales management experience to Rigel, having most recently led Questcor Pharmaceuticals’ commercial strategy and operations.

This quarter Rigel made additional key senior management appointments to drive the organization forward. Esteban Masuda, Ph.D. was appointed senior vice president research and will lead Rigel’s refocused research efforts. Joe Lasaga was appointed vice president business development and alliance management and will lead Rigel’s effort to partner certain assets including ex-U.S. partnerships for fostamatinib.

Clinical Portfolio Update

Fostamatinib Phase 2 Study in IgA Nephropathy (IgAN)

Rigel is conducting a global Phase 2, double blind, placebo-controlled study of fostamatinib in IgAN consisting of two sequential dose cohorts (100mg BID, followed by 150 mg BID). Enrollment for the first cohort has been completed and the company expects to report those results by the end of 2016. The second cohort is currently enrolling patients.

Fostamatinib Phase 2 Study in Autoimmune Hemolytic Anemia (AIHA)

Rigel is conducting a Phase 2, open-label, multi-center, two-stage study that will evaluate the safety and efficacy of fostamatinib in patients with warm antibody AIHA who have previously received treatment for the disorder, but have relapsed. Results of the Stage 1 segment of the trial are expected in 2017.

Genomic Health Reports Third Consecutive Quarter of Double-Digit Revenue Growth in Announcement of Third Quarter 2016 Financial Results

On November 1, 2016 Genomic Health, Inc. (Nasdaq: GHDX) reported financial results and business progress for the quarter ended September 30, 2016 (Filing, Q3, Genomic Health, 2016, NOV 1, 2016, View Source [SID1234516158]).

Total revenue was $82.3 million in the third quarter of 2016, compared with $73.6 million in the third quarter of 2015, an increase of 12 percent.

U.S. product revenue was $70.0 million in the third quarter of 2016, an increase of 11 percent, compared with $63.0 million in the same period in the prior year. Prostate test revenue in the U.S. of $2.3 million contributed to approximately 3 percent of the year-over-year growth.

International product revenue was $12.1 million in the third quarter of 2016, compared with $10.5 million a year ago, an increase of 15 percent. International revenue on a constant currency basis increased by 18 percent compared with a year ago.(i)

In the third quarter, more than 29,990 Oncotype test results were delivered, an increase of 8 percent, compared with more than 27,820 test results delivered in the third quarter of 2015. U.S. invasive breast tests delivered grew 5 percent and prostate tests delivered grew 6 percent compared with the prior year. International tests delivered grew 15 percent compared with the prior year and represented approximately 24 percent of total test volume in the third quarter of 2016.

"In 2016 we have delivered three consecutive quarters of double-digit revenue growth, with 15 percent revenue growth and 12 percent test growth year-to-date, in line with our guidance provided in February," said Kim Popovits, chairman of the board, chief executive officer and president of Genomic Health. "We believe these results demonstrate the strength of our business, including the importance of continuing to generate clinical data that differentiate our Oncotype IQ portfolio of products. Specifically, in invasive breast cancer, Oncotype DX remains the only genomic test proven to predict chemotherapy benefit and, with our latest clinical validation study in prostate cancer announced today, we now provide the only test to predict all major short- and long-term outcomes."

Operating loss for the third quarter of 2016 improved to $3.0 million, compared with $5.4 million for the third quarter of 2015. The operating loss includes a favorable impact in the quarter from the satisfaction of certain royalty payment obligations for the license of PCR patents, as well as an unfavorable impact from a write-down of a software development project for interactive digital reporting. These two items were approximately $2.5 million each and individually off-set each other.

Net loss was $2.8 million for the third quarter of 2016 compared with a net loss of $11.8 million for the third quarter of 2015. Basic and diluted net loss per share was $0.08 for the third quarter of 2016, compared with basic and diluted net loss per share of $0.36 for the same period in 2015.

Total revenue for the nine months ended September 30, 2016 was $245.1 million, compared with $212.3 million for the nine months ended September 30, 2015, an increase of 15 percent.

Operating loss improved to $16.9 million for the nine months ended September 30, 2016, compared with an operating loss of $30.9 million for the nine months ended September 30, 2015. Net loss was $15.3 million for the nine months ended September 30, 2016, compared with a net loss of $30.6 million for the nine months ended September 30, 2015.

Cash and cash equivalents and short-term marketable securities at September 30, 2016 were $83.6 million excluding the fair value of the company’s investment in a marketable security of $15.0 million, compared with $76.8 million at December 31, 2015 excluding the fair value of the company’s investment in a marketable security of $18.1 million.

Recent Business Highlights

Oncotype DX Commercial Progress

· As of September 30, 2016, the company’s flagship line of Oncotype DX gene expression tests has been used to guide treatment decisions for more than 700,000 cancer patients worldwide.
· Established an additional coverage for the Oncotype DX Genomic Prostate Score, bringing the total number of prostate cancer covered U.S. lives to more than 61 million.

Presentations and Publications

· Announced positive topline results from a prostate cancer clinical validation study demonstrating Oncotype DX is a strong predictor of the development of metastasis and prostate cancer death in patients with early-stage disease. With these new results, the Oncotype DX prostate cancer test becomes the first genomic test validated in all major short- and long-term end points, including adverse pathology, biochemical recurrence, metastasis and prostate cancer specific death.

· Reviews in Urology published a comprehensive economic analysis demonstrating use of Oncotype DX in low-risk prostate cancer patients leads to an increase in a net uptake of active surveillance and a net savings of $2,286 per patient — including the cost of the test — by decreasing unnecessary immediate invasive treatment.

· Presented results from eight Oncotype DX Breast Recurrence Score presentations at the European Society for Medical Oncology (ESMO) (Free ESMO Whitepaper) 2016 Congress, highlighting superior clinical evidence in identifying which patients with node-negative and node-positive invasive breast cancer should be treated with chemotherapy. To date, the unique clinical utility of Oncotype DX has been demonstrated with prospective outcomes results in over 63,000 breast cancer patients.

· Presented robust analytical validation study results on Oncotype SEQ Liquid Select at the ESMO (Free ESMO Whitepaper) 2016 Congress. The results demonstrated that this liquid biopsy mutation panel is highly sensitive, specific and reproducible.

· Received acceptance to present seven studies at the 2016 CTRC-AACR San Antonio Breast Cancer Symposium (SABCS) in December.

OncoMed Pharmaceuticals Reports Third Quarter 2016 Financial Results

On November 1, 2016 OncoMed Pharmaceuticals, Inc. (Nasdaq:OMED), a clinical-stage company focused on discovering and developing novel anti-cancer stem cell and immuno-oncology therapeutics, reported third quarter financial results. As of September 30, 2016, cash, cash equivalents and short-term investments totaled $207.6 million (Press release, OncoMed, NOV 1, 2016, View Source [SID1234516150]).

"OncoMed remains focused on execution across our pipeline, completing enrollment in two randomized Phase 2 trials for demcizumab and tarextumab and driving toward randomized Phase 2 results and potential partner opt-ins in the first half of 2017," said Paul J. Hastings, Chairman and Chief Executive Officer. "Additionally, we will continue to generate new data on multiple compounds in the clinic, and we expect to file INDs for two immuno-oncology programs in late 2016 though the first half of 2017."

Q3 Highlights

Completed enrollment of 207 patients a month ahead of schedule in the Phase 2 YOSEMITE trial of demcizumab (anti-DLL4, OMP-21M18) in combination with Abraxane (paclitaxel protein-bound particles for injectable suspension) (albumin bound) plus gemcitabine in first-line metastatic pancreatic cancer. Topline results are expected in the first half of 2017, enabling a potential opt-in by Celgene Corporation (Celgene).

Completed enrollment of 145 previously untreated patients with extensive-stage small cell lung cancer (SCLC) three months ahead of schedule in the Phase 2 PINNACLE clinical trial of tarextumab (anti-Notch2/3, OMP-59R5) in combination with etoposide and platinum-based chemotherapy. Topline are results expected in the first half of 2017, enabling a potential opt in by GlaxoSmithKline (GSK).

Presented interim data from the Phase 1b clinical trials of vantictumab (anti-Fzd, OMP-18R5) and ipafricept (FZD8-Fc, OMP-54F28) in pancreatic cancer at the European Society of Medical Oncology (ESMO) (Free ESMO Whitepaper) 2016 Congress. OncoMed expects to submit data packages for both vantictumab and ipafricept to Bayer Pharma AG (Bayer) for opt-in consideration during the first half of 2017.
Development updates

OncoMed’s Phase 2 DENALI clinical trial of demcizumab in combination with carboplatin/pemetrexed in first-line non-small cell lung cancer (NSCLC) has enrolled 81 patients as of October 31, 2016. Based on the evolving treatment landscape for front-line NSCLC, OncoMed has stopped further enrollment of patients in this Phase 2 randomized clinical trial and plans to continue to treat currently enrolled patients and analyze the data from those patients in time to support the YOSEMITE data and the potential opt-in package in the first half of 2017. Additionally, OncoMed will supplement the opt-in package with interim safety, biomarker, and early efficacy data from its ongoing Phase 1b trial of demcizumab combined with pembrolizumab. OncoMed anticipates having response rate, progression-free survival, interim overall survival and safety data for DENALI in parallel with the results of YOSEMITE. DENALI data combined with the Phase 1b combination data with demcizumab and pembrolizumab will inform future development of demcizumab in NSCLC.

GSK has notified OncoMed of its decision to focus its current collaboration with OncoMed on tarextumab in SCLC based on the PINNACLE study and to terminate its option on the brontictuzumab (anti-Notch1, OMP-52M51) program. As a result of the termination, OncoMed will retain the worldwide rights to develop brontictuzumab.

OncoMed will continue its ongoing efforts with investigators to plan the conduct of a Phase 1b clinical trial of brontictuzumab in combination with trifluridine and tipiracil tablets (Lonsurf) in third-line colorectal cancer. The trial includes enrollment of biomarker-positive patients whose tumors express the activated form of Notch1. OncoMed has previously presented Phase 1 data that suggest brontictuzumab has single-agent activity in patients with tumors that are positive for the Notch1 biomarker. The prevalence of activated Notch1 in colorectal cancer is expected to be about 50 percent. Enrollment in the Phase 1b study is expected to commence in late 2016 or early 2017.

2016 Upcoming Milestones

Present first-in-human data for anti-DLL4/VEGF (OMP-305B83) and anti-RSPO3 (OMP-131R10) from ongoing Phase 1 trials at the EORTC-NCI-AACR (Free EORTC-NCI-AACR Whitepaper) Molecular Targets and Cancer Therapeutics Symposium being held in Munich, Germany November 29-December 2, 2016.

File an Investigational New Drug (IND) application with the U.S. Food and Drug Administration (FDA) before year-end for one of two immuno-oncology therapeutic candidates: IO#2, partnered with Celgene, or GITRL-Fc, a wholly owned OncoMed asset. A second IND application is expected to follow in the first half of 2017.
Third Quarter 2016 Financial Results

Cash, cash equivalents and short-term investments totaled $207.6 million as of September 30, 2016, compared to $171.5 million as of June 30, 2016. The company’s cash balance includes net proceeds of $59.2 million from a follow-on offering completed August 23, 2016.

Revenues for the three months ended September 30, 2016 were $5.9 million, an increase of $1.2 million, compared to total revenue of $4.7 million for the three months ended September 30, 2015. This increase was primarily due to amortization of the $70.0 million safety milestone achieved in the fourth quarter of 2015.

Research and development (R&D) expenses were $27.4 million for the third quarter of 2016 compared with $24.7 million for the same period in 2015. Higher R&D expenditures during the third quarter 2016 were attributable to increased manufacturing costs for the IO#2 and GITRL-Fc programs, increased clinical costs for the anti-RSPO3 and vantictumab programs and increased personnel costs. These increases were partially offset by a decrease in 2016 spending for the tarextumab program.

General and administrative (G&A) expenses were $4.5 million for the quarters ended September 30, 2016 and September 30, 2015. G&A costs during the third quarter 2016 increased due to personnel costs, offset by financing costs in the third quarter of 2015 related to the filing of the Form S-3 registration statement in June 2015.

Net loss for the third quarter 2016 was $25.9 million ($0.77 per share), compared to $24.5 million ($0.81 per share) for the same period of 2015. The change in net loss from the same quarter in 2015 was primarily attributable to an increase in research and development expenses.

QLT Announces Third Quarter 2016 Results

On November 1, 2016 QLT Inc. (NASDAQ:QLTI) (TSX:QLT) ("QLT" or the "Company") reported financial results for the third quarter ended September 30, 2016. Unless otherwise specified, all amounts are reported in U.S. dollars and in accordance with U.S. GAAP (Press release, QLT, NOV 1, 2016, View Source;p=RssLanding&cat=news&id=2217788 [SID1234516148]).

2016 THIRD QUARTER FINANCIAL RESULTS

Operating Expenses/Income

During the third quarter of 2016, research and development ("R&D") expenditures were $2.9 million compared to $2.1 million for the same period in 2015. The $0.8 million (38%) increase was primarily due to higher costs related to preparatory activities for our upcoming Phase III pivotal trial for QLT091001.

During the third quarter of 2016, we incurred $1.9 million of consulting and advisory fees on activities to support our pending merger transaction with Aegerion Pharmaceuticals, Inc. ("Aegerion"), which is described below. In comparison, we incurred $2.2 million of similar costs in 2015 related to: (i) the pursuit of our merger transaction with InSite Vision Incorporated ("InSite"), which was terminated by InSite on September 15, 2015, and (ii) activities to support our investment in Aralez Pharmaceuticals, Inc. ("Aralez"), which was subsequently distributed to our shareholders on April 5, 2016 (the "Aralez Distribution").

Excluding the strategic consulting and advisory fees described above, selling, general and administrative ("SG&A") expenditures for the third quarter of 2016 were relatively consistent with SG&A expenditures incurred during the same period in 2015.

Operating Loss and Net Loss per Share

The operating loss for the third quarter of 2016 was $6.0 million, compared to $2.8 million for the same period in 2015. The net $3.2 million change in our operating loss was primarily due to a $2.7 million non-recurring termination fee received from InSite in September 2015, in connection with InSite’s termination of the merger agreement, as well as higher R&D costs in the third quarter of 2016 associated with preparatory activities for our upcoming Phase III pivotal trial for QLT091001.

Net loss per common share was $0.11 in the third quarter of 2016, compared to $0.05 for the same quarter in 2015. The change in our net loss per common share was primarily due to the same factors described above.

Cash and Cash Equivalents

As at September 30, 2016, the Company’s consolidated cash and cash equivalents were $73.1 million compared to $141.8 million at December 31, 2015. The $68.7 million decrease was primarily due to: (i) the $45.0 million investment in Aralez and subsequent Aralez Distribution (as described above), (ii) $9.2 million of strategic consulting and advisory fees related to the proposed merger with Aegerion, the Aralez Distribution, and the exploration of other strategic alternatives, (iii) $3.0 million advanced to Aegerion pursuant to the terms of the interim loan agreement with Aegerion, and (iv) cash used in operating activities during the period.

AEGERION MERGER TRANSACTION UPDATE

As previously announced, on June 14, 2016, Aegerion and QLT agreed to a merger (the "Merger") under the terms of an Agreement and Plan of Merger by and among Aegerion, QLT and Isotope Acquisition Corp., an indirect wholly-owned subsidiary of QLT. While the proposed Merger has been approved by the boards of directors of both companies, the closing of the Merger is subject to various conditions, including but not limited to (i) receipt of the required approvals of the shareholders at the special meetings of each QLT and Aegerion on November 7, 2016, and (ii) completion of the $21.8 million QLT private placement contemplated by the unit subscription agreement entered into with certain investors in connection with the Merger. The Merger is expected to close in the fourth quarter of 2016.

SYNTHETIC RETINOID UPDATE

The Company continues its Phase III pivotal trial start-up activities to test the safety and efficacy of its Fast Track and Orphan Drug Designated investigational drug product, QLT091001 in subjects with Inherited Retinal Disease phenotypically diagnosed as LCA or RP caused by RPE65 or LRAT gene mutations, with a goal of initiating the pivotal trial in the fourth quarter of 2016.

In addition to the Fast Track and Orphan Drug Designations previously granted to us by the FDA for QLT091001, the Company is currently exploring the potential of submitting to the FDA a request for a Rare Pediatric Disease Designation of QLT091001. Under the Federal Food, Drug, and Cosmetic Act, a sponsor who receives an approval of a New Drug Application (NDA) for a Rare Pediatric Disease and meets certain additional criteria, may be eligible to be awarded a Rare Pediatric Disease Priority Review Voucher (PRV). A PRV can be redeemed to receive a priority review for any subsequent marketing application for a different product. A PRV, if obtained by a sponsor, may be sold or transferred to another sponsor. The FDA’s authority to award Rare Pediatric Disease PRVs is currently set to expire December 31, 2016. The authority has been extended multiple times previously, and while it is possible that it may be further extended or made permanent in the future, there is no guarantee of any such extension.

In addition, U.S. Patent No. 9,403,765 relating to various methods of use of various synthetic retinal esters, including QLT091001, for the treatment of diseases associated with an endogenous 11-cis-retinal deficiency, including LCA and RP, was granted by the USPTO on August 2, 2016. This patent is currently projected to expire on June 20, 2025. This newly issued patent further enhances the Company’s key patent portfolio around methods of using QLT091001 in the treatment of IRD.

Passive Foreign Investment Company

The Company believes that it was classified as a Passive Foreign Investment Company ("PFIC") for 2008 through 2015, and that it may be classified as a PFIC in 2016, which could have adverse tax consequences for U.S. shareholders. Please refer to our 2015 Annual Report on Form 10-K (as amended by the Form 10-K/A filed on April 29, 2016) for additional information.

QLT Inc. – Financial Highlights
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
(In thousands of U.S. dollars except share and per share information)
Three months ended Nine months ended
September 30, September 30,
2016 2015 2016 2015

Expenses
Research and development $ 2,855 $ 2,142 $ 8,774 $ 7,754
Selling, general and administrative 3,138 3,166 13,487 13,939
Depreciation 24 141 85 508
Termination fee – (2,667 ) – (2,667 )
6,017 2,782 22,346 19,534
Operating loss (6,017 ) (2,782 ) (22,346 ) (19,534 )
Other (expense) income
Net foreign exchange losses (105 ) (43 ) (214 ) (5 )
Interest income 110 152 240 235
Fair value loss on investment – - (10,704 ) -
Other (39 ) (6 ) (30 ) (8 )
(34 ) 103 (10,708 ) 222
Loss before income taxes (6,051 ) (2,679 ) (33,054 ) (19,312 )
Recovery of (Provision for) income taxes 115 (3 ) 104 (17 )
Net loss and comprehensive loss $ (5,936 ) $ (2,682 ) $ (32,950 ) $ (19,329 )

Basic and diluted net loss per common share
Net loss per common share $ (0.11 ) $ (0.05 ) $ (0.62 ) $ (0.37 )

Weighted average number of common shares outstanding (thousands)
Basic and diluted 52,829 52,829 52,829 51,949

CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands of U.S. dollars) September 30, 2016 December 31, 2015
ASSETS
Current assets
Cash and cash equivalents $ 73,056 $ 141,824
Accounts receivable, net of allowances for doubtful accounts 186 287
Loan receivable 3,073 -
Income taxes receivable 14 14
Prepaid and other assets 450 611
Total current assets 76,779 142,736
Accounts receivable 2,000 2,000
Property, plant and equipment 270 430
Total assets $ 79,049 $ 145,166
LIABILITIES
Current liabilities
Accounts payable $ 3,308 $ 1,656
Accrued liabilities 1,058 1,827
Total current liabilities 4,366 3,483
Uncertain tax position liabilities - 342
Total liabilities 4,366 3,825
SHAREHOLDERS’ EQUITY
Share capital
Authorized
500,000,000 common shares without par value
5,000,000 first preference shares without par value, issuable in series
Issued and outstanding common shares $ 475,333 $ 475,333
September 30, 2016 – 52,829,398 shares
December 31, 2015 – 52,829,398 shares
Additional paid-in capital 63,669 97,377
Accumulated deficit (567,288 ) (534,338 )
Accumulated other comprehensive income 102,969 102,969
Total shareholders’ equity 74,683 141,341
Total shareholders’ equity and liabilities $ 79,049 $ 145,166