8-K – Current report

On February 2, 2016 – Gilead Sciences, Inc. (Nasdaq: GILD) reported its results of operations for the fourth quarter and full year 2015 (Filing, 8-K, Gilead Sciences, FEB 2, 2016, View Source [SID:1234508942]). Total revenues for the fourth quarter of 2015 were $8.5 billion compared to $7.3 billion for the fourth quarter of 2014. Net income for the fourth quarter of 2015 was $4.7 billion, or $3.18 per diluted share compared to $3.5 billion, or $2.18 per diluted share for the fourth quarter of 2014. Non-GAAP net income for the fourth quarter of 2015, which excludes amounts related to acquisition, stock-based compensation and other, was $4.9 billion, or $3.32 per diluted share compared to $3.9 billion, or $2.43 per diluted share for the fourth quarter of 2014.

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Full year 2015 total revenues were $32.6 billion compared to $24.9 billion for 2014. Net income for 2015 was $18.1 billion, or $11.91 per diluted share compared to $12.1 billion, or $7.35 per diluted share for 2014. Non-GAAP net income for 2015, which excludes amounts related to acquisition, stock-based compensation and other, was $19.2 billion, or $12.61 per diluted share compared to $13.3 billion, or $8.09 per diluted share for 2014.

Product Sales
Total product sales for the fourth quarter of 2015 were $8.4 billion compared to $7.2 billion for the fourth quarter of 2014. In the fourth quarter of 2015, product sales in the U.S. were $4.8 billion compared to $5.5 billion in the fourth quarter of 2014. In Europe, product sales were $1.7 billion compared to $1.4 billion in the fourth quarter of 2014. Sales in other international locations increased to $1.9 billion compared to $373 million in the fourth quarter of 2014, primarily due to sales of Sovaldi (sofosbuvir 400 mg) and Harvoni (ledipasvir 90 mg/sofosbuvir 400 mg) in Japan.

Total product sales during 2015 were $32.2 billion compared to $24.5 billion in 2014, primarily due to sales of Harvoni which was launched in October 2014, partially offset by a decrease in sales of Sovaldi. For 2015, product sales in the U.S. were $21.2 billion compared to $18.1 billion in 2014. In Europe, product sales were $7.2 billion compared to $5.1 billion in 2014. Sales in other international locations increased to $3.8 billion in 2015 compared to $1.2 billion in 2014, primarily due to sales of Sovaldi and Harvoni in Japan.

Antiviral Product Sales
Antiviral product sales, which include products in our HIV and liver diseases areas, were $7.9 billion for the fourth quarter of 2015 compared to $6.7 billion for the fourth quarter of 2014 primarily as a result of the launch of our HCV products in Japan and continued launches of our HCV products across Europe, partially offset by lower sales of HCV products in the U.S. For 2015, antiviral product sales were $30.2 billion compared to $22.8 billion in 2014 primarily due to sales of Harvoni, partially offset by a decrease in sales of Sovaldi.

Other Product Sales
Other product sales, which include Letairis, Ranexa and AmBisome, were $523 million for the fourth quarter of 2015 compared to $496 million for the fourth quarter of 2014. For 2015, other product sales were $1.9 billion compared to $1.7 billion in 2014.

• During the fourth quarter of 2015, non-GAAP R&D expenses decreased, compared to same period in 2014, primarily due to the 2014 impact of up-front fees paid in connection with Gilead’s collaboration with ONO Pharmaceutical Co., Ltd. (ONO) and the purchase of a U.S. Food and Drug Administration (FDA) priority review voucher, partially offset by increased costs to support the continued progression of Gilead’s clinical studies in 2015.

• During 2015, non-GAAP R&D expenses increased, compared to 2014, primarily due to the progression of Gilead’s clinical studies, partially offset by the 2014 impact of up-front fees paid in connection with Gilead’s collaboration with ONO and the purchase of a FDA priority review voucher.

• During the fourth quarter and full year 2015, non-GAAP SG&A expenses increased, compared to same periods in 2014, primarily to support Gilead’s growth and the geographic expansion of its business.

Cash, Cash Equivalents and Marketable Securities
As of December 31, 2015, Gilead had $26.2 billion of cash, cash equivalents and marketable securities compared to $11.7 billion as of December 31, 2014. During 2015, Gilead generated $20.3 billion in operating cash flow, utilized $10.0 billion to repurchase 95 million shares of its stock and paid cash dividends of $1.9 billion, or $1.29 per share.

Corporate Highlights

• Gilead was the top corporate HIV/AIDS philanthropic funder and the No. 2 private HIV/AIDS philanthropic funder overall behind the Bill & Melinda Gates Foundation, according to the Funders Concerned About AIDS Report issued on December 8, 2015. Gilead gave $73.4 million in HIV/AIDS philanthropic support in 2014. The company’s corporate giving helps address the HIV epidemic on all fronts, including testing and linkage to care, enabling access to medicines, reducing disparities in the quality of healthcare and educating healthcare professionals on the latest advances in HIV therapies.

• Gilead is partnering with the U.S. government, the Bill & Melinda Gates Foundation and other corporate donors on the DREAMS initiative aimed at reducing HIV infections among adolescent girls and young women in sub-Saharan Africa. Gilead will provide funding to help the program purchase generic Truvada for use as pre-exposure prophylaxis (PrEP) among HIV-negative adolescent girls and young women in sub-Saharan Africa, as well as to support costs related to procurement, transportation and dissemination of PrEP.

Product & Pipeline Updates Announced by Gilead During the Fourth Quarter of 2015 Include:

Antiviral Program

• Announced that the European Commission granted marketing authorization for the once-daily single tablet regimen Genvoya for the treatment of HIV-1 infection. Genvoya is the first tenofovir alafenamide (TAF)-based regimen to receive marketing authorization in the European Union (EU). Genvoya is indicated in the EU for the treatment of adults and adolescents (aged 12 years and older with body weight at least 35 kg) infected with HIV-1 without any known mutations associated with resistance to the integrase inhibitor class, emtricitabine or tenofovir.

• Announced that FDA approved Genvoya for the treatment of HIV-1 infection. Genvoya is the first TAF-based regimen to receive FDA approval. Genvoya is indicated as a complete regimen for the treatment of HIV-1 infection in adults and pediatric patients 12 years of age and older who have no antiretroviral treatment history or to replace the current antiretroviral regimen in those who are virologically-suppressed (HIV-1 RNA levels less than 50 copies per mL) on a stable antiretroviral regimen for at least six months with no history of treatment failure and no known substitutions associated with resistance to the individual components of Genvoya.

• Announced positive 96-week results from two Phase 3 studies evaluating Genvoya for the treatment of HIV-1 infection in treatment-naïve adults. Genvoya was found to be statistically non-inferior to Stribild, based on percentages of patients with HIV-1 RNA levels less than 50 copies/mL. Patients receiving Genvoya also had improved renal and bone laboratory parameters compared to those treated with Stribild. These data were presented at the 15th European AIDS Conference.

• Announced that the Marketing Authorization Application for an investigational, once-daily fixed-dose combination of the nucleotide analog polymerase inhibitor sofosbuvir (SOF) 400 mg and velpatasvir (VEL) 100 mg, an investigational pan-genotypic NS5A inhibitor, for the treatment of chronic hepatitis C virus (HCV) infection, was fully validated and under assessment by the European Medicines Agency (EMA). The data included in the application support the use of SOF/VEL among patients with genotype 1-6 HCV infection, including patients with compensated and decompensated cirrhosis. SOF/VEL is the third investigational medicinal product from Gilead for HCV infection to receive accelerated review by the EMA.

• Announced that FDA approved Harvoni for expanded use in patients with genotype 4, 5 and 6 HCV infection and in patients co-infected with HIV. In addition, Harvoni plus ribavirin (RBV) for 12 weeks was approved as an alternate therapy to 24 weeks of Harvoni for treatment-experienced, genotype 1 patients with cirrhosis.

• Announced that the company submitted a New Drug Application to FDA for an investigational, once-daily fixed-dose combination of SOF/VEL, for the treatment of chronic genotype 1-6 HCV infection. The NDA is supported by clinical studies exploring the use of 12 weeks of SOF/VEL for patients with genotype 1-6 HCV infection, including patients with compensated cirrhosis and 12 weeks of SOF/VEL with RBV for patients with decompensated cirrhosis. FDA assigned SOF/VEL with a Breakthrough Therapy designation, which is granted to investigational medicines that may offer major advances in treatment over existing options.

• Announced that the company fulfilled a request for compassionate access to GS-5734, a novel nucleotide analogue in development for the potential treatment of Ebola Virus Disease. The compound was provided to two patients, one a female patient in the Royal Free Hospital in London in October and one in Guinea the following month, through a compassionate use request. Two Phase 1 human trials are now underway in healthy adult volunteers.

Oncology Program

• Announced positive results from a prespecified interim analysis of a Phase 3 study evaluating Zydelig in combination with bendamustine and rituximab (BR) for patients with previously treated chronic lymphocytic leukemia. The analysis found a 67 percent reduction in the risk of disease progression or death (progression-free survival) in patients receiving Zydelig plus BR compared to BR alone. Additionally, all secondary endpoints, including overall survival, achieved statistical significance in this interim analysis. These data were presented at the Annual Meeting of the American Society of Hematology (ASH) (Free ASH Whitepaper).

Cardiovascular Program
• Announced that FDA approved the use of Letairis in combination with tadalafil for the treatment of pulmonary arterial hypertension (PAH) (WHO Group 1) to reduce the risks of disease progression and hospitalization for worsening PAH, and to improve exercise ability.

Inflammation Program
• Announced that Gilead and Galapagos NV entered into a collaboration for the development and commercialization of the JAK1-selective inhibitor filgotinib for inflammatory disease indications. This collaboration represents an opportunity to add complementary clinical programs to our growing inflammation research and development efforts. Phase 2 trial data show that filgotinib has the potential to be an effective and well-tolerated oral therapy for patients with rheumatoid arthritis (RA) and Crohn’s disease. Phase 3 trials in RA and Crohn’s are expected to start in mid-2016 pending the successful outcome of discussions with regulatory authorities.

PFIZER REPORTS FOURTH-QUARTER AND FULL-YEAR 2015 RESULTS PROVIDES 2016 FINANCIAL GUIDANCE

On February 2, 2016 Pfizer Inc. (NYSE:PFE) reported financial results for fourth-quarter and full-year 2015 and provided 2016 financial guidance (Press release, Pfizer, FEB 2, 2016, View Source [SID1234508940]).

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On September 3, 2015, Pfizer acquired Hospira, Inc. (Hospira). Consequently, and in accordance with Pfizer’s domestic and international reporting periods(3), full-year financial results for the year ended December 31, 2015 reflect four months of legacy Hospira U.S. operations and three months of legacy Hospira international operations, while financial results from fourth-quarter 2014 and full-year 2014 do not include any contribution from legacy Hospira operations. Fourth-quarter 2015 includes three months of legacy Hospira global operations.

The Company manages its commercial operations through two distinct businesses: an Innovative Products business and an Established Products business. The Innovative Products business is composed of two operating segments: the Global Innovative Pharmaceutical segment (GIP)(4) and the Global Vaccines, Oncology and Consumer Healthcare segment (VOC)(4). The Established Products business consists of the Global Established Pharmaceutical segment (GEP)(4), which includes all legacy Hospira commercial operations. Financial results for each of these segments are presented in the Operating Segment Information section.

Some amounts in this press release may not add due to rounding. All percentages have been calculated using unrounded amounts. Results for fourth-quarter and full-year 2015 and 2014 are summarized below.

OVERALL RESULTS
($ in millions, except
per share amounts)
Fourth-Quarter Full-Year
2015 2014 Change 2015 2014 Change
Reported Revenues(1) $ 14,047 $ 13,118 7% $ 48,851 $ 49,605 (2%)
Adjusted Income(2) 3,306 3,441 (4%) 13,755 14,530 (5%)
Adjusted Diluted EPS(2) 0.53 0.54 (2%) 2.20 2.26 (3%)
Reported Net Income(1) 613 1,228 (50%) 7,745 9,135 (15%)
Reported Diluted EPS(1) 0.10 0.19 (47%) 1.24 1.42 (13%)

REVENUES
($ in millions) Fourth-Quarter Full-Year
2015 2014 % Change 2015 2014 % Change
Total Oper. Total Oper.
Innovative Products $ 7,637 $ 6,628 15% 22% $ 26,758 $ 24,005 11% 19%
GIP(4) 3,862 3,748 3% 10% 13,954 13,861 1% 9%
Global Vaccines(4) 1,917 1,318 45% 53% 6,454 4,480 44% 51%
Consumer Healthcare(4) 930 953 (2%) 4% 3,395 3,446 (1%) 5%
Global Oncology(4) 928 609 52% 61% 2,954 2,218 33% 43%
Established Products $ 6,264 $ 6,407 (2%) 5% $ 21,587 $ 25,149 (14%) (7%)
GEP(4) Standalone 5,082 6,407 (21%) (14%) 20,075 25,149 (20%) (13%)
Legacy Hospira 1,182 — * * 1,513 — * *
Other(5) 146 83 75% 98% 506 451 12% 20%
Total Company $ 14,047 $ 13,118 7% 14% $ 48,851 $ 49,605 (2%) 6%

Pfizer Excluding Legacy
Hospira
$ 12,865 $ 13,118 (2%) 5% $ 47,339 $ 49,605 (5%) 3%
* Indicates calculation not meaningful.

SELECTED TOTAL COMPANY ADJUSTED COSTS AND EXPENSES(2)
($ in millions)
(Favorable)/Unfavorable
Fourth-Quarter Full-Year
2015 2014 % Change 2015 2014 % Change
Total Oper. Total Oper.
Cost of Sales(2) $ 2,983 $ 2,584 15% 22% $ 9,021 $ 9,134 (1%) 10%
Percent of Revenues(1) 21.2 % 19.7
%

N/A N/A 18.5 % 18.4
%

N/A N/A
SI&A Expenses(2) 4,598 3,916 17% 24% 14,324 13,721 4% 11%
R&D Expenses(2) 2,318 2,039 14% 16% 7,653 7,153 7% 9%
Total $ 9,900 $ 8,539 16% 21% $ 30,998 $ 30,007 3% 10%

Effective Tax Rate(2) 19.6 % 26.2
%

24.0 % 26.5
%

2016 FINANCIAL GUIDANCE(6)

A reconciliation of Pfizer’s full-year 2015 financial results to certain components of its 2016 financial guidance is below. For 2016, the financial guidance includes the estimated significant negative currency impact related to Venezuela and excludes any impact from the pending combination with Allergan plc (Allergan).


Impact of Mid-

January 2016 FX

2016 Financial
Rates Compared
Currency Impact

Full-Year
Guidance at 2015
to 2015 FX Rates
Related to
2016 Financial

2015 Results

FX Rates

(Ex Venezuela)

Venezuela

Guidance

Reported Revenues(1) $48.9 billion $51.3 to $53.3 billion ($1.5 billion) ($0.8 billion) $49.0 to $51.0 billion
Reported Diluted EPS(1) $1.24
$1.70 to $1.83
($0.09) ($0.07) $1.54 to $1.67
Adjusted Diluted EPS(2) $2.20
$2.36 to $2.46
($0.09) ($0.07) $2.20 to $2.30

Pfizer’s complete 2016 financial guidance is summarized below.

Reported Revenues(1) $49.0 to $51.0 billion
Adjusted Cost of Sales(2) as a Percentage of Reported Revenues(1) 21.0% to 22.0%
Adjusted SI&A Expenses(2) $13.2 to $14.2 billion
Adjusted R&D Expenses(2) $7.3 to $7.8 billion
Adjusted Other (Income)/Deductions(2) Approximately ($300 million) of income
Effective Tax Rate on Adjusted Income(2) Approximately 24.0%
Reported Diluted EPS(1) $1.54 to $1.67
Adjusted Diluted EPS(2) $2.20 to $2.30

EXECUTIVE COMMENTARY

Ian Read, Chairman and Chief Executive Officer, stated, "The just completed year was very productive in terms of business momentum, pipeline advancement and business development activity. I am particularly pleased with the performance of our Prevnar 13 adult and Ibrance launches in the U.S. In addition, Eliquis, Xeljanz and the Hospira portfolio, among other assets, along with operational growth in emerging markets, meaningfully enhanced the strength of our businesses.

"I believe that we are well positioned to deliver another strong year in 2016 as we expect that our key in-line products will continue to perform well while we expect to advance our product pipeline, notably our potential registrational programs in key therapeutic areas such as oncology, vaccines, cardiovascular and metabolic diseases, inflammation and rare diseases."

Mr. Read continued, "The integration of Hospira is well underway and we now look forward to completing the combination with Allergan, which we still expect to occur during the second half of this year. We see this transaction as a very effective driver of accelerating the growth potential of our Innovative business, strengthening our Established business and more efficiently allocating our capital globally, all factors which remain consistent with our overarching strategy of value creation.

"I want to thank our colleagues for their continued tireless work in an environment, that while challenging, continues to be very rewarding for our stakeholders," Mr. Read concluded.

Frank D’Amelio, Chief Financial Officer, stated, "2015 was a truly transformational year for Pfizer. In addition to our strong financial performance, we completed the Hospira acquisition, announced the pending combination with Allergan and continued to deliver shareholder value through prudent capital allocation. Regarding our financial performance, we exceeded our 2015 financial guidance for reported revenue(1) and met the top end of our 2015 financial guidance range for adjusted diluted EPS(2) despite an operating environment that remains challenging. Importantly, Pfizer-standalone revenues increased 3% operationally, marking Pfizer’s first year of operational revenue growth since entering a period of significant product losses of exclusivity. We believe the completion of the Hospira acquisition and the pending Allergan combination will strengthen our core businesses and better position the Company for sustainable revenue growth in the future.

"Today we are also providing our 2016 financial guidance, including ranges for reported revenues(1) of $49.0 to $51.0 billion and for adjusted diluted EPS(2) of $2.20 to $2.30. Our guidance for reported revenues(1) reflects anticipated mid-to-high-single digit operational revenue growth on an enterprise basis offset by the anticipated negative impact of $2.3 billion due to generic competition for products that recently lost or are expected to soon lose marketing exclusivity as well as $2.3 billion as a result of adverse changes in foreign exchange rates relative to the U.S. dollar compared to foreign exchange rates from last year, including $0.8 billion due to the estimated significant currency impact related to Venezuela. Our 2016 financial guidance excludes any impact from the pending combination with Allergan. Finally, our guidance for reported(1) and adjusted(2) diluted EPS also reflects anticipated share repurchases totaling $5 billion this year, consisting of our previously-announced plans to enter into a $5 billion accelerated share repurchase agreement that we expect to execute in the first half of 2016. These planned repurchases are expected to more than offset the potential dilution related to employee compensation programs," Mr. D’Amelio concluded.

QUARTERLY FINANCIAL HIGHLIGHTS (Fourth-Quarter 2015 vs. Fourth-Quarter 2014)

Reported revenues(1) totaled $14.0 billion, an increase of $930 million, or 7%, which reflects operational growth of $1.9 billion, or 14%, partially offset by the unfavorable impact of foreign exchange of $934 million, or 7%. Excluding the impact of legacy Hospira operations of $1.2 billion, foreign exchange and, to a lesser extent, the vaccines acquired from Baxter International Inc. (Baxter) of $35 million, Pfizer-standalone revenues increased by $646 million operationally, or 5%.

Operational revenue growth in developed markets was driven primarily by the inclusion of $1.1 billion of revenues from legacy Hospira operations and continued strong performance of several key products, notably Prevnar 13 in adults and Ibrance in the U.S., Eliquis globally as well as Xeljanz and Lyrica primarily in the U.S. In emerging markets, revenues increased 5% operationally, favorably impacted by the addition of legacy Hospira operations, which contributed $73 million, as well as the performance of Prevenar 13 and certain other products.

Operational revenue growth was partially offset primarily by the loss of exclusivity and associated generic competition for Celebrex in the U.S. and certain other developed markets, Lyrica in certain developed Europe markets and Zyvox in the U.S.

Innovative Products Business Highlights

Revenues for the Innovative Products business increased 22% operationally, reflecting the following:

GIP(4) revenues increased 10% operationally, primarily due to the strong operational performance of Eliquis globally, Lyrica in the U.S. and Japan as well as Xeljanz primarily in the U.S.
VOC(4) revenues increased 38% operationally, reflecting the following:
Global Vaccines(4) revenues increased 53% operationally, driven by 102% growth of Prevnar 13 in the U.S., reflecting continued strong uptake among adults due to the continued success of commercial programs and increased demand during the flu season as well as by the timing of government purchases for the pediatric indication compared to the year-ago quarter.
Global Oncology(4) revenues increased 61% operationally, primarily driven by continued strong momentum following the February 2015 U.S. launch of Ibrance for advanced breast cancer and, to a lesser extent, stronger demand for Sutent and Xalkori globally.
Consumer Healthcare(4) revenues increased 4% operationally, primarily due to Nexium 24HR in the U.S., driven by strong demand following increased promotion and lower revenues in fourth-quarter 2014 as retailers reduced initial stocking levels following the May 2014 launch.
Established Products Business Highlights

GEP(4) revenues increased 5% operationally due to the inclusion of legacy Hospira operations, which contributed $1.2 billion, partially offset by the loss of exclusivity and associated generic competition for Celebrex in the U.S. and certain other developed markets, Lyrica in certain developed Europe markets and Zyvox in the U.S. Emerging markets revenues were flat operationally, driven by the inclusion of legacy Hospira operations and continued strong growth in China offset by declines in certain Middle East markets.
Income Statement Highlights

Adjusted cost of sales(2), adjusted SI&A expenses(2) and adjusted R&D expenses(2) in the aggregate increased $1.8 billion operationally, or 21%, reflecting the inclusion of legacy Hospira operations in fourth-quarter 2015 and the following Pfizer-standalone operational factors:
slightly lower adjusted cost of sales(2);
higher adjusted SI&A expense(2), primarily reflecting increased investments to support recently launched products, other in-line biopharmaceutical products and certain Consumer Healthcare brands; and
higher adjusted R&D expense(2), primarily due to incremental investments in certain late-stage pipeline programs.
The effective tax rate on adjusted income(2) declined 6.6 percentage points to 19.6% from 26.2%. This decline was primarily due to a favorable change in the jurisdictional mix of earnings as well as an increase in tax benefits associated with the resolution of certain tax positions pertaining to prior years primarily with various foreign tax authorities.
The diluted weighted-average shares outstanding declined by 125 million shares compared to the prior-year quarter due to Pfizer’s share repurchase program, including the impact of the $5 billion accelerated share repurchase agreement executed in February 2015 and completed in July 2015.
In addition to the aforementioned factors, fourth-quarter 2015 reported earnings were primarily impacted by the following:

Unfavorable impacts:
foreign currency losses related to Venezuela;
higher purchase accounting adjustments, acquisition-related costs, restructuring charges and asset impairment charges in fourth-quarter 2015 compared with the prior year quarter; and
non-recurring charges related to pension settlements.
Favorable impacts:

the non-recurrence of a charge associated with a collaborative arrangement with Merck KGaA, Darmstadt, Germany (Merck KGaA), announced in November 2014, to jointly develop and commercialize avelumab(7);
lower charges for certain legal matters, primarily the non-recurrence of a charge to resolve a securities class action in New York federal court that was incurred in the prior year quarter; and
a lower effective tax rate, primarily due to the aforementioned factors impacting the fourth-quarter 2015 effective tax rate on adjusted income(2) as well as benefits associated with certain tax initiatives, partially offset by the non-tax deductible charge for the aforementioned foreign currency losses related to Venezuela.
FULL-YEAR FINANCIAL HIGHLIGHTS (Full-Year 2015 vs. Full-Year 2014)

Reported revenues(1) decreased $754 million, or 2%, which reflects operational growth of $3.0 billion, or 6%, more than offset by the unfavorable impact of foreign exchange of $3.8 billion, or 8%. Excluding the impact of legacy Hospira operations of $1.5 billion, foreign exchange and, to a lesser extent, the vaccines acquired from Baxter of $178 million, Pfizer-standalone revenues increased by $1.3 billion operationally, or 3%, which reflects operational revenue growth from certain key products partially offset by product losses of exclusivity and co-promotion expirations that negatively impacted 2015 reported revenues(1) by $3.2 billion operationally.

Income Statement Highlights

Adjusted cost of sales(2), adjusted SI&A expenses(2) and adjusted R&D expenses(2) in the aggregate increased $3.0 billion operationally, or 10%, reflecting the inclusion of legacy Hospira operations from September 2015 and the following Pfizer-standalone operational factors:
higher adjusted cost of sales(2), primarily reflecting an increase in sales volume, partially offset by manufacturing efficiencies and a decrease in royalty expense associated with products that recently lost marketing exclusivity;
higher adjusted SI&A expense(2), primarily reflecting increased investments to support recently launched products, other in-line biopharmaceutical products and certain Consumer Healthcare brands, partially offset by lower expenses associated with certain products that have recently lost marketing exclusivity, continued benefits from cost-reduction and productivity initiatives as well as a lower cost for the Branded Prescription Drug Fee compared to the prior year; and
higher adjusted R&D expense(2), primarily due to higher clinical trial spend for certain oncology and GIP(4) pipeline programs, an upfront payment to OPKO Health, Inc. in first-quarter 2015 associated with a worldwide development and commercialization agreement and increased investment in biosimilar and sterile injectable development programs, partially offset by the non-recurrence of upfront payments associated with certain agreements entered into during third-quarter 2014.
The full-year 2015 effective tax rate on adjusted income(2) declined 2.5 percentage points to 24.0% from 26.5% in 2014. This decline was primarily due to a favorable change in the jurisdictional mix of earnings.
The diluted weighted-average shares outstanding declined by 167 million shares compared to the prior-year, primarily due to Pfizer’s share repurchase program, including the impact of the $5 billion accelerated share repurchase agreement executed in February 2015 and completed in July 2015.
In addition to the aforementioned full-year 2015 factors and the factors impacting fourth-quarter 2015 reported earnings, full-year 2015 reported earnings were primarily impacted by the following:

Unfavorable impacts:
higher acquisition-related costs, purchase accounting adjustments and restructuring charges, all primarily associated with the acquisition of Hospira in third-quarter 2015;
higher asset impairment charges, including an impairment loss related to Pfizer’s 49%-owned equity-method investment with Zhejiang Hisun Pharmaceuticals Co., Ltd. (Hisun) in China recorded in third-quarter 2015; and
higher charges incurred during 2015 for business and legal entity alignment activities.
Favorable impacts:

lower legal charges, primarily as a result of the non-recurrence of the aforementioned charge to resolve a securities class action recorded in fourth-quarter 2014 and the non-recurrence of a charge to resolve Neurontin-related matters recorded in first-quarter 2014;
lower implementation costs associated with restructuring activities and amortization expense related to intangible assets;
the non-recurrence of a charge incurred in third-quarter 2014 for an additional year of the Branded Prescription Drug Fee in accordance with final regulations issued in third-quarter 2014 by the U.S. Internal Revenue Service; and
a lower effective tax rate, primarily due to the aforementioned factors impacting the fourth-quarter and full-year 2015 effective tax rate as well as the non-recurrence in 2015 of the non-tax deductible charge for the aforementioned additional year of the Branded Prescription Drug Fee incurred in third-quarter 2014.
RECENT NOTABLE DEVELOPMENTS

Product Developments

Eliquis (apixaban)
Bristol-Myers Squibb Company (BMS) and Pfizer announced in December 2015 results from a post-hoc early time course subanalysis of the Phase 3 AMPLIFY (Apixaban for the Initial Management of Pulmonary Embolism and Deep Vein Thrombosis as First-Line Therapy) trial. The subanalysis demonstrated Eliquis was comparable to conventional therapy (subcutaneous enoxaparin overlapped and followed by oral warfarin dose-adjusted to an international normalized ratio of 2.0 to 3.0) in recurrent venous thromboembolism (VTE) and VTE-related death with significantly less major bleeding during the first 7, 21 and 90 days after starting treatment. The results of the subanalyses at each pre-specified time interval were consistent with the overall results of the AMPLIFY trial at six months.
In November 2015, BMS and Pfizer presented 22 abstracts at the American Heart Association (AHA) Scientific Sessions 2015. The new data, including four oral presentations, contribute to the BMS and Pfizer Alliance’s research in nonvalvular atrial fibrillation and VTE in patients treated with Eliquis. Abstracts included new data analyses from the pivotal Phase 3 study, ARISTOTLE, as well as a number of real-world data analyses.
Ibrance (palbociclib) — Pfizer announced in December 2015 that the U.S. Food and Drug Administration (FDA) has accepted for filing and granted Priority Review for a supplemental New Drug Application (sNDA) for Ibrance. If approved, the sNDA would expand the approved use of Ibrance to reflect findings from the Phase 3 PALOMA-3 trial, which evaluated Ibrance in combination with fulvestrant versus fulvestrant plus placebo in women with hormone receptor-positive, human epidermal growth factor receptor 2-negative metastatic breast cancer, regardless of menopausal status, whose disease progressed after endocrine therapy, including those with and without prior treatment for their metastatic disease. The Prescription Drug User Fee Act (PDUFA) goal date for a decision by the FDA is April 2016.
Lyrica (pregabalin) — Pfizer announced in November 2015 top-line results of a Phase 3 study evaluating the efficacy and safety of Lyrica Capsules CV in adults with chronic post-traumatic peripheral neuropathic pain. The study did not meet its primary efficacy endpoint. The study was conducted as a 15-week, double-blind, placebo-controlled, parallel group study with a primary objective to evaluate the efficacy of pregabalin in the treatment of chronic post-traumatic peripheral neuropathic pain. The primary efficacy endpoint was mean pain reduction from baseline compared with placebo based on pain scores from patients’ daily pain diaries. The safety profile observed in this study was consistent with that known for pregabalin. The most common adverse events with pregabalin in this study were dizziness, somnolence, nausea and fatigue. There is currently no treatment approved by the FDA for post-traumatic neuropathic pain.
Xalkori (crizotinib)
In December 2015, the FDA accepted and granted Priority Review for a sNDA for Xalkori for the treatment of patients with metastatic non-small cell lung cancer (NSCLC) whose tumors are ROS1-positive. In April 2015, Xalkori received Breakthrough Therapy designation by the FDA for this potential indication. If approved, Xalkori would be the first FDA-approved biomarker-driven therapy for the treatment of ROS1-positive metastatic NSCLC. Xalkori is currently indicated in the U.S. for patients with metastatic NSCLC whose tumors are anaplastic lymphoma kinase (ALK)-positive as detected by an FDA-approved test. The PDUFA goal date for a decision by the FDA is April 2016.
Pfizer announced in November 2015 that the European Commission (EC) approved a label update to expand use of Xalkori to first-line treatment of adults with ALK-positive advanced NSCLC. The Summary of Product Characteristics also has been updated to include efficacy data from PROFILE 1014, which demonstrated that Xalkori significantly prolonged progression-free survival (PFS) in previously untreated patients with ALK-positive advanced nonsquamous NSCLC when compared to standard platinum-based chemotherapy regimens.
In November 2015, Pfizer announced that PROFILE 1029, a Phase 3 study of Xalkori met its primary objective of significantly prolonging PFS in previously untreated East Asian patients with ALK-positive advanced NSCLC when compared to a standard chemotherapy doublet. In this study, Xalkori was used as the first systemic therapy for patients with advanced ALK-positive NSCLC, and patients could have received therapy and/or surgery for early stage disease before they were diagnosed with metastatic disease. The adverse events observed with Xalkori in the study were generally consistent with findings from previous trials. No unexpected adverse events were observed. Efficacy and safety data from PROFILE 1029 will be submitted for presentation at a future medical meeting.
Xeljanz (tofacitinib citrate) — Pfizer presented in November 2015 26 new scientific abstracts, including 20 presentations for Xeljanz in rheumatoid arthritis (RA) at the American College of Rheumatology/Association of Rheumatology Health Professionals Annual Meeting. The new data continue to characterize the safety and efficacy of Xeljanz in the treatment of RA.
Pipeline Developments

A comprehensive update of Pfizer’s development pipeline was published today and is now available at www.pfizer.com/pipeline. It includes an overview of Pfizer’s research and a list of compounds in development with targeted indication and phase of development, as well as mechanism of action for candidates from Phase 2 through registration.

ALO-02 (oxycodone hydrochloride and naltrexone hydrochloride) — The FDA has not taken action on Pfizer’s New Drug Application (NDA) for ALO-02, which had a PDUFA date in January 2016. The delay is not related to anything specific in the ALO-02 NDA, and no additional data analyses or data requests have been identified by the FDA. Pfizer is continuing discussions with the FDA to finalize the label. Pfizer cannot speculate on timing for the FDA decision.
Avelumab(7) (MSB0010718C)
Merck KGaA and Pfizer announced during fourth-quarter 2015 the initiation of five Phase 3 trials of avelumab(7), an investigational fully human anti-PD-L1 IgG1 monoclonal antibody, in various cancers, including:
JAVELIN Lung 100 is designed to assess the safety and efficacy of avelumab(7), compared with platinum-based doublet chemotherapy, in patients with late-stage NSCLC who have not previously received any treatment for their systemic lung cancer.
JAVELIN Gastric 100 is designed to compare the switch from first-line chemotherapy to maintenance therapy with avelumab(7) versus continuation of chemotherapy in patients with unresectable, locally advanced or metastatic gastric/gastro-esophageal junction cancers whose disease has not progressed with first-line platinum-based chemotherapy.
JAVELIN Gastric 300 is designed to evaluate the superiority (based on overall survival) of avelumab(7) in patients with unresectable, recurrent or metastatic gastric/gastro-esophageal junction cancers, compared with investigator’s choice of chemotherapy from a pre-specified list of therapeutic options.
JAVELIN Ovarian 200 is designed to evaluate the superiority of avelumab(7) as a monotherapy or in combination with pegylated liposomal doxorubicin (PLD), compared with PLD alone, in treating patients with platinum-resistant/refractory ovarian cancer. The JAVELIN Ovarian 200 trial is the first Phase 3 study of a PD-L1 inhibitor investigated in this setting.
JAVELIN Bladder 100 is designed to evaluate the safety and efficacy of avelumab(7) plus best supportive care (BSC) as a maintenance treatment, compared with BSC alone, in patients with unresectable, locally advanced or metastatic urothelial cancer whose disease did not progress on (or following) completion of first-line treatment with a platinum-containing chemotherapy.
Merck KGaA and Pfizer announced in November 2015 that the European Medicines Agency’s Committee for Orphan Medicinal Products issued a positive opinion for Orphan Drug designation for avelumab(7) for the treatment of patients with Merkel cell carcinoma (MCC), a rare and aggressive type of skin cancer. An official decision by the EC was granted in December 2015.
Merck KGaA and Pfizer announced in November 2015 that the FDA granted Breakthrough Therapy designation for avelumab(7) for the treatment of patients with metastatic MCC who have progressed after at least one previous chemotherapy regimen.
Merck KGaA and Pfizer announced in October 2015 that the FDA granted avelumab(7) Fast Track designation for the treatment of metastatic MCC.
Bococizumab (PF-04950615, RN316) — In January 2016, Pfizer received positive top-line results from the first of six Phase 3 studies evaluating the low-density lipoprotein cholesterol (LDL-C) reduction activity of bococizumab. The SPIRE-SI study evaluated the efficacy, safety, and tolerability of bococizumab in adults with dyslipidemia who are intolerant to statins. A total of 184 patients were randomized to receive either 150 mg of bococizumab every two weeks by subcutaneous injection, atorvastatin 40 mg once-daily or placebo once-daily for 12 weeks. The trial met its primary endpoint, as measured by the percent change in baseline LDL-C level at 12 weeks. No new or unexpected safety findings for bococizumab were observed in the study. Complete study results of the SPIRE-SI trial will be presented at an upcoming scientific congress. Results from other Phase 3 studies evaluating LDL-C reduction are expected throughout 2016.
Corporate Developments

BMS and Pfizer announced in February 2016 that the companies have entered into a collaboration agreement with Portola Pharmaceuticals Inc. (Portola) to develop and commercialize the investigational agent andexanet alfa in Japan. Andexanet alfa, which is in Phase 3 clinical development in the U.S. and Europe, is designed to reverse the anticoagulant activity of Factor Xa inhibitors, including Eliquis.
Pfizer announced in January 2016 an expansion of its R&D investment strategy to include early-stage companies on the leading edge of scientific innovation, providing them with both equity and access to resources for research in promising areas aligned with Pfizer’s core interests. The first four investments of the newly focused initiative include $46 million in financing to companies at early stages of the discovery process that are actively exploring Conditionally Active Biologics, immuno-oncology, neurodegenerative technologies and gene therapy. Additional opportunities will continue to be identified by Pfizer’s scientific leadership through their active involvement, and Pfizer will help recipient companies fully explore their platforms in the hopes of advancing new therapeutic pathways.
Pfizer and Adaptive Biotechnologies Corporation (Adaptive) announced in January 2016 that they have entered into a translational research collaboration to leverage next generation sequencing of the adaptive immune system to advance Pfizer’s growing immuno-oncology franchise. Under the terms of the agreement, Pfizer and Adaptive will seek to combine drug development and platform technology biomarker expertise to identify patients who may preferentially benefit from immunotherapy.
Merck KGaA, Pfizer and Syndax Pharmaceuticals, Inc. (Syndax) announced in January 2016 that they have entered into a collaboration agreement to evaluate avelumab(7) in combination with Syndax’s entinostat, an investigational oral small molecule that targets immune regulatory cells (myeloid-derived suppressor cells and regulatory T-cells), in patients with heavily pre-treated, recurrent ovarian cancer. This is an exclusive agreement between the Merck KGaA-Pfizer alliance and Syndax to study the combination of these two investigational agents in ovarian cancer. Syndax will be responsible for conducting the Phase 1b/2 clinical trial.
In December 2015, Pfizer announced that its Board of Directors declared a 30-cent first-quarter 2016 dividend on the Company’s common stock, payable March 2, 2016, to shareholders of record at the close of business on February 5, 2016. This represents an increase of 7% in the quarterly dividend per share, compared to 28 cents per share in first-quarter 2015.
In December 2015, the Board of Directors authorized a new $11 billion share repurchase program to be utilized over time. In November 2015, Pfizer announced that, consistent with 2015, it expects to execute an approximately $5 billion accelerated share repurchase program in the first half of 2016. As of December 31, 2015, Pfizer had $16.4 billion in aggregate remaining under its share repurchase authorizations.
In November 2015, Pfizer announced that it entered into a definitive merger agreement with Allergan, a global pharmaceutical company incorporated in Ireland, under which Pfizer agreed to combine with Allergan in a stock transaction valued at $363.63 per Allergan share, for a total enterprise value of approximately $160 billion, based on the closing price of Pfizer common stock of $32.18 on November 20, 2015 (the last trading day prior to the announcement). Allergan shareholders will receive 11.3 shares of the combined company for each of their Allergan shares by virtue of a share split, and Pfizer stockholders will have the option of receiving one share of the combined company for some or all of their Pfizer shares or to receive cash instead of shares of the combined company for some or all of their Pfizer shares, provided that the aggregate amount of cash to be paid in the merger will not be less than $6 billion or greater than $12 billion. In the event that elections to receive cash and shares in the merger would otherwise result in an aggregate of less than $6 billion or greater than $12 billion of cash being paid out in the merger, then the share elections and cash elections will be subject to proration. The completion of the transaction, which is expected in the second half of 2016, is subject to certain conditions, including receipt of regulatory approval in certain jurisdictions, including the U.S. and EU, the receipt of necessary approvals from both Pfizer and Allergan shareholders, and the completion of Allergan’s pending divestiture of its generics business to Teva Pharmaceuticals Industries Ltd. The merger agreement also provides that the businesses of Pfizer and Allergan will be combined under the existing Allergan entity, which, subject to approval by Allergan shareholders, will be renamed "Pfizer plc."
In response to the ongoing challenges patients face in paying their out-of-pocket costs for their prescription medicines, Pfizer announced in November 2015 that it has doubled the allowable income level for its patient assistance program, so that even more patients in need could be eligible to receive their Pfizer medicines for free. With this change, more than 40 medicines offered for free through the program are now available to eligible patients earning up to four times the Federal Poverty Level adjusted for family size ($47,080 for a single person; $97,000 for a family of four). Through the Pfizer RxPathways program, Pfizer offers patients, including those with health insurance and those without, a range of individual services to help them gain access to Pfizer medicines. From 2010 to 2014, Pfizer has helped nearly 2.5 million uninsured and underinsured patients get access to more than 30 million Pfizer prescriptions, making it the most comprehensive program of its kind.
Please find Pfizer’s press release and associated financial tables, including reconciliations of certain GAAP reported to non-GAAP adjusted information, at the following hyperlink:

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AstraZeneca completes transaction for majority equity stake investment in Acerta Pharma

On February 2, 2016 AstraZeneca reported that it has completed the transaction to acquire a majority equity stake in Acerta Pharma, a privately-owned biopharmaceutical company based in the Netherlands and US (Press release, AstraZeneca, FEB 2, 2016, View Source [SID:1234508938]). The transaction, announced in December 2015, provides AstraZeneca with a potential best-in-class irreversible oral Bruton’s tyrosine kinase (BTK) inhibitor, acalabrutinib (ACP-196), currently in Phase II/III development for B-cell blood cancers and in Phase I/II clinical trials in multiple solid tumours.

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Upon completion of the agreement, AstraZeneca acquired 55% of the entire issued share capital of Acerta for an upfront payment of $2.5 billion and a further unconditional payment of $1.5 billion, to be paid either on receipt of the first regulatory approval for acalabrutinib for any indication in the US, or the end of 2018, depending on which is first.

An extensive development programme is underway for acalabrutinib with the opportunity for initial regulatory submissions in the second half of 2016 for the treatment of patients with specific types of haematological malignancies. Expanding further into B-cell cancers, acalabrutinib is estimated to reach potential peak-year sales in excess of $5 billion globally.

The investment also establishes in-house expertise for AstraZeneca in blood cancers, through the substantial expertise offered by Acerta’s approximately 150 employees.

Eagle Pharmaceuticals Announces Commercial Availability of Docetaxel Injection, Non-Alcohol Formula

On February 2, 2016 Eagle Pharmaceuticals ("Eagle" or the "Company") (NASDAQ:EGRX) reported the shipment and commercial availability of Alcohol-Free Docetaxel Injection ("Docetaxel Injection") (Press release, Eagle Pharmaceuticals, FEB 2, 2016, View Source [SID:1234508934]). Docetaxel Injection is approved for the treatment of breast cancer, non-small cell lung cancer, prostate cancer, gastric adenocarcinoma, and head and neck cancer.

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"We are excited to announce the shipment and commercial availability of Docetaxel Injection, which, as the first alcohol-free formulation approved in the U.S., addresses a compelling need in the docetaxel market. Eagle believes that this novel formulation has the potential to improve the lives of patients, resolve concerns among health care professionals at hospitals and infusion centers, and ultimately drive value for our stakeholders," said Scott Tarriff, President and Chief Executive Officer of Eagle Pharmaceuticals.

Docetaxel Injection is the first alcohol-free formulation approved in the U.S. Additional features of this product are:

presents as one, pre-filled vial that does not require mixing;
is available in three different dosages: 20mg/1ml, 80mg/4mL, and 160mg/8mL; and
24 hours of stability at final dilution strength.1
The need for an alcohol-free docetaxel gained visibility in June 2014 when the FDA issued a Drug Safety Communication warning patients that docetaxel may cause symptoms of alcohol intoxication after treatment. Manufacturers of docetaxel formulations for domestic use were subsequently required to revise their product labels to reflect alcohol content and include a drug safety warning. Some U.S. hospitals and clinics require patients to wait two or more hours after treatment with docetaxel before they can be released. Eagle’s formulation of docetaxel was specifically developed to address these concerns.

Eagle estimates that annual sales of generic docetaxel are approximately $75 million.

About Docetaxel

Docetaxel is a taxane product indicated for the treatment of breast cancer, non-small cell lung cancer, prostate cancer, gastric adenocarcinoma, and head and neck cancer.

Docetaxel was originally developed by Sanofi and marketed under the Taxotere brand. Since its patent expiration in 2011, several generics have entered the market. The alcohol content of these docetaxel formulations, including Taxotere, ranges from 2.0 to 6.4 grams in a 200 mg dose.2

8-K – Current report

On February 2, 2016 Array BioPharma Inc. (NASDAQ: ARRY) reported results for the second quarter ending December 31, 2015 of its fiscal year and provided an update on the progress of its key clinical development programs (Filing, 8-K, Array BioPharma, FEB 2, 2016, View Source [SID:1234508933]).

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Ron Squarer, Chief Executive Officer of Array, noted, "We were excited this quarter to share positive results from the first global Phase 3 trial of binimetinib in patients in NRAS-mutant melanoma. We plan to submit these results to regulators during 2016. In addition, we continue to make important progress with binimetinib and encorafenib in several other clinical trials, and expect to announce top-line results from COLUMBUS in BRAF-mutant melanoma in 2016."

KEY PIPELINE UPDATES
Binimetinib (MEK162) and encorafenib (LGX818)

NEMO meets primary endpoint; regulatory filing expected in 1H 2016
COLUMBUS top-line results expected in 1H 2016; regulatory filing expected in 2H 2016
New Phase 3 global registration trial in BRAF-mutant colorectal cancer expected to start in 2016

Update on Phase 3 trials
In December 2015, Array reported top-line results from the ongoing Phase 3 NEMO clinical trial of binimetinib in patients with advanced NRAS-mutant melanoma. The study met its primary endpoint of improving progression-free survival (PFS) compared with dacarbazine treatment, with a hazard ratio of 0.62, [95% CI 0.47-0.80] and a p-value of less than 0.001. The median PFS on the binimetinib arm was 2.8 months versus 1.5 months on the dacarbazine arm. In the trial, binimetinib was generally well-tolerated and the adverse events reported were consistent with previous results in NRAS melanoma patients.

Array plans to submit binimetinib to regulatory authorities for marketing approval in NRAS-mutant melanoma during the first half of 2016. Results from the NEMO trial including progression free survival, overall survival, objective response rate, safety and prespecified subgroup analyses including outcomes in patients who received prior treatment with immunotherapy will be presented at a medical conference in 2016.

In addition, Array expects top-line results from Part 1 of the COLUMBUS trial in the first half of 2016 and projects a regulatory filing of binimetinib and encorafenib in 2016. In October 2015, Part 2 of COLUMBUS achieved its target patient enrollment. The MILO Phase 3 study in patients with low-grade serous ovarian cancer continues to enroll patients, and Array estimates enrollment to be complete in 2016 with the availability of top-line data, along with a projected regulatory filing, in 2017.

Based on the strength of the Phase 2 combination data with encorafenib in patients with BRAF-mutant colorectal cancer shared at the 2015 European Society of Medical Oncology (ESMO) (Free ESMO Whitepaper)’s (ESMO) (Free ESMO Whitepaper) World Congress of Gastrointestinal Cancer, Array plans to initiate a Phase 3 global registration trial in that patient population in 2016.

Collaboration with Pierre Fabre
In November 2015, Array and Pierre Fabre announced a collaboration agreement for binimetinib and encorafenib. Under the terms of the agreement, Array received an upfront payment of $30 million in January 2016 and retains exclusive commercialization rights for binimetinib and encorafenib in key territories, including the United States and Japan. Pierre Fabre will have exclusive rights to commercialize both products in other territories, including Europe, Asia and Latin America. Array is entitled to receive up to $425 million if certain development and commercialization milestones are achieved, and is eligible for robust, tiered double-digit royalties. Array and Pierre Fabre have agreed to split future development costs on a 60:40 basis (Array:Pierre Fabre) with initial funding committed for new clinical trials in colorectal cancer and melanoma. The agreement was reviewed and approved by the European Commission on Competition in December 2015. All currently active binimetinib and encorafenib clinical trials remain substantially funded through completion by Novartis.

Pierre Fabre Oncology, a business unit of the global 10,000-employee Pierre Fabre company, is supported by over 1,000 employees with a strong focus on European markets. In 2014, worldwide annual sales of Pierre Fabre Oncology products surpassed $200 million on the strength of the Oral Navelbine, Javlor and Busilvex brands. In addition, Pierre Fabre has a significant commitment and track record in pharmaceutical R&D, developing products for patients afflicted with lung, breast and other solid tumors and hematological cancers.

ARRY-797 (ARRY-371797) – Phase 2 trial on-going in patients with LMNA A/C-related dilated cardiomyopathy (DCM)
Array is conducting a 12-patient Phase 2 study to evaluate the effectiveness and safety of ARRY-797 in patients with LMNA A/C-related DCM, a serious, genetic cardiovascular disease. By age 45, approximately 70% of patients with LMNA A/C-related DCM will have died, suffered a major cardiac event, or will have undergone a heart transplant. Data on the primary endpoint of mean change in 6-minute walk test (6MWT) at 12 weeks relative to baseline exceeds benchmarks set by a number of drugs for rare diseases recently approved on the basis of the 6MWT as a primary endpoint. Secondary endpoints, including changes in N-Terminal pro-Brain-derived Natriuretic Peptide (NT-proBNP, a serum biomarker of heart failure severity), and patient reported outcomes, are directionally consistent with the primary endpoint. Enrollment in this trial is complete. Data for patients followed through 48 weeks supports the durability of effect. Taken together, the data to date suggest a path forward for this program. Results with additional patient follow-up will be presented at an appropriate medical conference in 2016.

Selumetinib (partnered with AstraZeneca) – Three registration trials advancing in NSCLC (SELECT-1), thyroid cancer (ASTRA) and neurofibromatosis type 1
AstraZeneca continues to advance selumetinib in three registration trials: SELECT-1 in patients with KRAS-mutant non-small cell lung cancer, a registration trial in patients with neurofibromatosis type 1 and ASTRA in patients with differentiated thyroid cancer. AstraZeneca expects to share top-line results from SELECT-1 in mid-2016.

FINANCIAL HIGHLIGHTS
Cash, cash equivalents, marketable securities and accounts receivable totaled $185.4 million at the end of the quarter. Accounts receivable primarily consist of receivables expected to be paid by Novartis within three months and the $30.0 million license fee from Pierre Fabre, which was received in January 2016. In March 2015, binimetinib and encorafenib became wholly-owned assets, which prompted changes to the classification of revenue and expenses for the programs. The new expense classifications were included in the fourth quarter of fiscal 2015 financial results and, beginning in the first quarter of fiscal 2016, Array reports revenue from Novartis reimbursements under its agreements with Novartis for binimetinib and encorfenib as a separate line item called "reimbursement revenue."

Second Quarter of Fiscal 2016 Compared to First Quarter of Fiscal 2016 (Sequential Quarters Comparison)
Revenue for the second quarter of fiscal 2016 was $35.4 million, compared to $16.2 million for the prior sequential quarter. The $19.2 million increase in revenue was primarily due to higher reimbursement revenue from Novartis. Cost of partnered programs for the second quarter of fiscal 2016 was $5.7 million, compared to $6.2 million for the prior quarter. Research and development expense was $41.4 million, compared to $21.0 million in the prior quarter. The increase in research and development expense is primarily related to the ongoing transition of binimetinib and encorafenib trials from Novartis to Array. Net loss for the second quarter was $24.2 million, or ($0.17) per share, and was $21.0 million, or ($0.15) per share in the prior quarter.

Second Quarter of Fiscal 2016 Compared to Second Quarter of Fiscal 2015 (Prior Year Comparison)
Compared to the same quarter of fiscal 2015, revenue for the second quarter of fiscal 2016 increased $8.5 million primarily due to $27.3 million in reimbursement revenue from Novartis. Cost of partnered programs decreased $7.4 million compared to the second quarter of fiscal 2015 primarily due to binimetinib development costs being presented as research and development expense instead of cost of partnered programs upon becoming wholly-owned programs. Research and development expense increased $29.5 million compared to the second quarter of fiscal 2015 due to the categorization of binimetinib costs, as well as new spending on encorafenib. Net loss for the second quarter of fiscal 2016 was $24.2 million, or ($0.17) per share, and was $8.6 million, or ($0.06) per share, for the same quarter in fiscal 2015.

Six Months of Fiscal 2016 Compared to Six Months of Fiscal 2015 (Prior Year Comparison)
For the six months ended December 31, 2015, revenue was $51.6 million, compared to $33.0 million for the same period in fiscal 2015. Net loss for the six months ended December 31, 2015, was $45.2 million, or ($0.32) per share, compared to a net loss of $36.2 million, or ($0.27) per share, in the comparable prior year period.