On March 1, 2017 PDL BioPharma, Inc. (PDL or the Company) (NASDAQ: PDLI) reported financial results for the fourth quarter and year ended December 31, 2016 including(Press release, PDL BioPharma, MAR 1, 2017, View Source [SID1234517953]) . Schedule your 30 min Free 1stOncology Demo! Total revenues of $66.5 million and $244.3 million for the three and twelve months ended December 31, 2016, respectively.
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GAAP diluted EPS of ($0.06) and $0.39 for the three and twelve months ended December 31, 2016, respectively.
GAAP net loss attributable to PDL’s shareholders of $10.3 million and net income of $63.6 million for the three and twelve months ended December 31, 2016, respectively.
Non-GAAP net loss attributable to PDL’s shareholders of $8.6 million and net income of $108.1 million for the three and twelve months ended December 31, 2016, respectively. A full reconciliation of all components of the GAAP to non-GAAP financial results can be found in Table 4 at the end of the release.
The loss attributable to the three months ended December 31, 2016 was a result of a $51.1 million impairment charge relating to our Direct Flow Medical note receivable investment.
"2016 was a transformational year for PDL; one in which we took advantage of opportunities in the specialty pharma space as another tool to increase shareholder value," said John P. McLaughlin, president and chief executive officer of PDL. "As we look to 2017, we will focus our efforts on Noden product commercialization, along with acquiring additional specialty pharma assets, to drive value creation for PDL and our shareholders."
Recent Developments
PDL announced today that the company’s board of directors has authorized the repurchase of up to $30 million of the company’s common stock through March 2018.
As a result of ARIAD Pharmaceuticals, Inc. being acquired by Takeda Pharmaceuticals Company Limited on February 16, 2017, PDL exercised its put option with ARIAD and will be repaid an estimated $110 million, which is 1.2 times the original investment less any sums paid to date. We received $9.3 million of royalty payments through December 31, 2016. The cash repayment is expected in late March or early April of 2017.
PDL received a royalty payment for the first quarter of 2017 in the amount of $14.2 million for royalties earned on sales of Tysabri. The duration of this royalty payment is based on the sales of product manufactured prior to patent expiry, the amount of which is uncertain.
In January 2017 PDL monetized $7.0 million of certain assets of Direct Flow Medical acquired through its foreclosure.
Revenue Highlights
Total revenues of $66.5 million for the three months ended December 31, 2016 included:
Royalties from PDL’s licensees to the Queen et al. patents of $15.5 million, which consisted of royalties earned on sales of Tysabri under a license agreement;
Net royalty payments from acquired royalty rights and a change in fair value of the royalty rights assets of $28.1 million, which consisted of the change in estimated fair value of our royalty right assets, primarily related to the Depomed, Inc., University of Michigan, ARIAD and AcelRx Pharmaceuticals, Inc.;
Interest revenue from notes receivable financings to kaléo and CareView Communications of $5.5 million; and
Product revenues of $17.5 million from sales of Tekturna and Tekturna HCT in the United States and Rasilez and Rasilez HCT in the rest of the world (collectively, the Noden Products).
Total revenues decreased by 63 percent for the three months ended December 31, 2016, when compared to the same period in 2015.
The decrease in royalties from PDL’s licensees to the Queen et al. patents is due to the expiration of the patent license agreement with Genentech, Inc.
The decrease in royalty rights – change in fair value was primarily due to the $27.8 million decrease in fair value of the University of Michigan Cerdelga royalty right asset and the decrease in fair value of the AcelRx Zalviso royalty rights asset, partially offset by an increase in the fair value of the ARIAD Pharmaceuticals, Inc. royalty right asset.
PDL received $25.3 million in net cash royalty and milestone payments from its royalty rights in the fourth quarter of 2016, compared to $34.4 million for the same period of 2015.
The decrease in interest revenues was primarily due to the early repayment of the Paradigm Spine, LLC notes receivable investment.
Product revenues were derived from sales of the Noden Products.
Total revenues decreased by 59 percent for the twelve months ended December 31, 2016, when compared to the same period in 2015.
The decrease in royalties from PDL’s licensees to the Queen et al. patents is due to the expiration of the patent license agreement with Genentech, Inc.
The decrease in royalty rights – change in fair value was primarily driven by a $36.6 million decrease in the fair value of the University of Michigan royalty rights Cerdelga asset, a $23.1 million decrease in the fair value of the Depomed royalty rights asset and a $3.0 million decrease in the fair value of the Viscogliosi Brothers, LLC royalty right asset, partially offset by a $14.8 million increase in the fair value of the ARIAD Pharmaceuticals, Inc. royalty right asset.
PDL received $72.6 million in net cash royalty payments and milestone payments from its acquired royalty rights in the twelve months ended December 31, 2016, compared to $43.4 million for the same period of 2015.
Product revenues and interest revenue variances were the same as the three months ended December 31, 2016.
Operating Expense Highlights
Operating expenses were $74.2 million for the three months ended December 31, 2016, compared to $16.5 million for the same period of 2015. The increase in operating expenses for the three months ended December 31, 2016, as compared to the same period in 2015, was primarily a result of a $51.1 million impairment charge relating to our Direct Flow Medical note receivable investment and $11.4 million in expenses related to the Noden operations.
Operating expenses were $114.9 million for the twelve months ended December 31, 2016, compared to $40.1 million for the same period of 2015. The increase in operating expenses for the twelve months ended December 31, 2016, as compared to the same period in 2015, was the result of the Direct Flow Medical impairment and $25.6 million in expenses related to the acquisition of the Noden Products and its operations.
Other Financial Highlights
PDL had cash, cash equivalents, and investments of $242.1 million at December 31, 2016, compared to $220.4 million at December 31, 2015.
Net cash provided by operating activities in the twelve months ended December 31, 2016 was $101.7 million, compared with $301.5 million in the same period in 2015.
Month: March 2017
Nektar Therapeutics Reports Fourth Quarter and Year-End 2016 Financial Results
March 1, 2017 Nektar Therapeutics (Nasdaq: NKTR) reported its financial results for the fourth quarter and year ended December 31, 2016 (Press release, Nektar Therapeutics, MAR 1, 2017, View Source [SID1234517942]). Schedule your 30 min Free 1stOncology Demo! Cash and investments in marketable securities at December 31, 2016 were $389.1 million as compared to $308.9 million at December 31, 2015.
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"Nektar begins 2017 in a strong position with highly promising wholly-owned immuno-oncology and immunology clinical programs and several important data readouts expected throughout this year," said Howard W. Robin, President and Chief Executive Officer of Nektar. "Our Phase 1/2 study evaluating NKTR-214 as a potential combination treatment regimen with Opdivo in collaboration with Bristol-Myers Squibb is proceeding nicely. We plan to report initial data from the dose-escalation part of the study in the middle of this year. Later this month, we will have data from our Phase 3 efficacy study of NKTR-181 in patients with chronic low back pain. Finally, we are pleased that we will initiate a first-in-human trial shortly for NKTR-358, our proprietary T regulatory cell stimulator, which has the potential to become a first-in-class resolution therapeutic for a wide range of immune disorders."
Summary of Financial Results
Revenue for the fourth quarter of 2016 was $37.5 million as compared to $39.4 million in the fourth quarter of 2015.
Revenue for the year ended December 31, 2016 was $165.4 million as compared to $230.8 million in 2015. Revenue in 2016 included recognition of $31.0 million from AstraZeneca as a result of its sublicense of MOVENTIG (naloxegol) to Kyowa Kirin in Europe. In addition, product sales, royalty revenue, and non-cash royalty revenue increased in 2016 compared to 2015. Revenue in 2015 included recognition of a total of $130.0 million of milestone payments from AstraZeneca following the first commercial sale of MOVANTIK in the U.S. in Q1 2015 and the first commercial sale of MOVENTIG in the EU in Q3 2015.
Total operating costs and expenses in the fourth quarter of 2016 were $69.6 million as compared to $68.7 million in the fourth quarter of 2015. Total operating costs and expenses increased primarily as a result of higher research and development (R&D) expense. Total operating costs and expenses for the year ended December 31, 2016 were $278.3 million as compared to $260.2 million in 2015.
R&D expense in the fourth quarter of 2016 was $50.2 million as compared to $47.1 million for the fourth quarter of 2015. R&D expense for the year ended December 31, 2016 was $203.8 million as compared to $182.8 million in 2015. R&D expense increased primarily due to expenses for our NKTR-214 and NKTR-358 programs.
General and administrative (G&A) expense was $12.8 million in the fourth quarter of 2016 as compared to $13.2 million in the fourth quarter of 2015. G&A expense for the year ended December 31, 2016 was $44.3 million as compared to $43.3 million in 2015.
Net loss for the fourth quarter of 2016 was $42.2 million or $0.28 loss per share as compared to a net loss of $54.1 million or $0.40 loss per share in the fourth quarter of 2015. Net loss for the year ended December 31, 2016 was $153.5 million or $1.10 loss per share as compared to a net loss of $81.2 million or $0.61 loss per share in 2015.
2016 and Year-to-Date Business Highlights
Nektar Wholly-Owned Programs
In February 2017, Nektar submitted an Investigational New Drug (IND) application to the U.S. Food and Drug Administration (FDA) for NKTR-358, a new biologic designed to treat autoimmune disease. Clinical trials are planned for NKTR-358 in patients with systemic lupus erythematous (SLE) and other indications.
In February 2017, Nektar announced positive data from the Phase 1 dose-escalation study of single-agent NKTR-214 in patients with renal cell carcinoma at the ASCO (Free ASCO Whitepaper) 2017 Genitourinary Cancers Symposium. Clinical benefit and safety data presented included 40% of RCC patients experiencing tumor reductions including one patient with a partial response and a favorable safety and tolerability profile.
In January 2017, Nektar announced a new immuno-oncology candidate, NKTR-262, a small molecule agonist that targets toll-like receptors (TLRs) found on innate immune cells in the body. NKTR-262 is being developed as a single intra-tumoral injection to be administered at the start of therapy with NKTR-214. The company plans to file an IND for NKTR-262 by the end of 2017.
In December 2016, Nektar initiated a pivotal human abuse liability (HAL) trial for its novel opioid molecule NKTR-181, which is expected to complete in the middle of 2017.
In November 2016, Nektar announced positive data from the Phase 1 dose-escalation study of single-agent NKTR-214 at the Society of Immunotherapy of Cancer (SITC) (Free SITC Whitepaper) Annual Meeting. Results showed encouraging anti-tumor activity including one patient with a partial response and a favorable safety and tolerability profile.
In September 2016, Nektar and Bristol-Myers Squibb entered into a clinical collaboration to develop NKTR-214 as a potential combination treatment regimen with Bristol-Myers Squibb’s Opdivo (nivolumab) in five tumor types and eight potential indications. The dose-escalation part of the trial is underway with initial data expected in the middle of 2017.
Additional Pipeline and Partner Developments
In December 2016, Shire announced that the U.S. Food and Drug Administration (FDA) approved ADYNOVATE ([Antihemophilic Factor (Recombinant), PEGylated], an extended circulating half-life recombinant Factor VIII (rFVIII) treatment for hemophilia A, in pediatric patients under 12 years of age. The FDA also approved ADYNOVATE for use in surgical settings for both adult and pediatric patients. ADYNOVATE is under regulatory review in Europe, Switzerland and Canada.
In September 2016, Bayer presented positive Phase 3 data for Ciprofloxacin DPI at the 26th International Congress of European Respiratory Society. The RESPIRE 1 study assessed the safety and efficacy of Cipro DPI in NCFB patients and met both primary endpoints for the every 14-day dosing arm. The second Phase 3 trial (RESPIRE 2) completed recruitment in September 2016 and data are expected to be released by our partner Bayer in 2017.
In June 2016, Nektar entered into a partnership with Daiichi Sankyo Europe for Nektar’s investigational drug therapy, ONZEALD (etirinotecan pegol, NKTR-102), which has completed a Phase 3 clinical trial (the BEACON study) in patients with advanced breast cancer. The agreement grants Daiichi Sankyo Europe exclusive rights to market ONZEALD in Europe (EEA), Switzerland and Turkey. Nektar Therapeutics retained rights to ONZEALD in the United States and the rest of the world. Under the terms of the agreement, Nektar is entitled to milestones and significant double-digit royalties on net sales in Europe.
In June 2016, Nektar submitted a filing for a Marketing Authorization Agreement (MAA) with the European Medicines Agency for conditional approval for ONZEALD in patients with advanced breast cancer and brain metastases. An opinion from the European CHMP on conditional approval of ONZEALD is expected in the first half of 2017.
Amikacin Inhale, our second anti-infective Phase 3 program partnered with Bayer, which is being developed for gram-negative pneumonia, is expected to complete in Q2 of 2017. Nektar and Bayer expect to report topline results from this program in the middle of 2017.
NanoString Technologies Releases Fourth Quarter and Full Year 2016 Operating Results and Provides 2017 Outlook
On March 1, 2017 NanoString Technologies, Inc. (NASDAQ:NSTG), a provider of life science tools for translational research and molecular diagnostic products, reported financial results for the fourth quarter and year ended December 31, 2016 (Press release, NanoString Technologies, MAR 1, 2017, View Source [SID1234517941]). Schedule your 30 min Free 1stOncology Demo! Fourth Quarter Financial Highlights
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Total revenue of $25.2 million, 13% year-over-year growth
Total product and service revenue of $20.3 million, 5% year-over-year growth
Consumables revenue of $12.0 million, including $1.0 million of Prosigna IVD kits, 12% year-over-year growth
Instrument revenue of $7.5 million, 6% year-over-year decline
Collaboration revenue of $4.9 million, 68% year-over-year growth
Full Year 2016 Financial Highlights
Total revenue of $86.5 million, 38% year-over-year growth
Total product and service revenue of $69.1 million, 22% year-over-year growth
Consumables revenue of $41.7 million, including $4.2 million of Prosigna IVD kits, 26% year-over-year growth
Instrument revenue of $24.2 million, 16% year-over-year growth
Collaboration revenue of $17.4 million, nearly tripling versus the prior year
"In 2016 we grew our revenue by 38%, and entered into two landmark companion diagnostic collaborations," stated Brad Gray, NanoString president and chief executive officer. "In 2017, we will be investing in our commercial channel to improve our productivity, hiring new commercial leadership and launching a number of products that will build on the unique value proposition of the nCounter platform. We’re also investing in the future, preparing for the launch of companion diagnostic tests as well as a portfolio of breakthrough instruments to enhance our long-term growth prospects."
Recent Business Highlights
Grew installed base to approximately 480 nCounter Analysis Systems at December 31, 2016, with approximately 140 systems sold during the year, including approximately 60 nCounter SPRINT Profilers
Maintained consumable pull through above $100,000 per system for the full year 2016
Surpassed 1,500 cumulative peer-reviewed publications of studies utilizing nCounter technology
Received positive coverage decision from Humana and positive assessment from Blue Cross Blue Shield Association Evidence Street for Prosigna
Launched a Technology Access Program for Digital Spatial Profiling technology and presented first customer data at ASCO (Free ASCO Whitepaper)-SITC 2017
nCounter Vantage 3D assays, enabling simultaneous analysis of DNA, RNA, and protein, were recognized by The Scientist as a Top 10 Innovation of 2016
Highlighted progress with Hyb & Seq single molecule sequencing chemistry at Advances in Genome Biology and Technology (AGBT) meeting, including sequencing of oncogenes from FFPE samples with high accuracy and simple workflow free of library, enzymes and amplification
Fourth Quarter Financial Results
Revenue for the three months ended December 31, 2016 increased by 13% to $25.2 million, as compared to $22.3 million for the fourth quarter of 2015. Instrument revenue was $7.5 million, down 6% versus the prior year period, with nCounter SPRINT systems representing approximately one-third of systems sold. Consumables revenue, excluding Prosigna, was $11.0 million for the fourth quarter of 2016, 11% higher than in the comparable 2015 quarter. Prosigna IVD kit revenue was $1.0 million for the quarter, an increase of 25% over the fourth quarter of 2015. Collaboration revenue totaled $4.9 million, compared to $2.9 million for the fourth quarter of 2015. Gross margin on product and service revenue was 59% for the fourth quarter of 2016, up from 56% for the prior year period.
Research and development expense increased by 41% to $10.0 million for the fourth quarter of 2016 versus $7.1 million for the fourth quarter of 2015, reflecting increased costs associated with biopharma collaborations announced in 2016 and investments in new products and technologies under development for the life science research market. Selling, general and administrative expense increased by 17% to $16.7 million for the fourth quarter of 2016 compared to $14.2 million for the prior year period.
Net loss for the three months ended December 31, 2016 increased to $11.6 million, or a loss of $0.55 per share, compared with $8.8 million, or a loss of $0.44 per share, for the fourth quarter of 2015.
Full Year 2016 Financial Results
Revenue for 2016 increased by 38% to $86.5 million, as compared to $62.7 million for 2015. Instrument revenue was $24.2 million, up 16% versus the prior year. Consumables revenue, excluding Prosigna, was $37.5 million for 2016, 23% higher than in 2015. Prosigna IVD kit revenue was $4.2 million, an increase of 70% over 2015. Collaboration revenue totaled $17.4 million, compared to $6.0 million for 2015. Gross margin on product and service revenue was 56% for 2016, up from 54% for the prior year.
Research and development expense increased by 41% to $34.7 million for 2016 versus $24.6 million for 2015. Selling, general and administrative expense increased by 18% to $62.7 million for 2016 compared to $53.2 million for the prior year.
Net loss for 2016 was $47.1 million, or $2.34 per share, compared with $45.6 million, or a loss of $2.40 per share, for 2015.
The company ended 2016 with approximately $74.0 million of cash, cash equivalents, and short-term investments.
Outlook for 2017
Total revenue in the range of $100 million to $105 million
Gross margin on product and service revenues in the range of 57% to 58%
Operating expenses in the range of $117 million to $120 million
Operating loss in the range of $49 million to $53 million
Net loss per share in the range of $2.51 to $2.69
Mylan Reports Fourth Quarter and Full Year 2016 Results and Provides 2017 Guidance
On March 1, 2017 Mylan N.V. (NASDAQ, TASE: MYL) reported its financial results for the quarter and year ended December 31, 2016 and provided 2017 guidance (Press release, Mylan, MAR 1, 2017, View Source [SID1234517940]). Schedule your 30 min Free 1stOncology Demo! Fourth Quarter 2016 Financial Highlights
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Total revenues of $3.27 billion, up 31% compared to the prior year period
North America segment third party net sales of $1.57 billion, up 22%
Europe segment third party net sales of $927.4 million, up 50%
Rest of World segment third party net sales of $729.2 million, up 28%
U.S. GAAP diluted earnings per ordinary share ("U.S. GAAP EPS") of $0.78, up 105% compared to U.S. GAAP EPS of $0.38 in the prior year period
Adjusted diluted earnings per ordinary share ("adjusted EPS") of $1.57, up 29% compared to $1.22 in the prior year period
Full Year 2016 Financial Highlights
Total revenues of $11.08 billion, up 18% compared to the prior year
U.S. GAAP EPS of $0.92, down 46% compared to $1.70 in the prior year
Adjusted EPS of $4.89, up 14% compared to $4.30 in the prior year
U.S. GAAP cash provided by operating activities of $2.05 billion, up 2% compared to the prior year
Mylan CEO Heather Bresch commented, "Our strong 2016 results were highlighted by year-over-year constant-currency total revenue growth of 18% and adjusted EPS growth of 14%. The fourth quarter capped off the year with impressive revenue growth of 31% and adjusted EPS growth of 29%. Again, we saw all of our regions contribute to our results for the year, with double-digit revenue increases in North America, Europe and Rest of World, reflecting the resilience, differentiation and diversity of our global platform and our unwavering focus on execution. The diversity of our business was further demonstrated by our six global therapeutic franchises that delivered approximately $1 billion or more in revenue: Respiratory and Allergy, CNS and Anesthesia, Infectious Disease, Cardiovascular, Gastrointestinal, and Diabetes and Metabolism.
"We look forward in 2017 to delivering yet another strong year of performance, with anticipated 2017 revenues of $12.25 billion to $13.75 billion and adjusted EPS of $5.15 to $5.55. We also continue to advance toward our long-stated 2018 adjusted EPS target of $6.00."
Mylan President Rajiv Malik said, "In addition to executing on our core business, we completed during the year our acquisitions of Meda and the non-sterile, topicals-focused business of Renaissance Acquisition Holdings, which further built our scale and breadth from a product and geographic perspective. We continued the successful integration of Mylan, bringing these transactions into our One Mylan platform. Further, we continued executing on the many drivers of our organic growth, as evidenced, for instance, by the U.S. Food and Drug Administration’s acceptance of our abbreviated new drug application for Generic Advair Diskus and our submissions for biosimilars Pegfilgrastim and Trastuzumab. With regard to the pricing environment, we continued to see erosion both globally and in U.S. generics in the mid-single digits which was in line with our expectations, and we continue to expect a comparable environment in 2017 given the breadth and make-up of our global portfolio."
Mylan CFO Ken Parks added, "In 2016, Mylan once again benefited from the depth and breadth of our portfolio which drove significant cash flow generation. Our adjusted free cash flow increased by more than 15% to $2.1 billion. We are positioned well to reduce debt levels, while also allowing for financial flexibility for future growth opportunities and maintaining our commitment to our investment grade credit rating."
Total Revenues
Three Months Ended
Year Ended
December 31,
December 31,
(Unaudited; in millions)
2016
2015
Percent
Change
2016
2015
Percent
Change
Total Revenues (1)
$
3,267.8
$
2,490.7
31%
$
11,076.9
$
9,429.3
18%
North America (2)
1,565.0
1,287.9
22%
5,629.5
5,100.4
10%
Europe (1) (2)
927.4
616.4
50%
2,953.8
2,205.6
34%
Rest of World (2)
729.2
570.5
28%
2,383.8
2,056.6
16%
Other Revenues
46.2
15.9
191%
109.8
66.7
65%
(1)
For the year ended December 31, 2015, adjusted third party net sales from Europe totaled $2.22 billion and adjusted total revenues were $9.45 billion. Adjusted third party net sales from Europe and adjusted total revenues are non-GAAP financial measures.
(2)
As a result of our acquisition of Meda on August 5, 2016 and the integration of our portfolio across our branded, generics and over-the-counter platforms in all of our regions, effective October 1, 2016, we expanded our reportable segments as follows: North America, Europe and Rest of World. As a result, the amounts previously reported under the Specialty segment have been recast to North America and amounts related to Brazil are included in Rest of World for all periods presented. Segment amounts represent third party net sales.
Fourth Quarter 2016 Financial Results
Total Revenues
Total revenues were $3.27 billion in 2016, compared to $2.49 billion in the prior year period. Third party net sales for the current quarter were $3.22 billion compared to $2.47 billion for the prior year period, representing an increase of $746.8 million, or 30%. Other third party revenues for the current quarter were $46.2 million compared to $15.9 million in the prior year period, an increase of $30.3 million as a result of an increase in royalty income, including the impact of current year acquisitions. Below is a summary of third party net sales in each of our segments for the three months ended December 31, 2016:
Third party net sales from North America were $1.57 billion for the quarter, an increase of 22% when compared to the prior year period. This increase was principally due to net sales from the acquisitions of Meda AB ("Meda") and the non-sterile, topicals-focused business of Renaissance Acquisition Holdings, LLC (the "Topicals Business"), and to a lesser extent, net sales from new products. Partially offsetting this increase was lower pricing and volumes on existing products. The impact of foreign currency translation was insignificant within North America.
Third party net sales from Europe were $927.4 million for the quarter, an increase of 50% when compared to the prior year period. This increase was primarily the result of net sales from the acquisition of Meda, and to a lesser extent, net sales from new products and higher volumes on existing products, partially offset by lower pricing. The unfavorable impact of foreign currency translation on current period third party net sales was approximately $19.5 million, or 4% within Europe.
Third party net sales from Rest of World were $729.2 million for the quarter, an increase of 28% when compared to the prior year period. This increase was primarily due to net sales from the acquisition of Meda, and to a lesser extent, net sales from new products. In addition, net sales from existing products increased slightly, as higher volumes offset lower pricing throughout the region, including in our anti-retroviral ("ARV") franchise. The favorable impact of foreign currency translation on current period third party net sales was approximately $17.2 million, or 3% within Rest of World.
Total Gross Profit
Gross profit was $1.34 billion and $1.06 billion for the fourth quarter of 2016 and 2015, respectively. Gross margins were 41% and 43% in the fourth quarter of 2016 and 2015, respectively. Gross margins were negatively impacted in the current quarter due to increased amortization of intangible assets, the amortization of acquisition-related inventory fair value adjustments and intangible asset impairment charges. This negative impact was partially offset by the positive impact of net sales from new products. Adjusted gross profit was $1.85 billion and adjusted gross margins were 57% for the quarter compared to adjusted gross profit of $1.40 billion and adjusted gross margins of 56% in the prior year period. Adjusted gross margins were positively impacted in the current quarter as a result of net sales from new products and the net impact of acquisitions.
Total Profitability
Earnings from operations decreased $108.1 million from the comparable prior year period primarily due to the Modafinil antitrust litigation settlement of $165 million, higher amortization expense and operating expenses related to recent acquisitions.
R&D expense increased from the comparable prior year period due to the inclusion of Meda and the Topicals Business, expenses incurred related to the Company’s collaboration with Momenta Pharmaceuticals, Inc. ("Momenta") and the continued development of our respiratory, insulin and biologics programs. SG&A expense increased from the comparable prior year period primarily due to the additional expense related to the acquisitions of Meda and the Topicals Business as well as restructuring charges incurred in the current quarter.
U.S. GAAP net earnings attributable to Mylan N.V. ordinary shareholders ("U.S. GAAP net earnings") increased by $222.9 million to $417.5 million for the quarter ended December 31, 2016, compared to $194.6 million for the prior year period. Fourth quarter 2016 U.S. GAAP net earnings were negatively impacted by the reduction of earnings from operations and increased non-operating expenses including higher interest expense. Partially offsetting these decreases were fair value gains recorded on certain acquisition related contingent consideration and the recognition of an income tax benefit of $192.6 million in the fourth quarter primarily due to the mix of earnings between our U.S. and non-U.S. subsidiaries. U.S. GAAP EPS increased from $0.38 to $0.78 in the current quarter. Adjusted net earnings increased by $222.0 million to $842.2 million compared to $620.2 million for the prior year period. Adjusted EPS increased 29% to $1.57 compared to $1.22 in the prior year period.
EBITDA, which is defined as net earnings (excluding the non-controlling interest and losses from equity method investees) plus income taxes, interest expense, depreciation and amortization, was $878.5 million for the quarter ended December 31, 2016, and $657.5 million for the comparable prior year quarter. After adjusting for certain items as further detailed in the reconciliation below, adjusted EBITDA was $1.21 billion for the quarter ended December 31, 2016 and $827.2 million for the comparable prior year quarter.
Year Ended December 31, 2016 Financial Results
Total Revenues
Total revenues were $11.08 billion in 2016, compared to $9.43 billion in the prior year. Third party net sales for the current year were $10.97 billion compared to $9.36 billion for the prior year, representing an increase of $1.60 billion, or 17%. Other third party revenues for the current year were $109.8 million compared to $66.7 million in the prior year, an increase of $43.1 million which is consistent with the fourth quarter increase. Below is a summary of third party net sales in each of our segments for the year ended December 31, 2016:
Third party net sales from North America were $5.63 billion for the year ended December 31, 2016, an increase of 10% when compared to the prior year. The increase was principally due to net sales from the acquisitions of Meda, the Topicals Business and the incremental sales from the EPD Business, and to a lesser extent, net sales from new products. These increases were partially offset by lower volume and pricing on existing products. As anticipated, the U.S. generics products experienced price erosion in the mid-single digits. The unfavorable impact of foreign currency translation on current year third party net sales was approximately $7 million, or less than 1% within North America.
Third party net sales from Europe were $2.95 billion for the year ended December 31, 2016, an increase of 34% when compared to the prior year. This increase was primarily the result of net sales from the acquisition of Meda and the incremental sales from the EPD Business, and to a lesser extent, net sales from new products. In addition, higher volumes on existing products were partially offset by lower pricing throughout Europe. The unfavorable impact of foreign currency translation on current year third party net sales was approximately $30 million, or 1% within Europe.
Third party net sales from Rest of World were $2.38 billion for the year ended December 31, 2016, an increase of 16% when compared to the prior year. This increase was primarily driven by the acquisition of Meda, the incremental sales from the EPD Business, and to a lesser extent, new products. In addition, higher sales volumes in Japan, India, Australia and emerging markets positively contributed to the sales growth in this segment. These increases were partially offset by lower pricing throughout the segment, including the ARV franchise. However, sales within our ARV franchise increased progressively throughout 2016. The favorable impact of foreign currency translation on third party net sales was approximately $21 million, or 1%.
Total Gross Profit
Gross profit was $4.70 billion and $4.22 billion for the year ended December 31, 2016 and 2015, respectively. Gross margins were 42% and 45% for the year ended December 31, 2016 and 2015, respectively. Gross margins were negatively impacted in the current year due to increased amortization of intangible assets and purchase accounting related items consistent with the fourth quarter. This negative impact was partially offset by the positive impact of net sales from new products. Adjusted gross profit was $6.21 billion and $5.25 billion for the year ended December 31, 2016 and 2015, respectively. Adjusted gross margins were 56% in both 2016 and 2015. Adjusted gross margins were positively impacted in the current year as a result of net sales from new products and the net impact of acquisitions.
Total Profitability
Earnings from operations were $701.6 million for the year ended December 31, 2016, a decrease of 52% from the comparable prior year. This decrease was primarily due to an increase in litigation settlements, higher amortization expense and operating expenses related to acquisitions completed during 2016.
R&D expense for the year ended December 31, 2016 increased from the comparable prior year consistent with the fourth quarter drivers.
SG&A expense increased from the comparable prior year period principally due to the additional expense related to the acquisition of Meda and the additional two months of expense from the EPD Business. In addition, we incurred approximately $113.1 million of restructuring charges which were offset by lower acquisition related costs in the current year, including consulting and legal costs.
U.S. GAAP net earnings decreased by $367.6 million to $480.0 million for the year ended December 31, 2016, compared to $847.6 million for the prior year. U.S. GAAP EPS decreased from $1.70 to $0.92 as a result of the reduction of earnings from operations and higher non-operating expenses including higher interest expense as a result of recent acquisition related borrowings and a higher average share count. Partially offsetting these items was the recognition of an income tax benefit of $358.3 million in the current year. Adjusted net earnings increased by $409.9 million to $2.55 billion for the year ended December 31, 2016 compared to $2.14 billion for the prior year period. Adjusted EPS increased 14% to $4.89 for the year ended December 31, 2016 compared to $4.30 in the prior year period.
EBITDA was $2.21 billion for the year ended December 31, 2016, and $2.39 billion for the comparable prior year period. After adjusting for certain items as further detailed in the reconciliation below, adjusted EBITDA was $3.68 billion for the year ended December 31, 2016 and $3.01 billion for the comparable prior year period.
Cash Flow
Net cash provided by operating activities was $2.05 billion for the year ended December 31, 2016 compared to $2.01 billion for the prior year. Capital expenditures were approximately $390.4 million for the year ended December 31, 2016 compared to approximately $362.9 million for the comparable prior year. Adjusted cash provided by operating activities was $2.52 billion for the year ended December 31, 2016 compared to $2.22 billion for the prior year. Adjusted free cash flow, defined as adjusted cash provided by operating activities less capital expenditures, was $2.13 billion for the year ended December 31, 2016, compared to $1.85 billion in the prior year.
Guidance
Mylan expects 2017 total revenues in the range of $12.25 billion to $13.75 billion, the midpoint of which represents an increase of 17% versus 2016. As discussed in the "Non-GAAP Financial Measures" section below, Mylan is not otherwise providing forward looking guidance for U.S. GAAP reported financial measures or a quantitative reconciliation of forward-looking non-GAAP financial measures to the most directly comparable U.S. GAAP measure. Adjusted EPS is expected to be in the range of $5.15 to $5.55, the midpoint of which represents an increase of 9% versus 2016.
The following table provides a summary of Mylan’s 2017 full year guidance ranges, along with significant exchange rates used in preparing the guidance.
Full Year 2017 Financial Guidance
(In millions, except for EPS and %s)
2017 Guidance
Total Revenues
$12,250 – $13,750
Gross Margin*
54.5% – 56.5%
R&D as % of Total Revenues*
5.5% – 6.5%
SG&A as % of Total Revenues*
18.5% – 20.5%
EBITDA*
$4,350 – $4,750
Net Earnings*
$2,800 – $3,000
Diluted EPS*
$5.15 – $5.55
Cash Provided by Operating Activities*
$2,500 – $2,800
Capital Expenditures
$400 – $500
Free Cash Flow*
$2,000 – $2,400
Effective Tax Rate*
16.5% – 18.5%
Average Diluted Shares Outstanding
535 – 540
* Adjusted metrics, see "Non-GAAP Financial Measures" for more information.
Key Exchange Rates Used for 2017 Guidance:
Australian Dollar ($ / AUD)
1.32
British Pound ($ / GBP)
0.76
Canadian Dollar ($ / CAD)
1.30
Euro ($ / EUR)
0.90
Indian Rupee (INR / $)
65.50
Japanese Yen (JPY / $)
110.00
Juno Therapeutics Reports Fourth Quarter and 2016 Financial Results
On March 1, 2017– Juno Therapeutics, Inc. (NASDAQ: JUNO), a biopharmaceutical company developing innovative cellular immunotherapies for the treatment of cancer, reported financial results and business highlights for the fourth quarter and year ended December 31, 2016 (Press release, Juno, MAR 1, 2017, View Source [SID1234517937]). Schedule your 30 min Free 1stOncology Demo! "2016 was a year of progress and learning for Juno and the cancer immunotherapy field. We continue to experience encouraging signs of clinical benefit in our trial addressing NHL, but we also recognize the unfortunate and unexpected toxicity we saw in our trial addressing ALL with JCAR015. We have decided not to move forward with the ROCKET trial or JCAR015 at this time, even though it generated important learnings for us and the immunotherapy field. We remain committed to developing better treatments for patients battling ALL and believe an approach using our defined cell technology is the best platform to pursue. We intend to begin a trial with a defined cell product candidate in adult ALL next year. We look forward to sharing detailed data supporting our learnings from the ROCKET trial at an upcoming scientific conference," said Hans Bishop, Juno’s President and Chief Executive Officer. "Looking forward into 2017, we continue to be optimistic about the progress we are making with JCAR017 and our pipeline more broadly. We expect 2017 will be a data-rich year of key insights, based on up to 20 ongoing trials by year end, and we plan to present data from these trials as appropriate throughout the year."
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2016 and Recent Corporate Highlights
Clinical Update:
CD19 Portfolio – Meaningful developments with Juno’s CD19-directed portfolio across B cell malignancies including relapsed / refractory (r/r) non-Hodgkin lymphoma (NHL), r/r chronic lymphocytic leukemia (CLL), and r/r acute lymphoblastic leukemia (ALL):
NHL – Investigators presented interim results at the American Society of Hematology (ASH) (Free ASH Whitepaper) meeting in December 2016 (ASH 2016) from the Phase I TRANSCEND study in patients with r/r diffuse large B cell lymphoma (DLBCL), follicular lymphoma grade 3B, and mantle cell lymphoma (MCL) who were treated with fludarabine/cyclophosphamide (flu/cy) lymphodepletion and JCAR017. Topline results as of a data cutoff date of November 23, 2016 included a 12/20 (60%) complete response rate in patients with r/r DLBCL (N=19) and follicular lymphoma grade 3B (N=1) treated with a single dose of JCAR017 at dose level 1 (5×107 cells). No severe cytokine release syndrome (sCRS) was observed; grade 3-4 neurotoxicity was observed in 3/22 (14%) patients, and of those evaluable for reversibility (N=2), all resolved. In addition, the side effect profile of JCAR017 plus its cell persistence suggest the potential for combination therapy. The Phase I TRANSCEND trial continues, enrolling more patients at dose levels 1 and 2. Juno intends to initiate a pivotal trial in the U.S. in patients with r/r DLBCL in 2017.
The Phase Ib combination trial of JCAR014 and MedImmune’s investigational programmed death ligand 1 (PD-L1) immune checkpoint inhibitor, durvalumab, in patients with r/r NHL has begun. The investigational new drug application (IND) has cleared for, and Juno plans to enroll patients in 2017 in, a Phase I trial in certain adult B cell malignancies, including r/r NHL, for a CD19 product candidate that incorporates a fully human binding domain. Juno also expects to begin a Phase I trial in r/r B cell malignancies for its CD19/4-1BB ligand armored CAR in 2017.
CLL – Investigators presented interim results at ASH (Free ASH Whitepaper) 2016 from a Phase I/II study of heavily pre-treated patients with CLL who failed treatment with ibrutinib, a standard-of-care treatment for high-risk and elderly individuals with CLL. Fifteen of 17 (88%) efficacy-evaluable patients who had bone marrow disease at the start of the trial and treated with flu/cy at the two lowest doses of JCAR014 had a complete marrow response by flow cytometry as of the data cutoff date of December 4, 2016. Fourteen of the complete bone marrow response patients had a response assessment by IgH deep sequencing, a more sensitive measure than flow cytometry, with 7/14 (50%) having no detectable disease. As of the data cutoff date, all seven of these patients were alive and progression free with follow-up ranging from 2 to 24 months. Two of 24 (8%) patients developed grade 3-5 sCRS and 6/24 (25%) patients developed grade 3-5 neurotoxicity. There was one treatment-related mortality (4%) in the CLL portion of the trial in a patient who received flu/cy lymphodepletion, with both grade 5 sCRS and cerebral edema. Plans to study JCAR014 in combination with ibrutinib in CLL are underway, with a cohort expected to begin enrollment in early 2017. Juno is planning to file an IND in 2017 in support of a potential Juno-sponsored Phase I/II trial with JCAR017 in CLL.
ALL – Juno experienced a setback in 2016 to its adult r/r ALL development plans when a greater than expected incidence of severe neurotoxicity was observed, along with five deaths from cerebral edema, in patients treated in the Phase II trial with JCAR015 in adult patients with r/r ALL, referred to as the ROCKET trial. The Phase II trial was placed on clinical hold by the FDA briefly in July 2016. In November 2016, the trial was again placed on hold and has remained on hold while Juno conducted an investigation into the toxicity. Through the investigation Juno identified multiple factors that may have contributed to this increased risk, including patient specific factors, the conditioning chemotherapy patients received, and factors related to the product. Although Juno believes there are protocol modifications and process improvements that could enable Juno to proceed with JCAR015 in clinical testing in adult r/r ALL, Juno would first need to establish preliminary safety and dose in a Phase I trial. As a result of the timing delay that would entail and Juno’s belief that it has other product candidates in its pipeline that are likely to provide improved efficacy and tolerability, Juno, in collaboration with partner Celgene, has made a strategic decision to cease development of JCAR015 at this time and to redirect associated resources to the development of a defined cell product candidate in the adult r/r ALL setting.
As for pediatric ALL, investigators presented results at ASH (Free ASH Whitepaper) 2016 from the Phase I portion of the Phase I/II Pediatric Leukemia Adoptive Therapy-02 (PLAT-02) study with JCAR017 in 43 evaluable children and young adults with r/r CD19-positive ALL. The presentation updated data previously presented at ASCO (Free ASCO Whitepaper) in June 2016: 40/43 (93%) patients experienced a minimal residual disease (MRD)-negative complete remission (CR) as measured by flow cytometry as of the data cutoff date of July 19, 2016. In patients who received preconditioning with flu/cy lymphodepletion, 14/14 (100%) patients achieved a MRD-negative CR. The estimated 12-month event-free survival across all patients in the trial was 50.8% (95%CI 36.9, 69.9) and overall survival (OS) was 69.5% (95%CI 55.8, 86.5). Grade 3-4 neurotoxicity and sCRS were each observed in 10/43 (23%) patients.
Across our CD19 portfolio, the most common severe treatment-related side effects are sCRS and severe neurotoxicity, including several cases of fatal cerebral edema. Other treatment emergent adverse events observed in at least 25% of patients across our CD19 product candidates include cytopenias, febrile neutropenia, electrolyte abnormalities, hypotension, infections, pyrexia, fatigue, and hyperglycemia. All of Juno’s product candidates are investigational and their safety and efficacy have not been established.
Pipeline Portfolio – Juno continues to conduct clinical trials beyond the CD19 target:
JCAR018 – This CD22-directed, fully-human CAR T cell product candidate has the potential to treat or prevent CD19-negative relapses. Investigators from the National Cancer Institute (NCI) presented early data from the trial at ASH (Free ASH Whitepaper) 2016, with 7/8 (88%) of r/r ALL patients achieving a MRD-negative CR at dose level 2 (1×106 cells/kg) as measured by flow cytometry, as of a data cutoff date of October 4, 2016. Three of 7 (43%) patients who achieved an MRD-negative CR at dose level 2 were in ongoing remission ranging from 3 to 12 months. This trial continues to enroll patients. Combining a CD19-directed therapy and a CD22-directed therapy may increase the selection pressure on the cancer and significantly reduce the overall risk of relapse, particularly in patients with ALL. Juno is currently investigating pre-clinical constructs to better understand the optimal way to target these two targets in the same product.
JTCR016 – This WT-1-directed, T cell receptor (TCR) cell product candidate is currently being studied in acute myeloid leukemia (AML), refractory mesothelioma, and non-small cell lung cancer. In the first three solid organ tumor patients treated as of the data cutoff date of April 1, 2016, all with mesothelioma, preliminary data presented at the American Association for Cancer Research (AACR) (Free AACR Whitepaper) Annual Meeting 2016 showed one patient with an ongoing partial response to the WT-1 TCR and one with stable disease. The clinical activity appeared to correlate with the pharmacokinetics of the engineered T cells, as the patient with the partial response had the best T cell expansion and persistence. JTCR016 was generally well-tolerated in these three refractory mesothelioma patients, with no evidence of sCRS or severe neurotoxicity.
Announced breakthrough therapy designation and access to the Priority Medicines (PRIME) scheme for investigational drug JCAR017. JCAR017 received breakthrough therapy designation from the FDA for the treatment of patients with r/r aggressive large B-cell NHL, including DLBCL, not otherwise specified (de novo or transformed from indolent lymphoma), primary mediastinal B-cell lymphoma (PMBCL) or Grade 3B follicular lymphoma. In addition, the European Medicines Agency (EMA) Committee for Medicinal Products for Human Use (CHMP) and Committee for Advanced Therapies (CAT) have granted JCAR017 access to the PRIME scheme for r/r DLBCL.
Began manufacturing multiple product candidates at the Juno manufacturing plant in Bothell, WA in 2016.
Juno continues trials for solid tumor product candidates against five different targets – JCAR024 (ROR-1-directed CAR T), JCAR020 (MUC-16-directed armored CAR T engineered to secrete IL-12), JCAR023 (L1-CAM-directed CAR T), JTCR016 (WT-1- directed TCR) and a Lewis Y-directed CAR.
Continued collaboration with Celgene to leverage T cell therapeutic strategies with an initial focus on CAR T and TCR therapies. In April 2016, Celgene exercised its option to develop and commercialize CAR product candidates from Juno’s CD19 program outside of North America and China. Celgene paid Juno an option exercise fee of $50.0 million and the companies now generally share worldwide research and development expenses for CAR product candidates in the CD19 program. Celgene has commercial rights outside of North America and China and will pay Juno a royalty at a percentage in the mid-teens on any future net sales in Celgene’s territories of CAR therapeutic products developed through the CD19 program. Juno retains commercialization rights in North America and China.
In March 2016, Celgene exercised its annual right to purchase additional shares of the Company’s common stock to "top-up" its ownership interest in the Company. Celgene purchased 1,137,593 shares at a price of $41.32 per share, for an aggregate cash purchase price of $47.0 million.
Completed two acquisitions, which substantially increased Juno’s capabilities, including:
AbVitro, a leading next-generation single cell sequencing platform company that has augmented Juno’s capabilities to create best-in-class engineered T cells against a broad array of cancer targets, including significantly improving the speed of generating TCR binders, while also enabling comprehensive profiling of functional immune repertoires with cancer tissues. Juno and Celgene have agreed in principle to enter an agreement to license Celgene a subset of the acquired technology and grant Celgene options to certain related potential product rights emanating from the acquired technology.
RedoxTherapies, a privately held company with an exclusive license to vipadenant, a small molecule adenosine A2a receptor antagonist that has the potential to disrupt important immunosuppressive pathways in the tumor microenvironment in certain cancers. Juno intends to explore this molecule in combination with its engineered T cell platform and may over time explore it in other areas as well. The upfront consideration for the RedoxTherapies acquisition was $10.0 million in cash. The seller is also eligible to receive payments upon the achievement of clinical, regulatory, and commercial milestones.
Completed licensing transactions to expand Juno’s research and development capabilities, including:
Memorial Sloan Kettering Cancer Center (MSK) and Eureka Therapeutics, Inc. for innovative, fully-human binding domains targeting B cell maturation antigen (BCMA), along with antibodies against two additional undisclosed multiple myeloma targets to be used for the potential development and commercialization of CAR T cell therapies for patients with multiple myeloma. MSK and Eureka Therapeutics received an undisclosed upfront payment and are eligible to receive additional payments upon the achievement of undisclosed clinical, regulatory, and commercial milestones, and royalties on net sales. Juno has begun a Phase I trial with a BCMA-directed CAR product candidate at MSK in patients with multiple myeloma.
Defeated an attempt to invalidate a patent exclusively licensed by Juno and sued Kite Pharma, Inc., regarding a CAR T technology that can be used, for example, for the treatment of B cell malignancies. In August 2015, Kite filed a petition with the U.S. Patent & Trademark Office (USPTO) for inter partes review in an attempt to invalidate U.S. Patent No. 7,446,190 by challenging all of its claims. Following proceedings, the USPTO Patent Trial and Appeal Board issued a final written decision upholding all the claims of this patent. Kite is appealing this decision to the U.S. Court of Appeals for the Federal Circuit. Juno exclusively licenses the ’190 patent, titled "Nucleic Acids Encoding Chimeric T Cell Receptors," from Sloan Kettering Institute for Cancer Research, an affiliate of MSK. The patent covers, among other things, a construct for a CD19-targeted CAR T cell treatment that employs a certain CD28 costimulatory domain. In addition, Juno is suing Kite, seeking a declaratory judgment that Kite’s lead product candidate, KTE-C19, will infringe the patent when commercially produced.
Formed JW Therapeutics (Shanghai) Co., Ltd., a new company in China along with WuXi AppTec, with a mission to develop novel cell-based immunotherapies for patients with hematologic and solid organ cancers in China. The new company will leverage Juno’s world-class CAR and TCR technologies and WuXi AppTec’s research and development and manufacturing platform and local expertise.
Announced the opening of a new, best-in-class clinical trials unit dedicated to immuno-oncology, in collaboration with the University of Washington, the Seattle Cancer Care Alliance, and the Fred Hutchinson Cancer Research Center (FHCRC). The clinical trials unit has been established to accelerate the clinical care of patients and the generation of translational medicine insights with cutting-edge immuno-oncology therapeutic candidates.
Hired key talent, including the appointment of Corsee Sanders as Executive Vice President and Head of Development Operations.
Fourth Quarter and 2016 Financial Results
Cash Position: Cash, cash equivalents, and marketable securities as of December 31, 2016 were $922.3 million compared to $1.22 billion as of December 31, 2015.
Cash Burn: Cash burn in 2016, excluding cash inflows and outflows from business development activities, was $232.2 million, consistent with guidance of $220.0 million to $250.0 million. Included in cash burn in 2016 was $56.2 million for property and equipment, of which $18.2 million was for the purchase of Juno’s manufacturing facility. Excluding cash inflows and outflows from business development activities, cash burn in 2015 was $147.8 million including $28.2 million for the build out of Juno’s manufacturing facility and general lab equipment. The cash burn increase of $84.4 million was primarily driven by cash outflows in connection with the overall growth of the business including clinical, manufacturing, and research, costs to build out Juno’s headquarters facility, and purchases of manufacturing equipment. These increases were offset by $19.4 million received from Celgene for reimbursement of costs incurred by Juno in connection with the CD19 program.
Cash burn in the fourth quarter of 2016, excluding cash inflows and outflows from business development activities, was $106.6 million including $38.4 million for the purchase of property and equipment, of which $18.2 million was for the purchase of Juno’s manufacturing facility. Cash burn in the fourth quarter of 2015 was $51.4 million, including $4.8 million for capital expenditures. The cash burn increase of $55.2 million was primarily due to cash outflows in connection with the overall growth of the business, including clinical, manufacturing, and research costs, the purchase of Juno’s manufacturing facility, build out of its new headquarters facility, and purchase of manufacturing equipment. These increases were offset by $10.2 million received from Celgene for reimbursement of costs incurred by Juno in connection with the CD19 program.
Revenue: Revenue for the three and twelve months ended December 31, 2016 was $21.2 million and $79.4 million, respectively, compared to $4.2 million and $18.2 million for the three and twelve months ended December 31, 2015, respectively. The increases of $17.0 million and $61.2 million in the three and twelve months ended December 31, 2016, respectively, were due primarily to revenue recognized in connection with the Celgene collaboration and CD19 opt-in.
R&D Expenses: Research and development expenses for the three and twelve months ended December 31, 2016, inclusive of non-cash expenses and computed in accordance with GAAP, were $57.4 million and $264.3 million, respectively, compared to $75.6 million and $205.2 million for the same periods in 2015. The increase for the twelve months ended December 31, 2016 was primarily due to increased costs to execute Juno’s clinical development strategy, manufacture its product candidates, expand its overall research and development capabilities, milestones achieved in 2016, and an increase in stock-based compensation expense. These increases were offset by lower costs to acquire technology and gains recorded in connection with the change in value of the success payment and contingent consideration liabilities. The decrease for the three months ended December 31, 2016 was primarily due to gains recorded in connection with the change in value of the success payment and contingent consideration liabilities, partially offset by increased costs to execute Juno’s clinical development strategy, manufacture its product candidates, expand its overall research and development capabilities, and an increase in stock-based compensation expense. For the three and twelve months ended December 31, 2016, Juno recorded gains of $11.7 million and $32.5 million, respectively, related to Juno’s success payment liability, compared to expenses of $34.3 million and $51.6 million for the three and twelve months ended December 31, 2015.
Non-GAAP R&D Expenses: Non-GAAP research and development expenses for the three and twelve months ended December 31, 2016 were $73.1 million and $287.6 million, respectively, compared to $41.1 million and $116.5 million for the same periods in 2015. Non-GAAP research and development expenses for the three and twelve months ended December 31, 2016 include $8.6 million and $34.5 million of stock-based compensation expense, respectively, compared to $3.6 million and $10.9 million for the same periods in 2015. Non-GAAP research and development expenses in 2016 exclude the following:
A gain of $11.7 million and $32.5 million for the three and twelve months ended December 31, 2016, respectively, associated with the change in the estimated fair value and elapsed service period for Juno’s potential success payment liabilities to FHCRC and MSK.
Non-cash stock-based compensation expense of $0.6 million and $3.9 million for the three and twelve months ended December 31, 2016, respectively, related to a 2013 restricted stock award to a co-founding director that became a consultant upon his departure from Juno’s board of directors in 2014.
A gain of $4.5 million and $9.7 million for the three and twelve months ended December 31, 2016, respectively, associated with the change in the estimated fair value of the contingent consideration liabilities recorded in connection with the Stage and X-Body acquisitions.
Upfront payments related to technology licensing and the RedoxTherapies acquisition of $15.0 million for the twelve months ended December 31, 2016.
Non-GAAP research and development expenses in 2015 exclude the following:
An expense of $34.3 million and $51.6 million for the three and twelve months ended December 31, 2015, respectively, associated with the change in estimated fair value and elapsed accrual period for Juno’s potential success payment liabilities to FHCRC and MSK.
Non-cash stock-based compensation expense of $1.4 million and $6.2 million for the three and twelve months ended December 31, 2015, respectively, related to a 2013 restricted stock award to a co-founding director that became a consultant upon his departure from Juno’s board of directors in 2014.
A gain of $1.1 million for the fourth quarter of 2015 in the estimated fair value of the contingent consideration recorded in connection with the Stage and X-Body acquisitions.
Upfront payments related to license agreements of $30.8 million for the twelve months ended December 31, 2015 associated with the Editas and Fate Therapeutics collaborations.
G&A Expenses: General and administrative expenses on a GAAP basis for the three and twelve months ended December 31, 2016 were $19.5 million and $70.7 million, respectively, compared to $16.0 million and $57.2 million for the same periods in 2015. The increase of $3.5 million in the fourth quarter of 2016 compared to the same period in 2015 was due to an increase in consulting costs related to commercial readiness and legal costs, offset by decreased costs incurred to support business development activities. The increase of $13.5 million in 2016 compared to 2015 was primarily due to increased personnel costs, including stock-based compensation, and increased consulting costs related to commercial readiness, offset by decreased costs incurred to support business development activities.
General and administrative expenses include $5.2 million and $21.0 million of non-cash stock-based compensation expense for the three and twelve months ended December 31, 2016, respectively, compared to $5.4 million and $14.9 million for the same periods in 2015.
GAAP Net Loss: Net loss for the three and twelve months ended December 31, 2016 was $52.8 million, or $0.51 per share, and $245.6 million, or $2.42 per share, respectively, compared to $85.2 million, or $0.89 per share and $239.4 million, or $2.72 per share for the same periods in 2015.
Non-GAAP Net Loss: Non-GAAP net loss, which incorporates the non-GAAP R&D expense, for the three and twelve months ended December 31, 2016 was $68.5 million, or $0.65 per share, and $268.9 million, or $2.65 per share, respectively, compared to $50.7 million, or $0.53 per share, and $150.7 million, or $1.72 per share, respectively, for the same periods in 2015.
A reconciliation of GAAP net loss to non-GAAP net loss is presented below under "Non-GAAP Financial Measures."
2017 Financial Guidance
Juno expects 2017 cash burn, excluding cash inflows or outflows from upfront payments related to business development activities, of between $270 million and $300 million.
Operating burn estimated to be between $245 million and $275 million.
Capital expenditures estimated to be between $22 million and $27 million, the majority of which are related to one-time infrastructure build-outs.