On August 2, 2018 AMAG Pharmaceuticals, Inc. (NASDAQ: AMAG) reported unaudited consolidated financial results for the quarter ended June 30, 2018 (Press release, AMAG Pharmaceuticals, AUG 2, 2018, View Source [SID1234528748]). The company announced the sale of Cord Blood Registry (CBR) in June 2018, which is currently expected to close in mid-August 2018. As a result of the pending sale, CBR is being classified as discontinued operations for accounting purposes and is presented separately on AMAG’s GAAP consolidated statements of operations and consolidated balance sheets for all periods presented. The company has revised its full year 2018 financial guidance to reflect continued strong performance of its pharmaceutical products and the impact of the pending sale of CBR.

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Total GAAP revenue from continuing operations (excluding CBR) increased in the second quarter of 2018 to $146.3 million, 12% higher than the same period last year. The year-over-year increase was driven by increased sales of Feraheme (ferumoxytol injection) and Makena (hydroxyprogesterone caproate injection), as well as the commercial launch of Intrarosa (prasterone) in the third quarter of 2017. The company reported operating income from continuing operations of $41.9 million in the second quarter of 2018, compared with operating income of $3.3 million in the same period last year. Non-GAAP adjusted EBITDA (excluding CBR) totaled $60.6 million in the second quarter of 2018, compared with $41.4 million in the second quarter of 2017.1

"We have had an extraordinary first half of 2018, with the achievement of a number of important regulatory milestones and strong commercial success across the portfolio," said Bill Heiden, AMAG’s president and chief executive officer. "In the second quarter, our commercial teams generated record setting sales performance for each of our products and these strong results, combined with confidence in our prospects for the second half of 2018, allow us to again raise both annual revenue and adjusted EBITDA guidance for our pharmaceutical business. The divestiture of CBR is another important step in our plan to align the company’s balance sheet with our strategic growth plan, which focuses on the development and commercialization of innovative pharmaceuticals."

Second Quarter 2018 and Recent Business Highlights:

Achieved record quarterly sales

Makena revenues exceeded $105 million in the quarter, reaching an all-time high market share of 51%

Feraheme sales grew 37% over the prior year, generating revenues of $37.7 million in the quarter

1 See summaries of GAAP to non-GAAP adjustments at the conclusion of this press release.

Grew Intrarosa ex-factory shipments by 40% over the first quarter of 2018 and generated $3.2 million of net revenue in the second quarter of 2018, which continued to be impacted by high gross to net adjustments

Announced sale of CBR for $530 million in cash, the net proceeds of which the company expects to use to pay off $475 million of its high yield debt

Received FDA acceptance of the company’s new drug application for bremelanotide, with a PDUFA date of March 23, 2019

Continued strong conversion of Makena intramuscular product to the subcutaneous (SC) auto-injector

Approximately 60% of new enrollments through the Makena Care Connection through the end of the second quarter were for the SC auto-injector

Authorized AMAG’s partner, Prasco, to launch an authorized generic of the Makena single- and multi-dose intramuscular formulations

Increased Intrarosa market share to 3.8%, with approximately 93,000 total prescriptions written by more than 9,100 healthcare providers since the July 2017 launch

CMS clarified its position on reimbursement, which now allows for reimbursement coverage for Intrarosa; AMAG has initiated discussions with payers for Medicare Part D coverage

Began the first phase of the unbranded and branded Intrarosa digital consumer campaigns

Continued the launch of Feraheme with the broad iron deficiency anemia label, which is already capturing additional market share
–
Achieved market share of 16.3% for the second quarter of 2018, compared with 11.2% for the first quarter of 2018

Ended the quarter with more than $410 million2 of cash and investments, an increase of more than $40 million from the first quarter of 2018

Second Quarter Ended June 30, 2018 (unaudited)
Financial Results from Continuing Operations (GAAP Basis)
As a result of the pending sale of CBR, which is expected to close in mid-August, AMAG’s CBR business has been excluded from its continuing operations for all periods presented and is shown separately as discontinued operations.

Total revenues from continuing operations for the second quarter of 2018 increased 12% to $146.3 million, compared with $130.4 million in the second quarter of 2017. Sales of Feraheme and MuGard increased 37% to $37.8 million in the second quarter of 2018, compared with $27.7 million in the second quarter of 2017.

Net product sales of Makena increased 2% to $105.2 million in the second quarter of 2018, compared with $102.7 million in the same period last year. Intrarosa, which was commercially launched in July 2017, contributed $3.2 million in net sales during the second quarter of 2018.

Costs and expenses from continuing operations, including cost of product sales, totaled $104.4 million in the second quarter of 2018, compared with $127.1 million for the same period in 2017. Included in selling, general and administrative (SG&A) expenses was an expense reversal of $49.8 million, which was recorded to remove the Makena contingent consideration liability because the company no longer believes that it is probable that the sales milestone will be achieved. Excluding this accounting adjustment, total costs and expenses from continuing operations increased by $27.1 million to $154.2 million. Cost of product sales increased by $44.7 million, of which $36.4 million was an increase in amortization expense primarily related to the Makena intramuscular intangible asset. Research and development costs decreased by $18.6 million during the period. Acquired IPR&D expense in 2017 consisted of $5.8 million in connection with consideration paid under the company’s agreement with Endoceutics for the rights to Intrarosa.

2 Includes $60 million of cash and investments held in a CBR account, which is currently recorded as an asset held for sale. These cash and investments will be returned to AMAG upon closing of the transaction.

Operating income from continuing operations in the second quarter of 2018 was $41.9 million, compared with of $3.3 million for the same period last year. The company reported a net loss from continuing operations of $25.8 million, or $0.75 loss per basic and diluted share, for the second quarter of 2018, compared with a net loss of $14.3 million, or $0.41 loss per basic and diluted share, for the same period in 2017. The primary driver of the second quarter 2018 net loss from continuing operations was the $52 million expense incurred to increase the company’s valuation allowance on its deferred tax assets.

Financial Results from Continuing Operations (Non-GAAP Basis)1
Total costs and expenses from continuing operations on a non-GAAP basis totaled $85.7 million in the second quarter of 2018, compared with $89.0 million in the second quarter of 2017. This decrease was primarily due to lower research and development costs in 2018, partially offset by higher cost of product sales and higher SG&A expenses related to investments to support the launches of the broad Feraheme label, Makena SC auto-injector and Intrarosa.

Non-GAAP adjusted EBITDA (excluding CBR) for the second quarter of 2018 was $60.6 million, compared with $41.4 million in the second quarter of 2017.

Net Income from Discontinued Operations
As a result of the pending sale, CBR is being classified as discontinued operations for accounting purposes. Net income from discontinued operations in the second quarter of 2018 was $5.7 million compared with $0.2 million for the same period in 2017.

Balance Sheet Highlights
As of June 30, 2018, the company’s cash and investments totaled $410 million2 and total debt (principal amount outstanding) was $816.4 million.

"Continued execution across the business gives us confidence to increase our financial guidance for 2018," said Ted Myles, AMAG’s chief financial officer. "The sale of CBR will allow us to eliminate the senior notes from our capital structure and strengthen our balance sheet as we continue to generate adjusted EBITDA. Our long-term strategy focuses on continuing to grow and further diversify our pharmaceutical portfolio. Our liquidity profile gives us considerable flexibility to invest in and grow our current products and to pursue new business development opportunities."

Conference Call and Webcast Access
AMAG Pharmaceuticals, Inc. will host a conference call and webcast today at 8:00 a.m. ET to discuss the company’s second quarter 2018 financial results, recent business highlights and 2018 outlook.

Dial-in Number
U.S./Canada dial-in number: (877) 412-6083

International dial-in number: (702) 495-1202
Conference ID: 2757556

Replay dial-in number: (855) 859-2056
Replay International dial-in number: (404) 537-3406
Conference ID: 2757556

A telephone replay will be available from approximately 11:00 a.m. ET on August 2, 2018 through midnight on August 9, 2018.

The webcast with slides will be accessible through the Investors section of AMAG’s website at www.amagpharma.com. A replay of the webcast will be archived on the website for 30 days.

Use of Non-GAAP Financial Measures
AMAG has presented certain non-GAAP financial measures, including non-GAAP costs and expenses and non-GAAP adjusted EBITDA (earnings before income taxes, depreciation and amortization). These non-GAAP financial measures exclude certain amounts, expenses or income, from the corresponding financial measures determined in accordance with accounting principles generally accepted in the U.S. (GAAP). Management believes this non-GAAP information is useful for investors, taken in conjunction with AMAG’s GAAP financial statements, because it provides greater transparency regarding AMAG’s operating performance. Management uses these measures, among other factors, to assess and analyze operational results and trends and to make financial and operational decisions. Non-GAAP information is not prepared under a comprehensive set of accounting rules and should only be used to supplement an understanding of AMAG’s operating results as reported under GAAP, not as a substitute for GAAP. In addition, these non-GAAP financial measures are unlikely to be comparable with non-GAAP information provided by other companies. The determination of the amounts that are excluded from non-GAAP financial measures is a matter of management judgment and depends upon, among other factors, the nature of the underlying expense or income amounts. Reconciliations between these non-GAAP financial measures and the most comparable GAAP financial measures are included in the tables accompanying this press release after the unaudited condensed consolidated financial statements.

On August 2, 2018, the Company entered into a Third Amendment to Lease Agreement (the "Amendment") with ARE-SD Region No. 20 (the "Landlord") to amend the Lease Agreement, dated June 24, 2014, the First Amendment to Lease dated March 23, 2017, and the Second Amendment to Lease dated April 5, 2018 (the "Amended Lease") between the Company and Landlord (Filing, 8-K, Mirati, AUG 2, 2018, View Source [SID1234528662]). The Amendment expands the size of the existing premises by adding approximately 6,100 square feet of space for an additional base rent of $4,000 per month through January 31, 2020. In addition, our share of operating expenses of the building in which the premises are located, has increased from approximately 43% to 58%. All other material terms and covenants from the Amended Lease remain unchanged.

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On August 2, 2018 ENTEROME SA, a clinical-stage biotechnology company pioneering innovative therapies to treat microbiome-associated diseases with a focus on inflammatory bowel diseases (IBD) and immuno-oncology (IO) indications, reported that CEO Pierre Belichard will be presenting at two upcoming investor conferences in the United States (Press release, Enterome, AUG 2, 2018, View Source [SID1234528653]):

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August 12-13 – Oppenheimer & Co. Newport Summit for Revolutionary Biotechnology (Newport, RI)
August 14-15 – Wedbush PacGrow Healthcare Conference (New York, NY)
Mr Belichard will provide an overview of the company´s approach and strategy as well as an update on its development programs, including progress on its two lead investigational drug candidates:

EB8018, an orally administered small molecule FimH-blocker designed to selectively disarm virulent bacteria in the gut that cause inflammation without disrupting the gut microbiome, which is currently evaluated in a Phase Ib clinical proof of concept trial in patients with Crohn’s disease; and
EO2401, a novel microbiome-derived therapeutic cancer vaccine comprising immunogenic peptide/epitope mimics ("onco-mimics") of glioblastoma tumour-associated antigens, which is being prepared to enter a Phase Ib study in glioblastoma patients in 2018.

On August 2, 2018 Corvus Pharmaceuticals, Inc. (NASDAQ: CRVS), a clinical-stage biopharmaceutical company focused on the development and commercialization of precisely targeted oncology therapies, reported financial results for the second quarter ended June 30, 2018, and provided a business update (Press release, Corvus Pharmaceuticals, AUG 2, 2018, View Source;p=RssLanding&cat=news&id=2361869 [SID1234528637]).

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"We continue to be a leader in programs addressing the adenosine pathway, with three clinical trials currently enrolling and more than 235 patients treated to-date with our lead product candidate, an A2A receptor antagonist, CPI-444," said Richard A. Miller, M.D., co-founder, president and chief executive officer of Corvus. "We are enrolling up to 50 patients in a Phase 1/1b study of CPI-444 in combination therapy under an amended protocol focused on patients with earlier stage renal cell cancer. CPI-444 is also being studied in patients with lung cancer. We are also enrolling patients in a Phase 1/1b study of CPI-006, an anti-CD73 antibody, to treat advanced cancers, both as a monotherapy and in combination with CPI-444 and an anti-PD-1 therapy. In the fourth quarter, we expect to report updated data from several of our programs at medical meetings, which will be another important milestone in our development plans."

RECENT ACHIEVEMENTS
CPI-444: A2A Receptor Antagonist of Adenosine

Enrolling patients in a Phase 1/1b clinical trial evaluating CPI-444, the Company’s lead product candidate, administered alone and in combination with Genentech’s Tecentriq (atezolizumab), an anti-PD-L1 antibody, under an amended protocol to enroll up to 50 patients with renal cell cancer (RCC) who have failed no more than two prior treatment regimens, which must have included an anti-PD-(L)1 and a tyrosine kinase inhibitor.
○ Biomarker studies conducted by the company have shown that prior therapy with anti-PD-(L)1 may increase expression of the adenosine pathway.
○ Previous studies evaluated patients who have failed up to five (median three) prior treatment regimens.
Continued enrolling patients in the Phase 1b/2 trial, being conducted by Genentech as part of their MORPHEUS platform, which is evaluating CPI-444 and Tecentriq in up to 60 patients with non-small cell lung cancer (NSCLC) who have failed no more than two prior regimens.
CPI-006: Anti-CD73 Antibody

Began enrolling patients with advanced cancer in a Phase 1/1b clinical trial evaluating CPI-006, the Company’s anti-CD73 antibody, as a single agent and in combination with CPI-444, and in combination with an anti-PD-1. The trial is anticipated to enroll up to 350 patients and is designed to select the dose and evaluate the safety, pharmacokinetics, immune biomarkers and efficacy in patients with NSCLC, RCC, and other cancers who have failed standard therapies.
CPI-818: A small molecule ITK inhibitor

Continued pre-clinical development of the Company’s interleukin-2-inducible kinase (ITK) inhibitor and plan to submit an Investigational New Drug (IND) filing in early 2019. Tumor responses have been observed in a preclinical study in spontaneous canine T-cell lymphoma conducted at Colorado State University, College of Veterinary Medicine Flint Animal Cancer Center.
FINANCIAL RESULTS
At June 30, 2018, Corvus had cash, cash equivalents and marketable securities totaling $133.2 million. This compared to cash, cash equivalents and marketable securities of $90.1 million at December 31, 2017.

Research and development expenses for the three months ended June 30, 2018 totaled $9.7 million compared to $12.4 million for the same period in 2017. The decrease of $2.7 million was primarily due to a $2.2 million decrease in CPI-444 and CPI-006 drug manufacturing costs, a decrease of $2.2 million in CPI-444 clinical trial expense, and a decrease of $0.4 million in contracted research costs. These decreases were partially offset by an increase of $0.9 million in CPI-818 drug manufacturing costs, and increase of $0.6 million in CPI-006 clinical trial expense, and an increase of $0.6 million in personnel related costs.

General and administrative expenses for the three months ended June 30, 2018 totaled $2.5 million compared to $2.8 million for the same period in 2017. The decrease of $0.3 million was primarily due to a decrease of $0.4 million in patent and public company expenses, offset by an increase of $0.1 million in personnel costs.

The net loss for the three months ended June 30, 2018 was $11.6 million compared to $15.0 million for the same period in 2017. Total stock compensation expense for the three months ended June 30, 2018 was $1.7 million compared to $1.5 million for the same period in 2017.

On August 2, 2018 Arbutus Biopharma Corporation (Nasdaq: ABUS) reported its 2018 second quarter financial results and provides corporate update (Press release, Arbutus Biopharma, AUG 2, 2018, View Source [SID1234528635]). "With the advancement of AB-506 and AB-452 into clinical development, we are laying the groundwork for a potentially similar paradigm shift in HBV as what has been seen in HCV," said Dr. Mark J Murray, Arbutus’ President and Chief Executive Officer. "Once the Phase 1a/1b studies are completed, our goal is to rapidly initiate an all-oral combination clinical trial using AB-506 and AB-452 with an approved nucleoside analogue drug. We expect this study to begin by the end of 2019 and move us closer to developing a curative treatment for people with HBV."

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Recent Accomplishments and Upcoming Clinical Milestones

Phase 1a/1b study initiated for AB-506, Arbutus’ second generation, and potentially best-in-class, oral capsid inhibitor. The healthy volunteer portion of the study will be followed by dosing cohorts of HBV patients, with top-line results expected in the second quarter of 2019.

The regulatory filing for AB-452, Arbutus’ novel and proprietary RNA destabilizer, is on track for submission in the third quarter, with subject dosing to follow in the fourth quarter of 2018.

Pending completion of the monotherapy Phase 1a/1b studies for AB-506 and AB-452, Arbutus expects to begin an all-oral combination study with AB-506 and AB-452 with an approved nucleoside analogue by the end of 2019.

HBsAg data from the six-week treatment point of patients in the ARB-1467 Phase 2b combination study (with nucleoside analogue), qualifying patients for PEG-IFN add on therapy will be available in Q4.

Partnership with Alnylam

Patisiran is an RNAI therapeutic targeting transthyretin that is being developed as a treatment for hereditary ATTR (hATTR) amyloidosis. Patisiran is currently under Priority Review as a Breakthrough Therapy with the U.S. Food and Drug Administration. The PDUFA date for patisiran is August 11, 2018.

Successful approval of patisiran will trigger a royalty entitlement to Arbutus for the proprietary LNP technology licensed by Arbutus to Alnylam for patisiran.

Genevant

Genevant, a company formed in the second quarter of 2018 and jointly owned by Arbutus and Roivant Sciences, recently announced that it has entered into a strategic partnership with BioNTech AG, an industry leader in mRNA therapy development. BioNTech and Genevant will develop five mRNA products for rare diseases with high unmet medical need under a 50/50 co-development and co-commercialization collaboration.

Genevant and BioNTech have also agreed to a series of exclusive licenses covering the application of Genevant’s proprietary delivery technology for five oncology targets, for which Genevant is eligible to receive significant commercial milestones. This partnership advances Genevant’s goal of having 5-10 programs in the clinic by 2020 across RNAi, mRNA, and gene editing modalities and positions Genevant as a leader in the development of RNA-based therapeutics. Arbutus is entitled to royalties on any product sales by Genevant.

Financial Results

Cash, Cash Equivalents and Investments

As at June 30, 2018, Arbutus had cash, cash equivalents and short-term investments totaling $154.9 million, as compared to $139.0 million in cash and cash equivalents, short-term investments, and restricted investments at December 31, 2017. The increased cash balance was the result of $66.4 million of gross proceeds received in Q1 2018 from the second tranche Preferred Shares issued to Roivant, offset by cash used in operations.

For further details with respect to the Preferred Shares, please refer to Arbutus’ Proxy materials filed on Schedule 14A with the U.S. Securities and Exchange Commission on December 6, 2017.

Net Income (Loss)

For Q2 2018, net income attributable to common shares was $0.6 million ($0.01 basic income per common share) as compared to a net loss of $18.3 million ($0.33 basic loss per common share) for Q2 2017. The Company recorded a non-cash gain of $24.9 million in the second quarter of 2018 related to the formation of Genevant. See discussion below in Gain on Investment in Genevant.

Revenue

Revenue was $1.2 million in Q2 2018 as compared to $1.0 million in Q2 2017.

In October 2017, Arbutus entered into a license agreement with Gritstone that entitles Gritstone to research, develop, manufacture and commercialize products with the Company’s LNP technology in exchange for an upfront license payment and potential future milestone and royalty payments. In April 2018, as part of the license agreement for Arbutus’ delivery technologies, Genevant gained the right to receive 50% of future revenues from Gritstone. Revenue recognized in Q2 2018 relates to Arbutus’ share of the earned portion of the upfront license fee, as well as services provided to Gritstone.

In addition, Arbutus has ongoing license agreements with Alnylam and Spectrum, under which Arbutus is eligible to receive royalties on sales.

Research, Development, Collaborations and Contracts Expenses

Research, development, collaborations and contracts expenses increased to $16.4 million in Q2 2018 from $15.4 million in Q2 2017. Program R&D expenses increased as the Company’s HBV pipeline expands and progresses further into the clinic. In the first half of 2017, Arbutus initiated a Phase 1 clinical trial for AB-423. In the first half of 2018 the Company initiated a Phase 1a/1b clinical trial POS AB-506 (capsid inhibitor) which has shown striking potency and improved PK over AB-423 in preclinical studies. In the first half of 2018 Arbutus has progressed AB-452 (RNA destabilizer) through IND/CTA enabling work to prepare for a regulatory filing in Q3 2018. Arbutus also continues to incur costs related to its other programs pre-IND/CTA work on AB-729 (GalNAc-RNAi). The increase in program R&D expenses in Q2 2018 was offset by a decrease of $1.2 million related to non-cash compensation expense related to the expiry of repurchase rights.

General and Administrative

General and administrative expenses were $3.8 million in Q2 2018, as compared to $4.6 million in Q2 2017.

General and administrative expenses decreased in Q2 2018 compared to Q2 2017 primarily due to a decrease in non-cash compensation expense related to the expiry of repurchase rights in Q3 2017, offset by professional fees incurred in Q2 2018 related to the launch of Genevant Sciences.

Gain on Investment in Genevant

As previously announced, on April 11, 2018 Arbutus entered into an agreement with Roivant to form Genevant Sciences, a jointly-owned company focused on the discovery, development, and commercialization of a broad range of RNA-based therapeutics enabled by Arbutus’ proprietary lipid nanoparticle (LNP) and ligand conjugate delivery technologies. Initially, Arbutus held a 50% ownership interest in Genevant and after additional funding received by Genevant at a stepped-up valuation, at June 30, 2018 Arbutus holds 41% of the outstanding equity of Genevant. As a result of the equity interest received by Arbutus in exchange for the license of its delivery technologies and other contributed assets, Arbutus has recognized a non-cash gain of $24.9 million during Q2 2018.

Site Consolidation

In February 2018, we announced a site consolidation and organizational restructuring to better align our HBV business in Warminster, PA, by reducing our global workforce and closing our Burnaby facility. In Q1 2018 we began executing our site consolidation plan and substantially completed these activities in Q2 2018. We recorded expenses of $2.6 million in Q2 2018 related to the site consolidation. We expect related total cash expenditures to be approximately $5.0 million and have recognized $4.2 million to June 30, 2018.

Outstanding Shares

The Company had 55.3 million common shares issued and outstanding at June 30, 2018. In addition, the Company had 6.8 million options outstanding and 1.164 million Series A participating convertible preferred shares outstanding, which (including the annual 8.75% coupon) will be mandatorily convertible into 22.6 million common shares on October 18, 2021. Assuming the outstanding options and convertible preferred shares were fully converted, the Company would have had 84.7 million common shares outstanding at June 30, 2018.

The Company’s consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP) on a basis consistent for all periods presented. In addition to the results reported in accordance with U.S. GAAP, the Company provides additional measures that are considered "non-GAAP" financial measures under applicable SEC rules. These non-GAAP financial measures should not be viewed in isolation or as a substitute for GAAP net loss and basic and diluted net loss per common share.

The Company evaluates items on an individual basis, and considers both the quantitative and qualitative aspects of the item, including (i) its size and nature, (ii) whether or not it relates to the Company’s ongoing business operations, and (iii) whether or not the Company expects it to occur as part of its normal business on a regular basis. In the three months ended June 30, 2018, the Company’s non-GAAP net loss and non-GAAP net loss attributable to common shares per common share excludes the gain on investment related to the launch of Genevant. The Company believes that the exclusion of this item provides management and investors with supplemental measures of performance that better reflect the underlying economics of the Company’s business. In addition, the Company believes the exclusion of this item is important in comparing current results with prior period results and understanding projected operating performance.

Conference Call Today

Arbutus will hold a conference call and webcast today, Thursday, August 2, 2018 at 1:30 PM Pacific Time (4:30 PM Eastern Time) to provide a corporate update. You can access a live webcast of the call through the Investor section of Arbutus’ website at www.arbutusbio.com. Alternatively, you can dial 1-866-393-1607 or 1-914-495-8556 and reference conference ID 6966479.

An archived webcast will be available on the Arbutus website after the event. Alternatively, you may access a replay of the conference call by calling 1-855-859-2056 or 1-404-537-3406 and reference conference ID 6966479.