On February 6, 2019 Seelos Therapeutics, Inc. (the "Company") in its Current Reports on Form 8-K filed with the Securities and Exchange Commission (the "SEC") on each of October 17, 2018, November 16, 2018 and January 16, 2019, the Company reported that it has entered into a Securities Purchase Agreement dated as of October 16, 2018, by and among the Company, the Delaware corporation that was previously known as "Seelos Therapeutics, Inc." and the buyers listed on the signature pages attached thereto (the "Investors"), as amended (the "Securities Purchase Agreement") (Press release, Apricus Biosciences, FEB 6, 2019, View Source [SID1234533110]).

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On January 31, 2019, pursuant to the terms of the Securities Purchase Agreement, the Company issued warrants (the "Warrants") to purchase an aggregate of 1,463,519 shares of its common stock, par value $0.001 per share ("Common Stock") to the Investors. The Warrants are comprised of two series of warrants, the Series A Warrants to Purchase Common Stock (the "Series A Warrants") and the Series B Warrants to Purchase Common Stock (the "Series B Warrants"). The Series A Warrants are initially exercisable for an aggregate of 1,463,519 shares of Common Stock and the Series B Warrants are initially not exercisable for any shares of Common Stock.

The Series A Warrants have an initial exercise price of $4.15, were immediately exercisable upon issuance and have a term of five years from the date of issuance. The Series A Warrants provide that, for the first three years following the issuance of the Series A Warrants, if the Company issues or sells, or is deemed to have issued or sold, any shares of Common Stock for a price per share lower than the exercise price then in effect, subject to certain limited exceptions, then the exercise price of the Series A Warrants shall be reduced to such lower price per share. If the Company issues or sells, or is deemed to have issued or sold any shares of Common Stock for a price per share lower than the exercise price then in effect after the first three years following the issuance of the Series A Warrants, subject to certain limited exceptions, then the exercise price of the Series A Warrants shall be reduced to an amount equal to the product of (i) the exercise price then in effect and (ii) the quotient determined by dividing (a) the sum of (x) the product derived by multiplying the exercise price then in effect and the number of shares of Common Stock outstanding immediately prior to the new issuance plus (y) the consideration received by the Company for the new issuance, by (b) the product derived by multiplying (1) the exercise price then in effect by (2) the number of shares of Common Stock outstanding immediately after the new issuance. In addition, the exercise price and the number of shares of Common Stock issuable upon exercise of the Series A Warrants will also be subject to adjustment in connection with stock splits, dividends or distributions or other similar transactions.

Additionally, every ninth trading day up to and including the 45th trading day (each, a "Reset Date") following (i) each date on which a registration statement registering any shares of Common Stock underlying the Warrants ("Warrant Shares") is declared effective or is available for use, (ii) if there is no registration statement registering all of the Warrant Shares, the earlier to occur of (a) the first date on which the holders can sell all the Warrant Shares without restriction or limitation pursuant to Rule 144 under the Securities Act of 1933, as amended (the "Securities Act"), and (b) July 24, 2019 (such earlier date, the "Six Month Reset Date") and (iii) in the event that the Company (a) fails for any reason to satisfy the requirements of Rule 144(c)(1) under the Securities Act or (b) has ever been an issuer described in Rule 144(i)(1)(i) under the Securities Act or becomes such an issuer in the future, and the Company fails to satisfy any condition set forth in Rule 144(i)(2) under the Securities Act (each of clauses (a) and (b), a "Public Information Failure") at any time following the Six Month Reset Date, then the earlier to occur of (1) the date the Public Information Failure is cured and no longer prevents the holder from selling all of the Warrant Shares pursuant to Rule 144 without restriction or limitation, (2) the first date on which the holders can sell all the Warrant Shares without restriction or limitation pursuant to Rule 144 under the Securities Act and without the requirement to be in compliance with Rule 144(c)(1), and (3) January 24, 2020 (such 45 trading day period, the "Reset Period" and each such 45th trading day after (i), (ii) or (iii), the "End Reset Date"), the exercise price will be adjusted to be the lesser of (i) the exercise price then in effect and (ii) 125% of 80% of the average of the five lowest volume-weighted average trading prices of a share of Common Stock as quoted on the Nasdaq Capital Market during the applicable Reset Period to date and the number of shares of Common Stock issuable upon exercise of the Series A Warrants will be proportionally increased accordingly, provided that the Company shall in no event issue shares of Common Stock pursuant to the exercise of the Warrants, in the aggregate, in excess of 15,963,030 (the "Warrant Issuance Cap"). In the event that the Company is unable to

2

issue shares of Common Stock pursuant to an exercise of Warrants due to the application of the Warrant Issuance Cap, the Company will pay to the exercising holder an amount in cash per share equal to the difference between the last closing trade price of the Common Stock and the applicable exercise price, to the extent not previously paid to the Company.

Pursuant to the Series A Warrants, the Company agreed not to enter into, allow or be party to certain fundamental transactions, generally including any merger with or into another entity, sale of all or substantially all of the Company’s assets, tender offer or exchange offer, or reclassification of the Common Stock (a "Fundamental Transaction") until the Reservation Date. Thereafter, the Company agreed not to enter into or be party to a Fundamental Transaction unless the successor entity in such transaction assumes in writing all of the Company’s obligations under the Series A Warrants, upon which the Series A Warrants shall become exercisable for shares of Common Stock, shares of the common stock of the successor entity or the consideration that would have been issuable to the holders had they exercised the Series A Warrants prior to such Fundamental Transaction, at the holders’ election. Additionally, if the successor entity is a publicly traded corporation, the holders may elect to receive an equivalent security of the successor entity, in exchange for the Series A Warrants. Any security issuable or potentially issuable to the holder pursuant to the terms of the Series A Warrants on the consummation of a Fundamental Transaction must be registered and freely tradable by the holder without any restriction or limitation or the requirement to be subject to any holding period pursuant to any applicable securities laws.

Additionally, at the request of a holder delivered before the 90th day after the consummation of a Fundamental Transaction, the Company or the successor entity must purchase such holder’s Warrant for the value calculated using the Black-Scholes option pricing model as of the day immediately following the public announcement of the applicable Fundamental Transaction, or, if the Fundamental Transaction is not publicly announced, the date the Fundamental Transaction is consummated.

The Series A Warrants also contain a "cashless exercise" feature that allows the holders to exercise the Series A Warrants without making a cash payment in the event that there is no effective registration statement registering the shares issuable upon exercise of the Series A Warrants. The Series A Warrants are subject to a blocker provision which restricts the exercise of the Series A Warrants if, as a result of such exercise, the holder, together with its affiliates and any other person whose beneficial ownership of shares of Common Stock would be aggregated with the holder’s for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), would beneficially own in excess of 4.99% or 9.99% of the outstanding shares of Common Stock (including the shares of Common Stock issuable upon such exercise), as such percentage ownership is determined in accordance with the terms of the Series A Warrants.

The Series B Warrants have an exercise price of $0.001, were immediately exercisable upon issuance and will expire on the day following the later to occur of (i) the Reservation Date, and (ii) the date on which the Series B Warrants have been exercised in full (without giving effect to any limitation on exercise contained therein) and no shares remain issuable thereunder. The Series B Warrants are initially exercisable for no shares of Common Stock. On each Reset Date, the number of shares of Common Stock issuable upon exercise of the Series B Warrants shall be increased to the number (if positive) obtained by subtracting (i) 1,829,406 from (ii) the quotient determined by dividing (a) the pro rata portion of the purchase price paid by such holder pursuant to the Securities Purchase Agreement by (b) 80% of the average of the five lowest volume-weighted average trading price of a share of Common Stock as quoted on the Nasdaq Capital Market during the applicable Reset Period to date, provided that the Company shall in no event issue shares of Common Stock pursuant to the exercise of the Warrants, in the aggregate, in excess of the Warrant Issuance Cap. In the event that the Company is unable to issue shares of Common Stock pursuant to an exercise of Warrants due to the application of the Warrant Issuance Cap, the Company will pay to the exercising holder an amount in cash per share equal to the difference between the last closing trade price of the Common Stock and the applicable exercise price, to the extent not previously paid to the Company.

Pursuant to the Series B Warrants, the Company also agreed not to enter into, allow or be party to a Fundamental Transaction until the Reservation Date. Thereafter, the Company agreed not to enter into or be party to a Fundamental Transaction unless the successor entity in such transaction assumes in writing all of the Company’s obligations under the Series B Warrants, upon which the Series B Warrants shall become exercisable for shares of Common Stock, shares of the common

stock of the successor entity or the consideration that would have been issuable to the holders had they exercised the Series B Warrants prior to such Fundamental Transaction, at the holders’ election. Additionally, if the successor entity is a publicly traded corporation, the holders may elect to receive an equivalent security of the successor entity, in exchange for the Series B Warrants. Any security issuable or potentially issuable to the holder pursuant to the terms of the Series B Warrants on the consummation of a Fundamental Transaction must be registered and freely tradable by the holder without any restriction or limitation or the requirement to be subject to any holding period pursuant to any applicable securities laws.

The Series B Warrants also contain a "cashless exercise" feature that allows the holders to exercise the Series B Warrants without making a cash payment. The Series B Warrants are subject to a blocker provision which restricts the exercise of the Series B Warrants if, as a result of such exercise, the holder, together with its affiliates and any other person whose beneficial ownership of shares of Common Stock would be aggregated with the holder’s for purposes of Section 13(d) of the Exchange Act would beneficially own in excess of 4.99% or 9.99% of the outstanding shares of Common Stock (including the shares of Common Stock issuable upon such exercise), as such percentage ownership is determined in accordance with the terms of the Series B Warrants.

In the event that the Company does not have sufficient authorized shares to deliver in satisfaction of an exercise of a Series B Warrant, then unless the holder elects to void such attempted exercise, the holder may require the Company to pay an amount equal to the product of (i) the number of shares that the Company is unable to deliver and (ii) the highest volume-weighted average price of a share of Common Stock as quoted on the Nasdaq Capital Market during the period beginning on the date of such attempted exercise and ending on the date that the Company makes the applicable payment.

On February 6, 2019 GlaxoSmithKline reported that 2018 financial, product and strategy highlights (Press release, GlaxoSmithKline, FEB 6, 2019, View Source [SID1234533109]).

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Group sales £30.8 billion, +2% AER, +5% CER
Pharmaceuticals sales £17.3 billion, flat AER, +2% CER; Vaccines sales £5.9 billion, +14% AER, +16% CER; Consumer Healthcare sales £7.7 billion, -1% AER, +2% CER
Total new Respiratory product sales £2.6 billion, +35% AER, +38% CER
Total HIV sales £4.7 billion, +9% AER, +11% CER. Dolutegravir-based regimens £4.4 billion, +14% AER, +16% CER
Shingrix sales £784 million, +>100% AER, +>100% CER
Total Group operating margin 17.8%, +4.3 percentage points AER, +5.0 percentage points CER
Adjusted Group operating margin 28.4%, flat AER, +0.5 percentage points CER. (Pharmaceuticals: 33.3%; Vaccines 33.0%; Consumer Healthcare 19.8%)
Total EPS 73.7p, +>100% AER, +>100% CER, reflecting stronger operating performance, lower restructuring and impairment charges as well as a favourable comparison with impact of US tax reform in 2017
Adjusted EPS 119.4p, +7% AER, +12% CER, driven by improved operating margin and continued financial efficiencies
Net cash flow from operations £8.4 billion. Free cash flow £5.7 billion, improvement reflecting greater focus on cash conversion, particularly working capital
23p dividend declared for the quarter; 80p for full year 2018
4 major transactions, including new Consumer Healthcare JV, announced in 2018 to support strategy and reshape of the Group’s portfolio
2019 guidance
Expect Adjusted EPS to decline -5% to -9% CER reflecting recent approval of a generic competitor to Advair in the US. Guidance also reflects expected impact of Tesaro acquisition and assumes Consumer Healthcare nutrition disposal
and Consumer JV with Pfizer close as previously indicated
Expect 80p dividend for 2019
Pipeline update and newsflow
Rebuild of Pharmaceuticals pipeline continues with 33* of the 46* new medicines now in development targeting modulation of the immune system
Major progress made in immuno-oncology pipeline with 16* assets now in clinical development, reflecting organic progression, the Tesaro acquisition and the alliance with Merck KGaA, Darmstadt, Germany*
Major data readouts and other significant newsflow expected on multiple new medicines in HIV, Oncology, Immuno-inflammation and Respiratory in 2019:
– FDA approval decision expected for dolutegravir + lamivudine in H1
– FDA filings planned for long-acting injectable cabotegravir + rilpivirine in H1 and fostemsavir for highly treatment-experienced patients in H2
– Pivotal stage data readouts expected for BCMA for 4L multiple myeloma, Zejula for 1L maintenance ovarian cancer and PD1 dostarlimab for endometrial cancer
– Updated phase I PFS data from DREAMM-1 study for BCMA to be published in leading journal in H1
– Phase III start planned for anti-GMCSF for treatment of rheumatoid arthritis in H2
– Results of pivotal CAPTAIN study to support filing of Trelegy for use in asthma expected in H1

Emma Walmsley, Chief Executive Officer, GSK said:
"GSK delivered improved operating performance in 2018 with Group sales growth, strong commercial execution of new product launches, especially Shingrix, continued cost discipline and better cash generation.

"It was also a significant year for the Group strategically, with the launch of a new R&D strategy focused on immunology, genetics and new technologies, together with a series of transactions that support our strategy and reshape of the Group’s portfolio.

"We are making good progress against our priority to rebuild our Pharmaceuticals pipeline, particularly in oncology. Since July, we have doubled the number of oncology assets in clinical development to 16 through the advancement of our internal programmes and with targeted business development including the recently completed acquisition of Tesaro and our new alliance with Merck KGaA that is expected to close in Q1 2019. During 2019, we expect to receive pivotal data on three new cancer medicines, all of which have the potential to be launched in the next two years.

"We are also focused on completing the transactions to divest our Consumer Healthcare nutrition business to Unilever; and the formation of our new joint venture with Pfizer that will create a new, world leading Consumer Healthcare company and which provides a unique opportunity to deliver substantial value for shareholders.

"Finally, I would like to thank all our customers, suppliers and employees for their support and hard work in 2018 and look forward to working with them in 2019, which will be an important year of execution for GSK."

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on February 6, 2019 Regeneron Pharmaceuticals, Inc. (NASDAQ: REGN) reported financial results for the fourth quarter and full year 2018 and provided a business update (Press release, Regeneron, FEB 6, 2019, View Source [SID1234533105]).

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"2018 was marked by the diversification of our product revenue streams as well as exciting advances across our commercial and development portfolio," said Leonard S. Schleifer, M.D., Ph.D., President and Chief Executive Officer of Regeneron. "In 2019, we plan to strengthen EYLEA’s U.S. market leadership position with a potential approval in diabetic retinopathy. With the fourth quarter U.S. approval of Dupixent in asthma, and the potential 2019 approvals in adolescent atopic dermatitis and chronic rhinosinusitis with nasal polyposis in the U.S. and asthma in the EU, Dupixent continues to deliver on its potential as a pipeline in a product. Libtayo, our first approved immuno-oncology therapy, has begun its launch in advanced cutaneous squamous cell carcinoma and we continue to investigate multiple other potential indications, both as monotherapy and in combination. This year we plan to initiate two potentially pivotal lymphoma studies with our most advanced bispecific antibody, CD20xCD3, and to advance two innovative co-stimulatory bispecific antibodies into human clinical studies."

Key Pipeline Progress
Regeneron has twenty-one product candidates in clinical development, including five of the Company’s U.S. Food and Drug Administration (FDA) approved products for which it is investigating additional indications. Updates from the clinical pipeline include:
EYLEA (aflibercept) Injection

The Company announced that the Phase 3 PANORAMA trial evaluating EYLEA in patients with moderately severe and severe non-proliferative diabetic retinopathy (NPDR) met its one-year primary endpoint and key secondary endpoints, including both the improvement of diabetic retinopathy and a reduction in the rate of vision-threatening complications.

Dupixent (dupilumab) Injection

In October 2018, the FDA approved Dupixent as an add-on maintenance therapy in patients with moderate-to-severe asthma aged 12 years and older with an eosinophilic phenotype or with oral corticosteroid-dependent asthma.

The Company and Sanofi have submitted a supplemental Biologics License Application (sBLA) and a Marketing Authorization Application (MAA) for an expanded atopic dermatitis indication in adolescent patients (12–17 years of age). In November 2018, the FDA accepted for priority review the sBLA for atopic dermatitis in adolescent patients, with a target action date of March 11, 2019.

In December 2018, the Company and Sanofi submitted an sBLA for chronic rhinosinusitis with nasal polyposis.

REGN1979 is a bi-specific antibody against CD20 and CD3.

The Company presented positive results from a Phase 1 proof-of-concept study in patients with relapsed or refractory B-cell non-Hodgkin lymphoma, including in follicular lymphoma (FL) and diffuse large B-cell lymphoma (DLBCL), at the American Society of Hematology (ASH) (Free ASH Whitepaper) Annual Meeting.

Praluent (alirocumab) Injection

In February 2019, the European Medicine Agency’s Committee for Medicinal Products for Human Use (CHMP) adopted a positive opinion for Praluent, recommending a new indication to reduce cardiovascular risk by lowering low-density lipoprotein cholesterol (LDL-C) levels

as an adjunct to correction of other risk factors in adults with established atherosclerotic cardiovascular disease (ASCVD).

REGN3500 is an antibody to IL-33.

A Phase 2 study in atopic dermatitis was initiated.

REGN5458 is a bi-specific antibody against BCMA and CD3.

A Phase 1 study in multiple myeloma was initiated.

Business Development Update

The Company and Sanofi entered into an agreement to restructure their Immuno-oncology Discovery and Development Agreement (Amended IO Discovery Agreement), which narrowed the scope of the existing discovery and development activities conducted by the Company to developing therapeutic bi-specific antibodies targeting BCMA and CD3 (BCMAxCD3) and MUC16 and CD3 (MUC16xCD3). The Company retains full rights to its other immuno-oncology programs that were part of the original Immuno-oncology Discovery and Development Agreement.

Select 2019 Milestones
Programs

Milestones
EYLEA

FDA decision on sBLA for the treatment of diabetic retinopathy (target action date of May 13, 2019)

Re-submission of Prior-Approval Supplement (PAS) for pre-filled syringe

Initiate a study of a high dose formulation of aflibercept
Dupixent

FDA decision on sBLA for expanded atopic dermatitis indication in adolescent patients (12–17 years of age) (target action date of March 11, 2019)

Report results from Phase 3 study in pediatric patients (6–11 years of age) with atopic dermatitis

European Medicines Agency (EMA) decision on regulatory application for asthma

Initiate Phase 2/3 program in chronic obstructive pulmonary disease (COPD)
Libtayo

Regulatory agency decision for advanced cutaneous squamous cell carcinoma (CSCC) in the European Union (EU)

Continue patient enrollment in non-small cell lung cancer and various other studies
Praluent

FDA (target action date of April 28, 2019) and EMA decisions on applications for cardiovascular risk reduction

FDA decision on sBLA for first-line treatment of hyperlipidemia (target action date of April 29, 2019)
Fasinumab (NGF Antibody)

Continue patient enrollment in Phase 3 long-term safety study and Phase 3 efficacy studies in osteoarthritis
Evinacumab (ANGPTL3 Antibody)

Report results from Phase 3 study in homozygous familial hypercholesterolemia (HoFH)
REGN3500 (IL-33 Antibody)

Report results from Phase 2 study in asthma
Trevogrumab (GDF8 Antibody) in combination with garetosmab

Report results from multi-dose portion of Phase 1 study
REGN1979 (CD20 and CD3 Antibody)

Initiate potentially pivotal Phase 2 study in FL

Initiate potentially pivotal Phase 2 study in DLBCL
Pozelimab (C5 Antibody)

Initiate Phase 2 study in paroxysmal nocturnal hemoglobinuria (PNH)

Fourth Quarter and Full Year 2018 Financial Results

Product Revenues: Net product sales were $1.096 billion in the fourth quarter and $4.106 billion for the full year 2018, compared to $979 million in the fourth quarter and $3.719 billion for the full year 2017. EYLEA net product sales in the United States were $1.079 billion in the fourth quarter and $4.077 billion for the full year 2018, compared to $975 million in the fourth quarter and $3.702 billion for the full year 2017. Overall distributor inventory levels for EYLEA in the United States remained within the Company’s one-to-two-week targeted range. Libtayo, which was approved by the FDA on September 28, 2018, had net product sales in the United States of $15 million in the fourth quarter of 2018.

Total Revenues: Total revenues, which include product revenues described above, increased by 22% to $1.928 billion in the fourth quarter of 2018, compared to $1.582 billion in the fourth quarter of 2017. Full year 2018 total revenues increased by 14% to $6.711 billion, compared to $5.872 billion for the full year 2017. Total revenues include Sanofi and Bayer collaboration revenues of $729 million in the fourth quarter of 2018, compared to $497 million in the fourth quarter of 2017. Total revenues include Sanofi and Bayer collaboration revenues of $2.188 billion for the full year 2018, compared to $1.815 billion for the full year 2017. The increase in Sanofi collaboration revenue in the fourth quarter and full year 2018 was primarily due to (i) an increase in clinical development activities for Libtayo, (ii) the Company’s share of higher net sales of Dupixent, and, to a lesser extent, Praluent and Kevzara, and (iii) the recognition of a cumulative catch-up adjustment of $149 million in the fourth quarter arising from a change in the estimate of the stage of completion of the collaborations’ immuno-oncology programs primarily in connection with the Amended IO Discovery Agreement, partly offset by (i) a lower proportion of development reimbursements for Dupixent that Sanofi is required to fund under our License and Collaboration Agreement, and (ii) an increase in the collaborations’ Dupixent commercialization expenses. Sanofi collaboration revenue for the full year of 2018, compared to the full year of 2017, was also negatively impacted by the ceasing of funding by Sanofi in connection with the Company’s Antibody Discovery and Preclinical Development Agreement, which ended on December 31, 2017.

The change in Bayer collaboration revenue in the fourth quarter and full year 2018 was primarily due to an increase in net profits in connection with higher sales of EYLEA outside the United States. In addition, in the fourth quarter of 2017, the Company accelerated the recognition of deferred revenue from the up-front payment previously received from Bayer in connection with the discontinuation of the Ang2 development program.

The Company adopted Accounting Standard Codification (ASC) 606, Revenue from Contracts with Customers, as of January 1, 2018. The Company adopted the standard using the modified retrospective method, and therefore prior period amounts have not been adjusted.

The Company’s collaborators provide it with estimates of the collaborators’ respective sales and the Company’s share of the profits or losses from commercialization of products for the most recent fiscal quarter. The Company’s estimates for such quarter are reconciled to actual results in the subsequent fiscal quarter, and the Company’s share of the profit or loss is adjusted on a prospective basis accordingly, if necessary. Refer to Table 4 for a summary of collaboration and other revenue.

Research and Development (R&D) Expenses: GAAP R&D expenses were $601 million in the fourth quarter and $2.186 billion for the full year 2018, compared to $528 million in the fourth quarter and $2.075 billion for the full year 2017. The higher R&D expenses in the fourth quarter and full year 2018 were principally due to an increase in Libtayo development expenses, higher payroll and payroll-related costs, and higher facilities-related costs, partly offset by a decrease in Dupixent development expenses. The higher R&D expenses for full year 2018, compared to full year 2017, was also due to higher fasinumab development expenses, partly offset by lower total clinical manufacturing costs. R&D-related non-cash share-based compensation expense was $68 million in the fourth quarter and $229 million for the full year 2018, compared to $59 million in the fourth quarter and $272 million for the full year 2017. The decrease in total R&D-related non-cash compensation expense for the full year of 2018, compared to the full year of 2017, is largely attributable to a revision in our estimate of the number of stock options that are expected

to be forfeited, partly offset by the immediate recognition of non-cash compensation expense in connection with annual employee grants made in December 2018 to certain retirement-eligible employees.

Selling, General, and Administrative (SG&A) Expenses: GAAP SG&A expenses were $491 million in the fourth quarter and $1.556 billion for the full year 2018, compared to $410 million in the fourth quarter and $1.320 billion for the full year 2017. The higher SG&A expenses in the fourth quarter and full year 2018 were primarily due to higher headcount and headcount-related costs, higher contributions to independent not-for-profit patient assistance organizations, an increase in commercialization-related expenses for Dupixent, and an accrual for loss contingencies associated with ongoing litigation. SG&A-related non-cash share-based compensation expense was $51 million in the fourth quarter and $169 million for the full year 2018, compared to $62 million in the fourth quarter and $208 million for the full year 2017. The decrease in SG&A-related non-cash share-based compensation expense for the full year of 2018, compared to the full year of 2017, was primarily due to a revision in our estimate of the number of stock options that are expected to be forfeited.

Other Income (Expense): GAAP other income (expense), net, in the fourth quarter and full year of 2018 includes the recognition of $63 million and $42 million, respectively, of net losses on equity securities. In the first quarter of 2018, we adopted Accounting Standards Update (ASU) 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, which requires us to measure equity investments at fair value with changes in fair value recognized in net income; previously, such changes in fair value were recognized in Other comprehensive income (loss). In addition, GAAP other expenses in 2017 included the recognition of a $30 million loss on debt extinguishment related to the Company’s Tarrytown lease transaction.

Income Taxes: GAAP income tax benefit was $(144) million and the effective tax rate was (21.3)% in the fourth quarter of 2018, compared to GAAP income tax expense of $381 million and 68.7% in the fourth quarter of 2017. GAAP income tax expense was $109 million and the effective tax rate was 4.3% for the full year 2018, compared to $880 million and 42.3% for the full year 2017. The Company’s effective tax rate for both the fourth quarter and full year 2018 was significantly impacted by the law known as the Tax Cuts and Jobs Act (the "U.S. Tax Reform Act"), which reduced the U.S. federal corporate income tax rate from 35% to 21% effective January 1, 2018. The effective tax rate in 2018 was positively impacted, compared to the U.S. federal statutory rate, primarily by the Company’s fourth quarter sale of non-inventory related assets between foreign subsidiaries, which had a net impact on the rate by 24.0% and 6.3% for the fourth quarter and full year 2018, respectively. The effective tax rate for both the fourth quarter and full year 2018 was also positively impact by tax planning in connection with the U.S. Tax Reform Act, income earned in foreign jurisdictions with tax rates lower than the U.S. federal statutory rate, stock-based compensation, and the federal tax credit for research activities. During the fourth quarter and full year 2018, the Company recorded an income tax benefit of $56 million and $68 million, respectively, as an adjustment to the provisional amount recorded as of December 31, 2017 for the U.S. Tax Reform Act.

GAAP and Non-GAAP Net Income(2): GAAP net income was $820 million, or $7.58 per basic share and $7.15 per diluted share, in the fourth quarter of 2018, compared to GAAP net income of $174 million, or $1.62 per basic share and $1.50 per diluted share, in the fourth quarter of 2017. GAAP net income was $2.444 billion, or $22.65 per basic share and $21.29 per diluted

share, for the full year 2018, compared to GAAP net income of $1.199 billion, or $11.27 per basic share and $10.34 per diluted share, for the full year 2017.

Non-GAAP net income was $786 million, or $7.26 per basic share and $6.84 per diluted share, in the fourth quarter of 2018, compared to non-GAAP net income of $607 million, or $5.67 per basic share and $5.23 per diluted share, in the fourth quarter of 2017. Non-GAAP net income was $2.622 billion, or $24.30 per basic share and $22.84 per diluted share, for the full year 2018, compared to non-GAAP net income of $1.901 billion, or $17.88 per basic share and $16.32 per diluted share, for the full year 2017.

A reconciliation of the Company’s GAAP to non-GAAP results is included in Table 3 of this press release.

2019 Financial Guidance(3)

The Company’s full year 2019 financial guidance consists of the following components:
GAAP Sanofi collaboration revenue: Sanofi reimbursement of Regeneron commercialization-related expenses
$510 million–$560 million
GAAP Unreimbursed R&D(5)
$1.855 billion–$2.000 billion
Non-GAAP Unreimbursed R&D(2)(4)
$1.590 billion–$1.710 billion
GAAP SG&A
$1.700 billion–$1.830 billion
Non-GAAP SG&A(2)(4)
$1.500 billion–$1.600 billion
GAAP effective tax rate
14%–16%
Capital expenditures
$410 million–$490 million

Regeneron records net product sales of EYLEA in the United States. Outside the United States, EYLEA net product sales comprise sales by Bayer in countries other than Japan and sales by Santen Pharmaceutical Co., Ltd. in Japan under a co-promotion agreement with an affiliate of Bayer. The Company recognizes its share of the profits (including a percentage on sales in Japan) from EYLEA sales outside the United States within "Bayer collaboration revenue" in its Statements of Operations.

This press release uses non-GAAP net income, non-GAAP net income per share, non-GAAP unreimbursed R&D, and non-GAAP SG&A, which are financial measures that are not calculated in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"). These non-GAAP financial measures are computed by excluding certain non-cash and other items from the related GAAP financial measure. Non-GAAP adjustments also include the estimated income tax effect of reconciling items.

The Company makes such adjustments for items the Company does not view as useful in evaluating its operating performance. For example, adjustments may be made for items that fluctuate from period to period based on factors that are not within the Company’s control (such as the Company’s stock price on the dates share-based grants are issued or changes in the fair value of the Company’s equity investments) or items that are not associated with normal, recurring operations (such as changes in applicable laws and regulations). Management uses these non-GAAP measures for planning, budgeting, forecasting, assessing historical performance, and making financial and operational decisions, and also provides forecasts to investors on this basis. Additionally, such non-GAAP measures provide investors with an enhanced understanding of the financial performance of the Company’s core business operations. However, there are limitations in the use of these and other non-GAAP financial measures as they exclude certain expenses that are recurring in nature. Furthermore, the Company’s non-GAAP financial measures may not be comparable with non-GAAP information provided by other companies. Any non-GAAP financial measure presented by Regeneron should be considered supplemental to, and not a substitute for, measures of financial performance prepared in accordance with GAAP. A reconciliation of the Company’s historical GAAP to non-GAAP results is included in Table 3 of this press release.

The Company’s 2019 financial guidance does not assume the completion of any significant business development transactions not completed as of the date of this press release.

A reconciliation of full year 2019 non-GAAP to GAAP financial guidance is included below:

Unreimbursed R&D represents R&D expenses reduced by R&D expense reimbursements from the Company’s collaborators and/or customers.

Conference Call Information

Regeneron will host a conference call and simultaneous webcast to discuss its fourth quarter and full year 2018 financial and operating results on Wednesday, February 6, 2019, at 8:30 AM. To access this call, dial (800) 708-4539 (U.S.) or (847) 619-6396 (International). A link to the webcast may be accessed from the "Investors and Media" page of Regeneron’s website at www.regeneron.com. A replay of the conference call and webcast will be archived on the Company’s website and will be available for 30 days.

On February 6, 2019 MacroGenics, Inc. (NASDAQ: MGNX), a clinical-stage biopharmaceutical company focused on discovering and developing innovative monoclonal antibody-based therapeutics for the treatment of cancer, reported positive results from SOPHIA, the Company’s Phase 3 clinical study of margetuximab in HER2-positive metastatic breast cancer patients (Press release, MacroGenics, FEB 6, 2019, View Source [SID1234533103]). Margetuximab is an investigational immune-enhancing monoclonal antibody derived from the Company’s proprietary Fc Optimization technology platform. The SOPHIA clinical trial met the primary endpoint of prolongation of progression-free survival (PFS) in patients treated with the combination of margetuximab plus chemotherapy compared to trastuzumab plus chemotherapy. Patients in the margetuximab arm experienced a 24% risk reduction in PFS compared to patients in the trastuzumab arm (HR=0.76, p=0.033). Notably, approximately 85% of patients in the study were carriers of the CD16A (FcγRIIIa) 158F allele, which has been previously associated with diminished clinical response to HERCEPTIN and other antibodies. In this pre-specified subpopulation, patients in the margetuximab arm experienced a 32% risk reduction in PFS compared to patients in the trastuzumab arm (HR=0.68, p=0.005). Results of the SOPHIA study are being prepared for submission for publication and presentation later this year at a major scientific conference. Follow-up for determination of the impact of therapy on the sequential primary endpoint of overall survival (OS) is ongoing, as pre-specified in the study protocol and recommended by the trial’s independent Data Safety Monitoring Committee. MacroGenics anticipates submitting a Biologics License Application (BLA) to the U.S. Food and Drug Administration in the second half of 2019.

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The SOPHIA study enrolled 536 patients at approximately 200 trial sites across North America, Europe and Asia. Patients were treated with either margetuximab or trastuzumab in combination with one of four chemotherapy agents (capecitabine, eribulin, gemcitabine or vinorelbine). All study patients had previously received trastuzumab and pertuzumab, and approximately 90% had previously received ado-trastuzumab emtansine. The combination of margetuximab and chemotherapy demonstrated acceptable safety and tolerability, comparable overall to that of trastuzumab and chemotherapy.

"There are currently no approved agents for the treatment of patients with metastatic HER2+ breast cancer who have previously received trastuzumab, pertuzumab and ado-trastuzumab emtansine. If margetuximab is approved, based on SOPHIA data, I believe that this agent could become a valuable treatment option for these patients," said Hope S. Rugo, M.D., Director, Breast Oncology and Clinical Trials Education, University of California San Francisco Comprehensive Cancer Center.

"We are pleased with the SOPHIA clinical results and are especially grateful to the patients, their caregivers, trial investigators and site personnel who participated in the study. I would also like to thank the entire MacroGenics team and our business partners who worked diligently to bring margetuximab to the clinic and execute the SOPHIA study," said Scott Koenig, M.D., Ph.D., MacroGenics’ President and CEO. "Our Fc-engineered, immune-enhanced molecule has demonstrated a superior outcome in a head-to-head study against HERCEPTIN. We look forward to additional opportunities to develop margetuximab in other HER2-positive breast and gastric cancer populations."
Conference Call Information

MacroGenics will host a conference call today at 8:30 am (ET) to discuss the results of the SOPHIA clinical study. To participate in the conference call, please dial (877) 303-6253 (domestic) or (973) 409-9610 (international) five minutes prior to the start of the call and provide the Conference ID: 7965575.
The recorded, listen-only webcast of the conference call can be accessed under "Events & Presentations" in the Investor Relations section of the Company’s website at View Source A replay of the webcast will be available shortly after the conclusion of the call and archived on the Company’s website for 30 days following the call.

About Margetuximab
Margetuximab is an investigational monoclonal antibody that targets the human epidermal growth factor receptor 2, or HER2 oncoprotein. HER2 is expressed by tumor cells in breast, gastroesophageal and other solid tumors. Margetuximab was designed to provide HER2 blockade and has been engineered with an Fc domain to enhance the engagement of the immune system. In addition to studying margetuximab in breast cancer, MacroGenics is developing the antibody in combination with anti-PD-1 therapy to engage both innate and adaptive immunity for the treatment of patients with gastroesophageal cancer.

About MacroGenics’ Fc Optimization Technology
MacroGenics’ Fc Optimization platform is designed to modulate an antibody’s interaction with immune effector cells. The Fc region of certain antibodies binds activating and inhibitory receptors, referred to as FcγRs, on immune cells found within the innate immune system. Such interactions affect killing of cancer cells through antibody dependent cellular cytotoxicity (ADCC), among other Fc-dependent functions.
Activating FcγRs occur in two variants, or alleles, with high (158V) or low (158F) affinity for the Fc domain of IgG1. A majority (approximately 85%) of the population carries the 158F allele, either in the homozygous or heterozygous form with 158V. Patients that carry the 158F allele have been reported to show diminished clinical responses to certain therapeutic antibodies, including HERCEPTIN.
MacroGenics’ optimized Fc region binds with increased affinity to the activating FcγRs, including the 158F low-affinity allele, and, unique to MacroGenics’ technology, with reduced affinity to the inhibitory FcγR, resulting in improved effector functions, such as ADCC. To date, MacroGenics has successfully incorporated its proprietary Fc Optimization technology in margetuximab, as well as enoblituzumab, an anti-B7-H3 monoclonal antibody currently in development in combination with anti-PD-1 therapy for cancer treatment.

On February 6, 2019 Vaxart, Inc., a clinical-stage biotechnology company developing oral recombinant vaccines that are administered by tablet rather than by injection, reported financial results for the fourth quarter and full year ended December 31, 2018 (Press release, Vaxart, FEB 6, 2019, View Source [SID1234533101]).

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"As we execute on our objective of building a leading oral vaccine company, we continue to expand our understanding of the unique properties of our oral vaccine platform and the important advantages we believe it can offer over conventional injectable vaccines, particularly for mucosal pathogens such as norovirus, flu and RSV," said Wouter Latour, M.D., chief executive officer of Vaxart. "We are focused on our lead product candidate, the first oral vaccine against norovirus, a disease with a $34 billion economic impact in high income countries including the United States, Europe and Japan. After laying the groundwork in 2018, we expect to initiate our norovirus Phase 1 bivalent study and Phase 2 monovalent challenge study during the first half of 2019. In parallel, we are advancing our first therapeutic vaccine targeting HPV-associated dysplasia and cancer toward the clinic."

2018 Highlights:

Corporate:

In February, Vaxart commenced trading on the Nasdaq Capital Market under the symbol "VXRT" following the closing of its merger with Aviragen Therapeutics.
In October, at ID Week in San Francisco, the Company presented data from its H1 influenza Phase 2 challenge study demonstrating that its oral H1 flu vaccine, while providing 39% reduction in flu illness compared to 27% for Fluzone, protected primarily through mucosal immunity, in contrast to Fluzone which primarily protected through serum antibodies. This finding provides evidence that Vaxart’s oral vaccines may deliver better protection against mucosal pathogens than injectable vaccines.
In July, Vaxart announced the publication of the comprehensive results of the previously disclosed Phase 1 clinical trial with its norovirus oral tablet vaccine in the Journal of Clinical Investigation Insight. As reported in the article, the vaccine generated robust systemic and mucosal immune responses, including mucosal IgA, memory B cells, and serum blocking antibody titers (BT50), all potential correlates of protection.
In October at the 32nd International Papillomavirus Conference, the Company presented preclinical data on its human papillomavirus (HPV) vaccine trial. The Vaxart HPV vaccine created CD8 tumor-infiltrating T cells and eliminated or significantly reduced the majority of tumors with or without a checkpoint inhibitor.
In June, the Company announced the publication of preclinical results from its oral F-protein based Respiratory Syncytial Virus (RSV-F) vaccine in Vaccine. As described in the article, the oral RSV-F vaccine candidate provided complete sterilizing protection against RSV infection in the cotton rat challenge model at the target dose.
Financial Results for the Three Months and Year Ended December 31, 2018

Vaxart reported a net loss of $4.9 million for the fourth quarter of 2018 compared to a net loss of $1.1 million for the fourth quarter of 2017. For the year ended December 31, 2018, the net loss was $18.0 million compared to a net loss of $9.6 million for 2017.
Vaxart ended the year with cash and cash equivalents of $11.5 million compared to $17.9 million at September 30, 2018. The decrease was primarily due to cash used in operations.
Revenue for the quarter was $1.8 million compared to $0.8 million in the fourth quarter of 2017. The increase was due to royalty revenue resulting from our merger with Aviragen, offset by lower revenues from the contract with BARDA, which ended on September 30, 2018.
Research and development expenses were $4.5 million for the quarter compared to $1.9 million for the fourth quarter of 2017. The increase was mainly due to higher clinical and manufacturing costs incurred in the Company’s norovirus program and amortization of intangible assets acquired in the merger with Aviragen, offset by lower expenditures incurred under the BARDA contract.
General and administrative expenses were $1.2 million for the quarter compared to $1.5 million for the fourth quarter of 2017. The decrease was a result of significant one-off costs incurred in the 2017 period in connection with the merger with Aviragen