On April 27, 2017 The Bayer Group reported a very successful start to 2017 and generated strong sales and earnings growth in the first quarter (Press release, Bayer, APR 26, 2017, View Source [SID1234518711]).


"At Pharmaceuticals, we once again benefited from the very good performance of our key growth products," CEO Werner Baumann said when he presented the interim report for the first quarter on Thursday. Consumer Health, Crop Science and Animal Health also registered increases in sales and EBITDA before special items. Covestro posted substantial growth in sales and earnings. Driven by Covestro’s performance, Bayer has raised its Group outlook for 2017.

Sales of the Bayer Group increased by 11.7 percent to EUR 13,244 million (Q1 2016: EUR 11,854 million) in the first quarter. Adjusted for currency and portfolio effects (Fx & portfolio adj.), sales advanced by 9.4 percent. Sales of the Life Science businesses amounted to EUR 9,680 million, up by 4.9 percent (Fx & portfolio adj.) year on year. Group EBITDA before special items improved by 14.9 percent to EUR 3,893 million (Q1 2016: EUR 3,387 million). EBIT climbed by a substantial 34.3 percent to EUR 3,116 million (Q1 2016: EUR 2,320 million) after special charges of EUR 85 million (Q1 2016: EUR 272 million). These mainly resulted from expenses related to efficiency improvement programs, impairment losses on intangible assets, and costs in connection with the agreed acquisition of Monsanto. EBIT before special items moved ahead by 23.5 percent to EUR 3,201 million (Q1 2016: EUR 2,592 million). Net income climbed by 37.9 percent to EUR 2,083 million (Q1 2016: EUR 1,511 million), and core earnings per share from continuing operations by 11.5 percent to EUR 2.62 (Q1 2016: EUR 2.35).

Cash flow provided by operating activities from continuing operations climbed by a substantial 49.6 percent to EUR 826 million (Q1 2016: 552 million) due to the improvement in EBITDA. Net financial debt of the Bayer Group declined by EUR 1.4 billion to EUR 10.4 billion between December 31, 2016, and March 31, 2017, due mainly to cash inflows from the sale of Covestro shares.

Strong gains at Pharmaceuticals

Sales of prescription medicines (Pharmaceuticals) rose in the first quarter by an encouraging 7.4 percent (Fx & portfolio adj.) to EUR 4,263 million (Q1 2016: EUR 3,889 million). "Our key growth products were once again especially successful, registering combined growth of 20 percent on a currency-adjusted basis," Baumann said. The oral anticoagulant Xarelto, the eye medicine Eylea, the cancer drugs Xofigo and Stivarga, and the pulmonary hypertension treatment Adempas posted total combined sales of EUR 1,445 million (Q1 2016: EUR 1,187 million). Sales of Xarelto climbed by 19.6 percent on a currency-adjusted basis (Fx adj.), due primarily to higher volumes in Europe and Japan. In addition, Bayer once again significantly expanded its business with the eye medicine Eylea (Fx adj.: plus 19.3 percent), with performance driven by higher sales volumes in Europe. Encouraging sales were also achieved in Canada and Japan.

Sales of the hormone-releasing intrauterine devices of the Mirena product family increased by a substantial 22.7 percent (Fx adj.), primarily due to the performance of the U.S. business, which also benefited from the successful market launch of the new Kyleena intrauterine device. Bayer also recorded substantial sales increases for its diabetes treatment Glucobay (Fx adj.: plus 14.6 percent), its Aspirin Cardio product for the secondary prevention of heart attacks (Fx adj.: plus 13.8 percent) and its X-ray contrast agent Ultravist (Fx adj.: plus 18.0 percent), primarily as a result of the positive development of business in China. On the other hand, business with the Kogenate/ Kovaltry blood-clotting medicines was down overall (Fx adj.: minus 8.5 percent), largely due to fluctuations in the order volumes placed by Bayer’s distribution partner for these products. As expected, sales of the multiple sclerosis product Betaferon/Betaseron were also lower than in the prior-year quarter due to reduced demand in Europe and the United States (Fx adj.: minus 12.1 percent). Overall, the Pharmaceuticals business grew in all regions on a currency-adjusted basis.

EBITDA before special items of Pharmaceuticals increased by a substantial 19.1 percent to EUR 1,502 million (Q1 2016: EUR 1,261 million). While sales rose, selling expenses and research and development expenditures were at around the same level as the prior-year quarter.

Growth in sales and earnings at Consumer Health

Adjusted for currency and portfolio effects, sales of self-care products advanced by 2.6 percent to EUR 1,601 million (Q1 2016: EUR 1,520 million) in the first quarter. "We achieved double-digit percentage sales gains for several products at Consumer Health as well," Baumann noted. The division registered encouraging growth in Europe/Middle East/Africa and in Asia/Pacific. Sales in North America were level year on year on a currency-adjusted basis, while business declined substantially in Latin America.

The sunscreen product Coppertone delivered positive performance (Fx adj.: plus 21.3 percent), primarily in the United States and China where Bayer built inventories in the distribution channel ahead of the summer season. Encouraging sales gains were also recorded for Canesten skin and intimate health products (Fx adj.: plus 11.5 percent), in part due to the expansion of the product portfolio last year. Sales of the Alka-Seltzer family of products to treat gastric complaints and cold symptoms advanced significantly (Fx adj.: plus 19.6 percent), especially in the United States due to a strong cold season and as a result of a product line extension. The One A Day vitamin product achieved double-digit growth (Fx adj.: plus 19.1 percent), as did the Elevit prenatal vitamin (Fx adj.: plus 13.4 percent). By contrast, sales of Dr. Scholl’s foot care products declined substantially (Fx adj.: minus 33.6 percent), primarily due to the reduction of inventories in distribution channels ahead of a change in product lines and a weak market environment in the United States. Business with the antihistamine Claritin was down slightly (Fx adj.: minus 2.4 percent), mainly because of a slow start to the allergy season in the United States. Gains in Europe and China only partially offset this effect.

EBITDA before special items of Consumer Health advanced by 2.3 percent to EUR 392 million (Q1 2016: EUR 383 million). This increase resulted from the positive development of sales as well as from one-time gains of around EUR 20 million, primarily from the sale of brands. A higher cost of goods sold, in part due to write-downs on inventories, had an opposing effect.

Crop Science: business expanded in North America

Sales of the agriculture business increased by 3.2 percent (Fx & portfolio adj.) to EUR 3,120 million (Q1 2016: EUR 2,936 million). "Crop Science benefited primarily from encouraging performance in North America," Baumann said. Sales in that region grew by 8.9 percent (Fx adj.). Business development was also positive in Europe/Middle East/ Africa (Fx adj.: plus 2.0 percent) and in Asia/Pacific (Fx adj.: plus 2.9 percent), while sales in Latin America declined by 9.8 percent (Fx adj.).

Sales at Seeds (which also includes the traits business) rose by 8.0 percent (Fx and portfolio adj.). At Crop Protection, gains were primarily recorded at SeedGrowth (seed treatment products) and Herbicides, which posted increases of 7.1 percent and 5.3 percent (both Fx and portfolio adj.), respectively. Business at Insecticides expanded by 3.9 percent (Fx and portfolio adj.), while sales at Fungicides were 6.2 percent lower (Fx and portfolio adj.) than in the prior-year quarter. Sales growth of 20.5 percent (Fx and portfolio adj.) at Environmental Science was based on the delivery of products to the company that acquired the consumer business in October 2016.

EBITDA before special items of Crop Science increased by 2.4 percent to EUR 1,115 million (Q1 2016: EUR 1,089 million). Positive earnings effects resulted primarily from higher volumes. These stood against an increase in the cost of goods sold and in research and development expenses.

Substantial earnings growth at Animal Health

Sales of the Animal Health business rose by 2.9 percent (Fx and portfolio adj.) to EUR 440 million (Q1 2016: EUR 408 million). The development of business in the Asia/Pacific region in particular was encouraging. Business in North America benefited from the sales generated by the Cydectin product portfolio that Bayer acquired from Boehringer Ingelheim Vetmedica, Inc. in the United States. Bayer once again significantly expanded business with its Seresto flea and tick collar (Fx adj.: plus 38.2 percent), primarily as the result of higher volumes in the United States and Europe. By contrast, sales of the Advantage family of flea, tick and worm control products were considerably lower than in the prior-year quarter (Fx adj.: minus 10.0 percent), partly due to intensified competitive pressure and shifts in demand patterns. EBITDA before special items increased by 10.7 percent to EUR 135 million (Q1 2016: EUR 122 million). Positive earnings contributions resulted from both price increases as well as the Cydectin business that Bayer acquired. These stood against an increase in selling expenses and research and development expenditures.

Covestro records substantial expansion in volumes and prices

Sales of Covestro advanced by 23.6 percent (Fx & portfolio adj.) in the first quarter compared with the prior-year period, to EUR 3,564 million (Q1 2016: EUR 2,850 million). Selling prices were much higher overall, especially at Polyurethanes, while volumes increased substantially in all business units. EBITDA before special items improved by 66.5 percent to EUR 839 million (Q1 2016: EUR 504 million). Substantially higher selling prices more than offset the effect of a slight increase in raw material prices. In addition, higher volumes had a positive effect on earnings.

Group outlook for 2017 raised

For 2017, Covestro is now budgeting a substantial sales increase (previously: increase) and a significant improvement in EBITDA after adjustment for special items (previously: on or above the prior-year level).

This development leads to the following changes for the Bayer Group. Sales are now expected to increase to around EUR 51 billion (previously: more than EUR 49 billion). This now corresponds to a mid- to high-single-digit (previously: low- to mid-single-digit) percentage increase on a currency- and portfolio-adjusted basis. EBITDA before special items is now expected to improve by a low-teens percentage (previously: mid-single-digit percentage). Bayer now aims to grow core earnings per share from continuing operations by a mid- to high-single-digit percentage (previously: mid-single-digit percentage). Bayer’s interest in Covestro amounts to only 53 percent as of March 2017 (previously: 64 percent for the full year). Excluding capital and portfolio measures, net financial debt is targeted to be around EUR 8 billion at the end of 2017 (previously: around EUR 10 billion).

Taking into account the potential opportunities and risks, at this point in time Bayer is not adjusting the forecasts issued for its Life Science businesses in February 2017 and refers to its Annual Report 2016 for further information. This forecast is based on the exchange rates as of March 31, 2017. There were no significant changes in this regard compared with December 31, 2016.

On April 26, 2017 Asterias Biotherapeutics, Inc. (NYSE MKT: AST), a biotechnology company focused on the emerging field of regenerative medicine, reported that the results from its completed Phase 2 clinical trial of AST-VAC1 are now available online in Cancer, a leading peer-reviewed journal of the American Cancer Society (Press release, BioTime, APR 26, 2017, View Source [SID1234518695]). The study publication is available at View Source

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"This important publication in the journal Cancer shows why AST-VAC1 has the potential to become an important new therapy for AML patients by safely prolonging the duration of remission in patients with high-risk AML," said Steve Cartt, President and Chief Executive Officer of Asterias. "We believe these Phase 2 results also demonstrate the potential of our AST-VAC2 allogeneic (non-patient specific) dendritic cell cancer vaccine to achieve promising results in its upcoming Phase 1/2a study in non-small cell lung cancer and to potentially be developed for the treatment of other types of cancer, as well."

The publication, titled "Immune Responses and Long-Term Disease Recurrence Status After Telomerase-Based Dendritic Cell Immunotherapy in Patients With Acute Myeloid Leukemia," describes the previously reported results of the Phase 2 study of AST-VAC1, Asterias’ patient-specific dendritic cell cancer vaccine, in which 57% of patients who received AST-VAC1 had prolonged relapse-free survival, including high-risk patients over 60 years old or in second remission.

The Phase 2 multicenter, open label trial was designed to evaluate the safety and tolerability of the AST-VAC1 vaccination regimen in patients with intermediate or high risk AML who were in complete clinical remission. Additional objectives of the study were to evaluate the immune responses to AST-VAC1 and to explore the effects of vaccination on relapse in this patient population. Long-term follow-up results showed that 11 out of 19 patients (58 percent) receiving AST-VAC1 during complete remission were relapse-free with a median follow-up of 52 months. In addition, four out of seven patients (57 percent) over the age of 60 remained in remission after a median 54 months of follow-up. Such prolonged relapse-free survival was favorable compared to that previously reported for these patient groups (20-40% overall group and 10-20% for subjects over 60 years old). AST-VAC1 was found to be safe and well-tolerated in this study over multiple vaccinations.

About Acute Myeloid Leukemia

Acute myeloid leukemia (AML) is a cancer of the blood and bone marrow. AML is the most common type of acute leukemia and has the potential for rapid progression, if untreated. In AML, the bone marrow produces an excess number of immature cells known as blasts. In AML, these blasts fail to mature into normal red and white blood cells. Instead, the blasts proliferate and accumulate in the bone marrow and peripheral blood, leading to deficiencies in normal mature cells. These deficiencies, often referred to as cytopenias, can induce several adverse effects including anemias and susceptibility to infections. Current treatment strategies for AML are associated with significant morbidities and in most instances, AML leads to death.

Approximately 20,500 new cases of AML are diagnosed in the U.S. annually. AML remains a high unmet clinical need, particularly in patients over the age of 60 years who face poor outcomes and have limited therapeutic options. Treatment and prognosis in AML is strongly influenced by a patient’s age and tumor profile. Successful treatment and survival of advanced age patients or those with a high risk profile is very poor, with a four year relapse-free survival of 10% – 20% (Rolig et al, 2011). Detailed characterizations of genetic abnormalities associated with AML have elucidated their high number and relative complexity, making development of targeted therapeutics to these mutations very challenging. For this reason, broad immunotherapy approaches such as autologous cell vaccines are particularly promising.

About AST-VAC1

AST-VAC1 is a cancer immunotherapy, consisting of autologous mature antigen-presenting dendritic cells pulsed with a messenger RNA for the protein component of human telomerase (hTERT) and a portion of a lysosomal targeting signal (LAMP). hTERT is a common protein in tumor cells and is responsible for the increased proliferative lifespan of cancer cells. In AST-VAC1, the dendritic cells present telomerase to the immune system to induce T cells to target and kill hTERT-expressing tumor cells. The LAMP signal allows AST-VAC1 to stimulate both cytotoxic and helper T cell responses to telomerase, critical elements to induce and maintain immune responses that kill tumor cells. Because of the widespread expression of telomerase in the majority of cancers, AST-VAC1 is a platform immunotherapeutic that could be used alone or in conjunction with other therapeutics such as immune checkpoint inhibitors to target immune-based destruction of tumors.

On April 26, 2017 TESARO, Inc. (NASDAQ:TSRO), an oncology-focused biopharmaceutical company, reported that the European Commission (EC) has approved VARUBY (oral rolapitant tablets) for the prevention of delayed nausea and vomiting associated with highly and moderately emetogenic cancer chemotherapy in adults (Press release, TESARO, APR 26, 2017, View Source [SID1234518692]). Chemotherapy-induced nausea and vomiting (CINV) is a frequent and debilitating, yet often preventable, side effect of chemotherapy.

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VARUBY is a selective and competitive antagonist of human substance P/neurokinin 1 (NK-1) receptors that is rapidly absorbed and slowly eliminated, with a plasma half-life of seven days. A single 180 milligram dose (two tablets) of VARUBY is to be administered within two hours prior to initiation of each chemotherapy cycle, but at no less than 2‑week intervals, as part of combination therapy. Results from three global Phase 3 trials of VARUBY demonstrated a significant reduction in episodes of vomiting or use of rescue medication during the 25 to 120 hour period following administration of emetogenic chemotherapy, including cisplatin, carboplatin and anthracycline/cyclophosphamide-based regimens. In addition, patients who received VARUBY reported experiencing less nausea that interfered with normal daily life and fewer episodes of vomiting over multiple cycles of chemotherapy. Results of each of the three Phase 3 studies were published in The Lancet Oncology in August 2015.i,ii

"With more than half of patients treated with emetogenic chemotherapy experiencing delayed nausea and vomiting, the approval of VARUBY will give physicians in Europe a new option to help prevent this serious side effect," said Orlando Oliveira, Senior Vice President and General Manager of TESARO International. "This approval represents an important milestone in TESARO’s international expansion. With TESARO operating in 17 European countries, we look forward to bringing this important medicine to patients as quickly as possible."

"While important progress in the treatment and prevention of delayed CINV has been made, nausea and vomiting continue to be two of the most common and distressing side effects of cancer chemotherapy," said Florian Scotté, M.D., Ph.D., Head of the Functional Unit of Supportive Care, Department of Medical Oncology at Hôpital Européen Georges Pompidou, Paris, France. "Adding an NK-1 receptor antagonist such as VARUBY, which has a 7-day half-life and greater than 90% receptor occupancy in the cortical regions of the brain five days after dosing, can provide enhanced protection from delayed CINV, which can last for several days."

The centralised marketing authorisation applies to all 28 European Union (EU) member states as well as in the European Economic Area (EEA) countries of Iceland, Lichtenstein and Norway. TESARO is working with the appropriate national authorities in the European countries to support reimbursement and availability of VARUBY to ensure that patients who may benefit from VARUBY have access to it.

Oral rolapitant was approved by the U.S. Food and Drug Administration on September 1, 2015 and is marketed by TESARO in the United States under the brand name VARUBI.

About Chemotherapy-Induced Nausea and Vomiting (CINV)
Chemotherapy-induced nausea and vomiting is a debilitating, yet often preventable, side effect of chemotherapy. Up to 50% of patients undergoing highly or moderately emetogenic chemotherapy experience delayed CINV (>24 to 120 hours post chemotherapy)—even when prescribed a 5-HT3 receptor antagonist and a corticosteroid. Blocking both 5-HT3 and NK-1 receptors has been shown to offer better control of nausea and vomiting than inhibiting 5-HT3 receptors alone. Adding a single dose of VARUBY to an antiemetic regimen, including a 5-HT3 receptor antagonist and corticosteroid, within two hours prior to each chemotherapy cycle as part of combination therapy further improves prevention of delayed CINV.

About the VARUBY (Oral Rolapitant Tablets) Clinical Program
The efficacy of VARUBY was established in multiple randomized, well-controlled, international, blinded clinical trials that enrolled more than 2,500 patients. VARUBY, when administered in combination with a 5-HT3 receptor antagonist and dexamethasone, was superior to a 5-HT3 receptor antagonist and dexamethasone in preventing CINV in patients receiving either moderately or highly emetogenic chemotherapy.

The clinical profile of VARUBY in cisplatin-based highly emetogenic chemotherapy (HEC) was confirmed in two identical Phase 3 studies: HEC1 and HEC2. Both trials met their primary endpoint of complete response (CR), and demonstrated statistical superiority of rolapitant 180 mg compared to active control (5-HT3 receptor antagonist plus dexamethasone) in the delayed phase (25-120 hours) of CINV. In HEC1, 264 patients received rolapitant 180 mg and 262 received control. The proportion of patients achieving a CR was 72.7% vs. 58.4% (p=< 0.001). In HEC2, 271 patients received rolapitant and 273 received control. The proportion of patients achieving a CR was 70.1% vs. 61.9% (p=0.043). The most common adverse reactions (≥3%) among patients receiving cisplatin-based chemotherapy were neutropenia (9% rolapitant vs. 8% control), hiccups (5% vs. 4%), and abdominal pain (3% vs. 2%).

A Phase 3 trial was also conducted to evaluate rolapitant 180 mg compared to active control in 1,332 patients receiving moderately emetogenic chemotherapy regimens, including anthracycline/cyclophosphamide combinations, carboplatin, irinotecan, pemetrexed, oxaliplatin, and doxorubicin. This trial met its primary endpoint of CR, and demonstrated statistical superiority of rolapitant 180 mg compared to active control (5-HT3 receptor antagonist plus dexamethasone) in the delayed phase of CINV. The proportion of patients achieving a CR was 71.3% vs 61.6% (p= < 0.001). The most common adverse reactions (≥3%) among patients receiving these chemotherapies were decreased appetite (9% rolapitant vs. 7% control), neutropenia (7% vs. 6%), dizziness (6% vs. 4%), dyspepsia (4% vs. 2%), urinary tract infection (4% vs. 3%), stomatitis (4% vs. 2%), and anemia (3% vs. 2%).

About VARUBY (oral rolapitant tablets)
VARUBY is a substance P/neurokinin-1 (NK-1) receptor antagonist that is approved in the European Union for use in combination with other antiemetic agents in adults for the prevention of delayed nausea and vomiting associated with highly and moderately emetogenic cancer chemotherapy in adults. VARUBY is contraindicated in combination with St John’s wort. Each tablet contains 90 mg of rolapitant (as hydrochloride monohydrate). The inhibitory effect of a single dose of VARUBI/VARUBY on CYP2D6 lasts at least seven days and may last longer. VARUBI/VARUBY is not recommended in patients who require chronic administration of strong or moderate enzyme inducers. Please see full product information for more details.

VARUBI (rolapitant) is also approved in the United States in combination with other antiemetic agents for the prevention of delayed nausea and vomiting associated with initial and repeat courses of emetogenic cancer chemotherapy, including, but not limited to, highly emetogenic chemotherapy. Please see additional important safety information and full prescribing information at www.varubirx.com.

On April 26, 2017 ArQule, Inc. (Nasdaq: ARQL) reported that the U.S. Patent and Trademark Office has issued U.S. Patent Number 9,630,968 (Press release, ArQule, APR 26, 2017, View Source [SID1234518690]). The patent claims composition of matter of ARQ 531. ArQule will be entitled to patent protection through December 2035 in the U.S. for the allowed claims. ARQ 531 is an investigational, orally bioavailable, potent and reversible inhibitor of both wild type and C481S-mutant Bruton’s tyrosine kinase (BTK). The company plans to begin a phase 1 clinical trial by the third quarter of 2017 with ARQ 531 in patients with B-cell malignancies who are refractory to other therapeutic options.

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"This patent secures long lasting and foundational intellectual protection for ARQ 531," said Peter Lawrence, President, Chief Operating Officer, and General Counsel at ArQule. "We continue to work to extend and strengthen all intellectual property related to chemical equity that has been generated through our multiple years of investment in the BTK discovery program."

B-cell malignancies, like chronic lymphocytic leukemia, Waldenstrom’s macroglobulinemia, diffuse large B-cell lymphoma and mantle cell lymphoma are driven by BTK. The only approved BTK inhibitor, ibrutinib, is irreversible and makes a covalent bond with the C481 residue of the targeted protein. Although ibrutinib has demonstrated excellent responses in patients with elevated B-cell receptor signaling, clinical resistance has been observed, and the BTK C481S mutation is emerging as a predominant mechanism of resistance. As a reversible inhibitor, ARQ 531 does not require interaction with the C481 residue, a binding site essential for irreversible ibrutinib binding to BTK, thus positioning ARQ 531 as a targeted therapy for patients harboring C481S-mutant BTK who have developed resistance to irreversible BTK inhibitors.

About BTK and ARQ 531

ARQ 531 is an investigational, orally bioavailable, potent and reversible Bruton’s tyrosine kinase (BTK) inhibitor. Biochemical and cellular studies have shown that ARQ 531 inhibits both the wild type and C481S-mutant forms of BTK. The C481S mutation is a known emerging resistance mechanism for first generation irreversible BTK inhibitors. In preclinical studies ARQ 531 has demonstrated high oral bioavailability as well as good ADME, pharmacokinetic and metabolic properties. The company plans to initiate a phase 1 trial by the third quarter of 2017. BTK is a therapeutic target that has been clinically proven to inhibit B-cell receptor signaling in blood cancers.

On April 26, 2017 United Therapeutics Corporation (NASDAQ: UTHR) reported its financial results for the first quarter ended March 31, 2017 (Press release, United Therapeutics, APR 26, 2017, View Source [SID1234518691]).

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"Our quarterly financial growth trends are slower than we would like as we are seeing more patients stay longer on front-line pulmonary arterial hypertension (PAH) therapies," said Martine Rothblatt, Ph.D., United Therapeutics Chairman and Chief Executive Officer. "Due to the progressive nature of this disease, we believe that this building backlog of PAH patients ultimately will transition to more advanced therapies, such as Orenitram, Tyvaso and Remodulin. As the PAH patient backlog dynamics unfold, we are continuing to invest in our growing product pipeline of late stage programs in cardiopulmonary diseases and oncology and also in regenerative medicine and organ manufacturing to ultimately find a cure for PAH."

Key financial highlights include (dollars in millions, except per share data):



Three Months Ended
March 31,

Percentage



2017

2016

Changes

Revenues

$
370.5

$
369.0

—
%
Net income

$
178.6

$
235.5

(24)
%
Non-GAAP earnings(1)

$
165.7

$
141.9

17
%
Net income, per diluted share

$
3.89

$
4.84

(20)
%
Non-GAAP earnings, per diluted share(1)

$
3.61

$
2.91

24
%










(1) See definition of non-GAAP earnings, a non-GAAP financial measure, and a reconciliation of net income to non-GAAP earnings below.
Financial Results for the Three Months Ended March 31, 2017 compared to the Three Months Ended March 31, 2016

Revenues

The following table presents the components of total revenues (dollars in millions):



Three Months Ended
March 31,

Percentage



2017

2016

Change

Net product sales:







Remodulin


$
145.8

$
139.8

4
%
Tyvaso


87.4

102.2

(14)
%
Adcirca


80.0

72.6

10
%
Orenitram


39.3

40.2

(2)
%
Unituxin


18.0

14.2

27
%
Total revenues


$
370.5

$
369.0

—
%
Revenues for the three months ended March 31, 2017 increased by $1.5 million compared to the same period in 2016. The growth in revenues resulted from the following: (1) a $7.4 million increase in Adcirca net product sales; (2) a $6.0 million increase in Remodulin net product sales; and (3) a $3.8 million increase in Unituxin net product sales. These increases were partially offset by a $0.9 million decrease in Orenitram net product sales and a $14.8 million decrease in Tyvaso net product sales.

Expenses

Cost of product sales. The table below summarizes cost of product sales by major category (dollars in millions):



Three Months Ended
March 31,

Percentage



2017

2016

Change

Category:







Cost of product sales excluding share-based compensation


$
15.8

$
12.6

25
%
Share-based compensation benefit(1)


(1.5)

(11.9)

87
%
Total cost of product sales


$
14.3

$
0.7

1,943
%











(1) Refer to Share-based compensation (benefit) expense below for discussion.
Research and development expense. The table below summarizes research and development expense by major category (dollars in millions):



Three Months Ended
March 31,

Percentage



2017

2016

Change

Category:







Research and development expense excluding share-based compensation


$
41.3

$
36.8

12
%
Share-based compensation benefit(1)


(5.1)

(37.2)

86
%
Total research and development expense


$
36.2

$
(0.4)

9,150
%











(1) Refer to Share-based compensation (benefit) expense below for discussion.
Selling, general and administrative expense. The table below summarizes selling, general and administrative expense by major category (dollars in millions):



Three Months Ended
March 31,

Percentage



2017

2016

Change

Category:







General and administrative excluding share-based compensation


$
53.5

$
78.2

(32)
%
Sales and marketing excluding share-based compensation


15.4

22.3

(31)
%
Share-based compensation benefit(1)


(12.5)

(95.5)

87
%
Total selling, general and administrative expense


$
56.4

$
5.0

1,028
%











(1) Refer to Share-based compensation (benefit) expense below for discussion.
General and administrative. The decrease in general and administrative expense of $24.7 million for the three months ended March 31, 2017, as compared to the same period in 2016, was primarily attributable to a $32.0 million decrease in charitable donations to non-affiliated, non-profit organizations that provide financial assistance to patients with PAH.

Share-based compensation (benefit) expense. The table below summarizes share-based compensation (benefit) expense by major category (dollars in millions):



Three Months Ended
March 31,

Percentage



2017

2016

Change

Category:







Share tracking awards plan


$
(24.6)
$
(147.9)

83
%
Stock options


4.6

3.1

48
%
Other(1)


0.9

0.2

350
%
Total share-based compensation benefit


$
(19.1)
$
(144.6)

87
%










(1) Includes expense related to restricted stock units for the three months ended March 31, 2017, and employee stock purchase plan for the three months ended March 31, 2017 and 2016.
Share tracking awards plan. We re-measure the fair value of share tracking awards at the end of each financial reporting period. Changes in the liability associated with share tracking awards resulting from such re-measurements are recorded as adjustments to share-based compensation (benefit) expense. Decreases in our stock price will generally result in a reduction in the share tracking award liability. The decrease in share tracking awards plan benefit of $123.3 million for the three months ended March 31, 2017, as compared to the same period in 2016, was primarily due to the smaller decrease in our stock price during the three months ended March 31, 2017, as compared to the same period in 2016.

Income Tax Expense

The provision for income taxes was $85.0 million for the three months ended March 31, 2017 as compared to $128.4 million for the same period in 2016. The provision for income taxes is based on an estimated effective tax rate for the entire year. The estimated annual effective tax rate is subject to adjustment in subsequent quarterly periods if components used to estimate the effective tax rate are updated or revised. The estimated effective tax rate as of March 31, 2017 and March 31, 2016, was approximately 32 percent and approximately 35 percent, respectively. Our 2017 estimated effective tax rate decreased compared to 2016 primarily due to a decrease in non-deductible share-based compensation expense, and the impact of ASU 2016-09 adoption requiring windfall excess tax benefits to be recognized in income tax expense.

Non-GAAP Earnings

Non-GAAP earnings is defined as net income, adjusted for: (1) share-based compensation expense (benefit), net (including expenses relating to stock options, share tracking awards, restricted stock units and our employee stock purchase plan); (2) extraordinary, non-recurring and unusual items; and (3) tax impact on non-GAAP earnings adjustments. Starting in the first quarter of 2017, we will no longer adjust our non-GAAP results for interest expense, depreciation and amortization. We believe these changes will provide a better view of the company’s regular and on-going operations. Prior year amounts will reflect this change for comparability purposes.

A reconciliation of net income to non-GAAP earnings is presented below (in millions, except per share data):



Three Months Ended
March 31,



2017

2016

Net income, as reported

$
178.6

$
235.5

Adjusted for:





Share-based compensation benefit, net


(19.1)

(144.6)

Tax expense(1)


6.2

51.0

Non-GAAP earnings

$
165.7

$
141.9

Non-GAAP earnings per share:





Basic


$
3.72

$
3.13

Diluted


$
3.61

$
2.91

Weighted average number of common shares outstanding:





Basic


44.5

45.4

Diluted


45.9

48.7








(1) Represents the total tax impact of the quarterly non-GAAP earnings adjustments based on our actual quarterly effective income tax rates of approximately 32 percent and approximately 35 percent as of March 31, 2017 and 2016, respectively.