On August 2, 2016 Teva Pharmaceutical Industries Ltd. (NYSE and TASE: TEVA) and Allergan plc (NYSE: AGN) reported that Teva has completed its acquisition of Allergan’s generics business ("Actavis Generics") (Press release, Teva, AUG 2, 2016, View Source;p=irol-newsArticle&ID=2191986 [SID1234516257]).

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This strategic acquisition brings together two leading generics businesses with complementary strengths, R&D capabilities, product pipelines and portfolios, geographical footprints, operational networks and cultures. The result is a stronger, more competitive Teva, well positioned to thrive in an evolving global marketplace, to realize the opportunities the very attractive global and U.S. generics markets offer, and to deliver the highest-quality generic medicines at the most competitive prices, unlocking value to patients, healthcare systems and investors around the world.

"The acquisition of Actavis Generics comes at a time when Teva is stronger than ever—in both our generics and specialty businesses," said Erez Vigodman, President and CEO, Teva. "Through our acquisition of Actavis Generics, we are creating a new Teva with a strong foundation, significantly enhanced financial profile and more diversified revenue sources and profit streams backed by strong product development engines in both generics and specialty. This is a platform that is expected to generate multi-year top-line and bottom-line growth as well as significant cash flow."

Mr. Vigodman continued, "We are confident that we can realize the projected synergies and accretion inherent in this acquisition for our stockholders and quickly integrate Actavis Generics into Teva. Furthermore, as a result of our strengthened financial profile following this transaction, we will be even better positioned to reap the benefits of Teva’s R&D capabilities to support top-line growth and expand our portfolio across the business. The strong, combined company cash flow will allow for rapid deleveraging and give us the ability to continue capital allocation, with a focus on bolstering our specialty pipeline and product portfolio as well as strengthening shareholder returns."

With the acquisition, Teva now has approximately 338 product registrations pending FDA approval and holds the leading position in first-to-file opportunities with approximately 115 pending ANDAs in the U.S. In Europe, after divestitures; Teva will have a pipeline capable of over 5000 launches across the region. In Teva growth markets including, Asia, Africa, Latin America, Middle East, Russia and CIS, there are now approximately 600 pending product approvals. Overall, Teva is planning for 1,500 generic launches globally in 2017.

Teva’s products generated approximately $215 billion in savings in the last decade to the U.S. healthcare system; this number will continue to increase and even accelerate as a result of the acquisition.

"Teva now has some of the best assets, people and capabilities in the industry. We have a clear responsibility to turn those strengths into meaningful results for patients, customers and the communities we serve, as well as for our shareholders," said Siggi Olafsson, President and CEO, Global Generic Medicines, Teva. "We are pleased to welcome our talented new colleagues from Actavis Generics, including many first-class scientists and business leaders."

Increased Global Commercial Reach
Teva’s acquisition of Actavis Generics improves international commercial opportunities and significantly enhances the global scale of its sales and R&D platforms. Offering access to the world’s largest drug cabinet—with more than 1,800 medicines and 16,000 products—Teva now has a commercial presence across 80 markets, including a top-three leadership position in over 40 markets and global leadership in all key global markets.

Financial Highlights
Teva expects to achieve cost synergies and tax savings of approximately $1.4 billion annually by the end of 2019, by eliminating duplication and inefficiencies on a global scale and capturing economies of scale.
Allergan plc received $33.43 billion in cash and approximately 100 million Teva shares.
Strong Combined Global Leadership Team and Employees with Deep Experience across the Business

The two companies share a close cultural and strategic fit, and Teva is focused on leveraging both organizations’ competencies and talent. The combined company’s expanded senior management team is comprised of leaders from both Teva and Actavis. It is structured to leverage the strong talent from both organizations to ensure that the new company capitalizes on its expanded global commercial footprint and Teva’s continued strength as a world leader in generics. With this structure in place beginning on Day One, the company is immediately positioned to maximize growth across all of its global businesses.
Operational Integration and Readiness

Since the acquisition agreement was announced in July 2015, integration teams at Teva and Actavis Generics have worked diligently to plan for integration of the two companies in order to ensure that the combined company is fully operational immediately upon the closing of the transaction. As a result of these actions, Teva will begin to capitalize on the benefits offered by the acquisition of Actavis Generics starting immediately.

"Our ability to close a transaction of this size successfully and be operational on ‘Day One’ is a true testament to the dedication of the integration planning teams at both companies," said Richard Daniell, Teva Chief Integration Officer. "Because business continuity was a primary objective throughout the integration process, our leaders and colleagues are in a position to quickly build on Teva’s solid financial foundation, operational discipline and diverse product base to continue to improve our performance."

On August 2, 2016 Cardinal Health reported fourth-quarter fiscal year 2016 revenues of $31.4 billion, an increase of 14 percent from the fourth quarter last year, and fiscal 2016 revenues of $121.5 billion, an increase of 19 percent from the same period last year (Filing, Q4/Annual, Cardinal Health, 2016, AUG 2, 2016, View Source [SID:1234514197]).

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For the quarter, the company reported growth in GAAP operating earnings of 11 percent to $620 million and in non-GAAP operating earnings of 5 percent to $643 million. GAAP operating earnings for fiscal year 2016 were $2.5 billion, an increase of 14 percent, and non-GAAP operating earnings for the fiscal year were $2.9 billion, an increase of 17 percent from the prior fiscal year.
For the quarter, GAAP diluted earnings per share from continuing operations2 (EPS) increased 16 percent to $1.02, while non-GAAP diluted EPS increased 14 percent to $1.14. GAAP diluted EPS for fiscal year 2016 increased 20 percent to $4.32, and non-GAAP diluted EPS increased 20 percent to $5.24.
"We finished fiscal 2016 having generated the highest revenues, the largest GAAP and non-GAAP operating earnings, and the greatest operating cash flow in our company’s history. Our teams worked incredibly hard this past year while never losing sight of the ultimate goal – serving patients and their families," said George Barrett, chairman and CEO of Cardinal Health, Inc. "The Cardinal Health team is well-positioned to adapt, innovate and lead during a time of great change in the healthcare industry."

Q4 and Fiscal Year Summary

Q4 FY16

Q4 FY15

Y/Y

FY16

FY15

Y/Y
Revenue
$
31.4
billion

$
27.5
billion

14%

$
121.5
billion

$
102.5
billion

19%
GAAP Operating Earnings
$
620
million

$
558
million

11%

$
2,459
million

$
2,161
million

14%
Non-GAAP Operating Earnings
$
643
million

$
611
million

5%

$
2,895
million

$
2,472
million

17%
GAAP Earnings from Continuing Operations2
$
333
million

$
293
million

14%

$
1,427
million

$
1,212
million

18%
Non-GAAP Earnings from Continuing Operations2
$
372
million

$
333
million

12%

$
1,732
million

$
1,469
million

18%
GAAP Diluted EPS from Continuing Operations2
$
1.02

$
0.88

16%

$
4.32

$
3.61

20%
Non-GAAP Diluted EPS from Continuing Operations2
$
1.14

$
1.00

14%

$
5.24

$
4.38

20%
SEGMENT RESULTS
Pharmaceutical Segment
Fourth-quarter revenue for the Pharmaceutical segment increased 14 percent to $28.2 billion due to growth from existing and net new Pharmaceutical Distribution customers and, to a lesser extent, performance from the Specialty business. Segment profit for the quarter increased 1 percent to $542 million due to contributions from acquisitions, largely offset by the loss of a large customer contract, which expired on March 31, 2016.
For the full year, revenue for the Pharmaceutical segment increased 20 percent to $109.1 billion, and segment profit increased 19 percent to $2.5 billion.

Q4 FY16

Q4 FY15

Y/Y

FY16

FY15

Y/Y
Revenue
$
28.2
billion

$
24.7
billion

14%

$
109.1
billion

$
91.1
billion

20%
Segment Profit
$
542
million

$
535
million

1%

$
2.5
billion

$
2.1
billion

19%

Cardinal Health
Page 2

Medical Segment
Fourth-quarter revenue for the Medical segment increased 12 percent to $3.2 billion primarily due to contributions from acquisitions, and, to a lesser extent, growth from Cardinal Health Brand products. Segment profit increased 19 percent to $122 million due to contributions from acquisitions and Cardinal Health Brand products.
Full-year revenue for the Medical segment increased 9 percent to $12.4 billion, and segment profit increased 6 percent to $457 million.

Q4 FY16

Q4 FY15

Y/Y

FY16

FY15

Y/Y
Revenue
$
3.2
billion

$
2.9
billion

12%

$
12.4
billion

$
11.4
billion

9%
Segment Profit
$
122
million

$
103
million

19%

$
457
million

$
433
million

6%

OUTLOOK

The company does not provide GAAP EPS outlook, because it is unable to reliably forecast most of the items that are excluded from GAAP EPS to calculate non-GAAP EPS. These items could cause EPS to differ materially from non-GAAP EPS. See "Use of Non-GAAP Measures" following the attached schedules for additional explanation.

The company’s fiscal year 2017 guidance range for non-GAAP diluted EPS from continuing operations is $5.48 to $5.73, representing growth of approximately 5 to 9 percent from the prior year.

Cardinal Health typically does not provide quarterly earnings guidance. However, the company expects a year-over-year decline in its non-GAAP earnings per share for the first-quarter of fiscal year 2017 in the high-single- to low-double-digit-percent range. This expectation is largely due to an anticipated first-quarter decline in Pharmaceutical segment profit in a percentage range from the high teens to low twenties with full-year Pharmaceutical segment profit expected to be essentially flat to fiscal year 2016.

The expected first-quarter fiscal 2017 Pharmaceutical segment decline is largely based upon two factors: 1) less year-over-year incremental contribution from its generics program; and 2) a previously mentioned Pharmaceutical Distribution large customer loss, the impacts of which will continue through the third-quarter of fiscal year 2017.

More details can be found on the accompanying earnings presentation slides as well as on the company’s conference call.

SELECTED YEAR-END AND RECENT HIGHLIGHTS
•
Increased quarterly dividend by 16 percent to $0.4489 per share, or $1.80 on an annualized basis, and authorized new share repurchase program
•
Appointed Pamela O. Kimmet Chief Human Resources Officer following the retirement of Carole Watkins
•
Committed nearly $2 million in multi-year patient safety grants to help improve the effectiveness, efficiency and excellence of patient care
•
Announced distribution agreement with Biosensors enabling Cordis to sell Biosensors’ coronary stent portfolio in select countries in Europe, the Middle East, Africa, Australia and New Zealand
•
Convened 26th annual Retail Business Conference, presenting a record-setting 9,300 attendees with the industry’s largest lineup of continuing education opportunities, buying opportunities, and access to a broad array of Cardinal Health solutions to help diversify and improve their businesses
•
Demonstrated Cardinal Health’s commitment to the community by:
◦
Recognizing the essential contributions of medical laboratory professionals to patient care with the Cardinal Health urEssential Award
◦
Donating 11 million yen to Save the Children Japan to assist with restoration efforts for those families affected by the earthquakes earlier this year
◦
Contributing more than $85,000 in cash and health care products to aid those affected by the wildfires in Fort McMurray, Alberta, Canada

AWARDS AND RECOGNITIONS

Over the past year, Cardinal Health was recognized for the company’s culture and its commitment to diversity and sustainability. These accolades include:

•
Named on the 2016 "World’s Most Admired Companies" list by Fortune
•
Designated a 2016 Top Green Company in the U.S. by Newsweek
•
Named to the Human Rights Campaign (HRC) "Best Places to Work for LGBT Equality" for fourth consecutive year based on ratings in HRC’s 2016 Corporate Equality Index
•
Included in Becker’s Healthcare 150 Great Places to Work in Healthcare 2016 listing

Cardinal Health
Page 3

•
Named among the 2016 Best Companies for Leaders by Chief Executive
•
Included in the Dow Jones Sustainability North American Company Index for the 10th year in a row

On August 2, 2016 Xencor, Inc. (NASDAQ: XNCR), a clinical-stage biopharmaceutical company developing engineered monoclonal antibodies for the treatment of autoimmune diseases, asthma and allergic diseases and cancer, reported financial results for the second quarter ended June 30, 2016 and provided a review of pipeline and corporate highlights (Filing, 8-K, Xencor, AUG 2, 2016, View Source [SID:1234514196]).

"In the second quarter, we strengthened our internal development pipeline with the addition of two new bispecific oncology candidates, XmAb18087 for the treatment of neuroendocrine tumors and XmAb20717, for the treatment of multiple cancers. We also entered into a strategic collaboration with Novartis, in which we jointly develop XmAb14045 and XmAb13676 for the treatment of acute myeloid leukemia and B-cell malignancies, respectively, while retaining U.S. commercialization rights to both compounds," said Bassil Dahiyat, Ph.D., president and chief executive officer of Xencor. "Taken together, we now expect to have 13 wholly-owned or partnered XmAb antibodies in the clinic by 2018, including four XmAb bispecific antibodies. With $168.8 million in cash, cash equivalents and marketable securities at the end of the second quarter, coupled with the $150 million upfront payment received from Novartis in the third quarter, we remain well-financed to advance the development of our clinical programs and platform."

Pipeline Highlights:

XmAb5871: XmAb5871 is a first-in-class monoclonal antibody that targets CD19 with its variable domain and that uses Xencor’s XmAb immune inhibitor Fc domain to target FcγRIIb, a receptor that inhibits B-cell function. XmAb5871 is currently in Phase 2 clinical studies for the treatment of IgG4-Related Disease (IgG4-RD) and system lupus erythematosus (SLE).

· Phase 1 trial with subcutaneous formulation started in Q3 2016; initial data expected in 2017
· Initial data from IgG4-RD Phase 2 trial expected in 1H17
· Initial data from SLE Phase 2 trial expected in 2018

XmAb7195: XmAb7195 is a first-in-class monoclonal antibody that targets IgE with its variable domain and uses Xencor’s XmAb Immune Inhibitor Fc domain to target FcγRIIb, resulting in three distinct mechanisms of action for reducing IgE levels.

· Initiation of Phase 1 trial with subcutaneous formulation expected in 2016; initial data expected in 1H17

In May 2016, Xencor announced complete data results from its Phase 1a trial of XmAb7195, which showed a swift and extensive depletion of serum IgE at all doses tested, including in high IgE subjects. XmAb7195 was generally well tolerated, with transient, asymptomatic thrombocytopenia reported at doses > 2.0 mg/kg. Moderate urticaria was reported in some treated patients with an apparent correlation of dose frequency with occurrence. Results of this study support further development in a multiple ascending dose study with subcutaneous administration, which will evaluate safety, tolerability and immunogenicity, and will measure IgE levels. These data were presented at the American Thoracic Society 2016 International Conference (A6476: Poster Board Number 407).

Bispecific Oncology Pipeline: Xencor’s initial bispecific programs are tumor-targeted antibodies that contain both a tumor antigen binding domain and a cytotoxic T-cell binding domain. These bispecific antibodies activate T cells for highly potent and targeted killing of malignant cells. Their XmAb Fc domains confer long circulating half-lives, stability and ease of manufacture.

· Initiation of clinical trial for XmAb14045 in acute myeloid leukemia (AML) expected in 2016; initial data expected in 2017
· Initiation of clinical trial for XmAb13676 in B-cell malignancies expected in 2016; initial data expected in 2018
· Initiation of pre-clinical development of XmAb18087, a SSTR2 x CD3 bispecific antibody for the treatment of neuroendocrine tumors, announced in June 2016; Phase 1 clinical trial is expected to begin in 2017
·

Xencor has initiated development of its first bispecific antibody that simultaneously engages two T-cell checkpoint targets to activate T cells against multiple tumor types. These dual checkpoint bispecific antibodies have the potential to improve on combination checkpoint therapies by improving selectivity and eliminating the need for multiple checkpoint antibodies.

· Initiation of pre-clinical development of XmAb20717, a PD-1 x CTLA-4 bispecific antibody for potential use in multiple oncology indications, announced in June 2016; Phase 1 clinical trial is expected to begin in 2017

In June 2016, Xencor entered into a collaboration with Novartis to develop and commercialize lead bispecific oncology candidates XmAb14045 and XmAb13676. Under the terms of the agreement, Xencor and Novartis will share worldwide development costs for the two compounds, with Xencor maintaining U.S. commercial rights and Novartis having commercial rights in the rest of the world. Novartis will also receive worldwide rights to Xencor’s bispecific technology to develop and commercialize four additional targets selected by Novartis, one of which Xencor may elect to co-detail in the U.S. The bispecific collaboration will include molecular engineering by Xencor. Additionally, Novartis will receive a worldwide non-exclusive license to use Xencor’s other XmAb Fc technologies in up to ten molecules. Xencor received a $150 million upfront payment and is eligible to receive up to $2.41 billion in future clinical, regulatory and sales milestone payments and royalties on sales.

Partnered XmAb Programs: Nine pharmaceutical companies and the National Institutes of Health (NIH) are advancing novel drug candidates either discovered at Xencor or that rely on Xencor’s proprietary XmAb technology. Seven such programs are currently undergoing clinical testing.

As part of the June 2016 collaboration with Novartis, Xencor announced that its XmAb bispecific Fc domains will also be applied to four Novartis programs, one of which Xencor may elect to share in costs and U.S. profits in lieu of royalties and to co-detail in the U.S. Novartis will also receive a non-exclusive license to use Xencor’s other XmAb Fc technologies in up to ten molecules.

Second Quarter Ended June 30, 2016 Financial Results

Cash, cash equivalents and marketable securities totaled $168.8 million as of June 30, 2016, compared to $193.3 million on December 31, 2015. The decrease reflects the net spending for the six months ended June 30, 2016. In July 2016, we received a $150 million upfront payment in connection with our Novartis collaboration.

Revenues for the second quarter ended June 30, 2016 were $66.0 million compared to $1.0 million for the same period of 2015. Revenues for the six months ended June 30, 2016 were $73.3 million, compared to $2.5 million for the same period in 2015. Revenues in the three and six month period ended June 30, 2016 included revenue from our Novartis and Amgen collaborations, compared to revenues for the same period in 2015, which were earned primarily from our Novo Nordisk and Alexion collaborations.

Research and development expenditures for the second quarter ended June 30, 2016 were $14.4 million, compared to $7.5 million for the same period in 2015. Total research and development expenses for the six month period ended June 30, 2015 were $24.4 million, compared to $12.7 million for the same period in 2015. The increased spending for research and development for the three and six months ended June 30, 2016 is primarily due to increased spending in our clinical programs including our XmAb5871 program and our initial bispecific clinical programs XmAb14045 and XmAb13676.

General and administrative expenses in the second quarter ended June 30, 2016 were $3.0 million compared to $2.5 million for the same period in 2015. Total general and administrative expenses for the first six months of 2016 were $7.0 million, compared to $5.3 million in the first six months of 2015. Increased spending on general and administration area reflects additional stock-based compensation expenses.

Non-cash, share based compensation expense for the first six months of 2016 was $4.0 million compared to $2.3 million for the first six months of 2015.

Net income for the second quarter ended June 30, 2016 was $47.2 million, or $1.13 on a fully diluted per share basis, compared to a net loss of $8.9 million, or $(0.22) on a fully diluted per share basis, for the same period in 2015. For the six months ended June 30, 2016, net income was $40.8 million or $0.98 on a fully diluted per share basis, compared to net loss of $15.3 million, or $(0.41) on a fully diluted per share basis, for the same period in 2015. The income for the three and six months ended June 30, 2016 over the loss reported for the same periods in 2015 is primarily due to the income recognized under our Novartis and Amgen collaborations.

The total shares outstanding was 40, 944,080 as of June 30, 2016, compared to 40,460,091 shares outstanding as of June 30, 2015.

Financial Guidance

Based on current operating plans, Xencor expects to have cash to fund research and development programs and operations through at least the end of 2019.

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On August 02, 2016 Supernus Pharmaceuticals, Inc. (NASDAQ:SUPN), a specialty pharmaceutical company focused on developing and commercializing products for the treatment of central nervous system (CNS) diseases, reported financial results for second quarter 2016 and associated company developments (Press release, Supernus, AUG 2, 2016, View Source [SID:1234514195]).

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Commercial Update

Second quarter 2016 product prescriptions for Trokendi XR and Oxtellar XR, as reported by IMS, totaled 123,758, a 38.9% increase over the second quarter of 2015.

Prescriptions
Q2 2016 Q1 2015 Change %

Trokendi XR 93,094 65,552 42.0 %
Oxtellar XR 30,664 23,534 30.3 %

Total 123,758 89,086 38.9 %

Source: IMS

Total revenue for the second quarter of 2016 was $50.4 million, a 43.8% increase over $35.1 million in the same period last year. Total revenue for both periods consisted almost exclusively of net product sales.

Net Product Sales ($mil.)
Q2 2016 Q2 2015 Change %

Trokendi XR $ 37.6 $ 26.3 43.3 %
Oxtellar XR $ 12.7 $ 8.0 58.7 %

Total $ 50.3 $ 34.3 46.9 %

"We are pleased with the growth in prescriptions and net product sales in the second quarter and through the first half of 2016. For the first six months of 2016, net product sales increased approximately 50%, as compared to the same period last year," said Jack Khattar, President and CEO of Supernus Pharmaceuticals. "The solid growth in prescriptions behind our products three years post launch reinforces our belief that the combined annual peak sales for Oxtellar XR and Trokendi XR can exceed $500 million."

In June 2016 the Company submitted the revised label for Trokendi XR requesting approval to expand the label to include treatment of migraine in adults. As previously announced, this resubmission was requested by the Food and Drug Administration (FDA) to review the proposed label in a different format. The FDA has set a target date in the third quarter of 2016 to complete its review. We continue to prepare and will be ready to launch the migraine indication soon after receiving full FDA approval.

Progress of Product Pipeline

Enrollment continues for both Phase III trials for SPN-810, which is currently in development for Impulsive Aggression in patients aged 6 to 12 years who have ADHD. The pace of enrollment is slower than anticipated due to challenges such as those experienced by caregivers in recording patient information on the new electronic diary, and lack of compliance during the screening period regarding ‘washing out’ of current medications. As a consequence, we have instituted a number of measures to improve patient enrollment and retention. These include lengthening the screening period to provide increased education for site coordinators and caregivers on the electronic diary and to make it easier for caregivers and patients to comply with the trial protocol. Although the pace of recruitment has picked up recently for both Phase III trials, it is likely that enrollment will continue into 2017. The Company continues to expect to launch SPN-810 in 2019. During the third quarter of 2016, patients began enrolling into the open-label extension portion of the Phase III study.

Regarding SPN-812, currently in development for patients aged 6 to 12 years with ADHD, the Phase IIb trial is now fully recruited. The final patient visit was completed during the third quarter of 2016. Eligible patients are now entering the open label extension portion of the study. The Company continues to expect data from the SPN-812 Phase IIb trial to be available by early 2017.

"With the SPN-812 Phase IIb trial fully enrolled, we have reached another important clinical milestone as we continue to advance SPN-812 into late-stage development," said Jack Khattar. "Regarding SPN-810, we are encouraged by the recent progress in improving recruitment and retention, and we remain focused on the successful execution of the trials."

Mr. Khattar added, "We believe the 84% rate of enrollment into the open-label extension of the Phase IIb study for SPN-812 reflects a high level of satisfaction from physicians and patients."

Operating Expenses

Research and development expenses in the second quarter of 2016 were $11.1 million, as compared to $6.9 million in the same quarter last year. This increase is primarily due to the ongoing Phase III testing of SPN-810 and Phase IIb testing of SPN-812, as well as the open-label extension studies associated with both SPN-810 and SPN-812.

Selling, general and administrative expenses in the second quarter of 2016 were $26.1 million, as compared to $23.3 million in the same quarter last year. The increase is primarily due to the efforts in preparing for the launch of the migraine indication for Trokendi XR.

Operating Income and Earnings Per Share

Operating income in the second quarter of 2016 was $10.4 million, as compared to $3.1 million in the same period last year. This improvement in operating income is primarily due to increased net product sales.

Diluted earnings per share were $0.18 in the second quarter of 2016, as compared to $0.03 in the same period last year.

Weighted-average diluted common shares outstanding were approximately 51.7 million in the second quarter of 2016, as compared to approximately 52.3 million in the same period last year.

Capital Resources

As of June 30, 2016, the Company had $128.0 million in cash, cash equivalents, marketable securities, and long term marketable securities, as compared to $117.2 million at December 31, 2015. As of June 30, 2016, approximately $6.6 million of the Company’s six year, $90 million notes, bearing interest at 7.5% per annum, remain outstanding.

Financial Guidance

For full year 2016, the Company is reiterating guidance for net product sales and adjusting guidance for R&D expenses and operating income as set forth below:

Net product sales will remain in the range of $200 million to $210 million.
R&D expenses in the range of $50 million to $55 million, compared to the previously expected range of $55 million to $65 million.
Operating income in the range of $32 million to $37 million, compared to the previously expected range of $28 million to $35 million.

On August 2, 2016 Regulus Therapeutics Inc. (Nasdaq: RGLS), a biopharmaceutical company leading the discovery and development of innovative medicines targeting microRNAs, reported financial results for the three and six months ended June 30, 2016 and provided a summary of corporate highlights (Press release, Regulus, AUG 2, 2016, View Source [SID:1234514193]).

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Regulus Therapeutics Inc. Logo
"The second quarter was very busy from both the clinical and corporate perspectives," said Paul Grint, MD, Regulus’ President and Chief Executive Officer. "We remain on track to deliver follow-up results from RG-101 studies while working to address the deficiencies outlined in the clinical hold letter from the FDA. In addition, we are initiating a Phase II study in Alport Syndrome for RG-012, and plan to nominate our fourth clinical candidate by year-end."

Financial Results

Revenue: Revenue was $0.5 million and $1.0 million for the three and six months ended June 30, 2016, respectively, compared with $3.8 million and $8.0 million for the same periods in 2015. Revenue for the three and six months ended June 30, 2016 and 2015 consisted of amortization of up-front payments from Regulus’ strategic alliances and collaborations. Revenue for the three months ended June 30, 2015 included $2.6 million for research services under Regulus’ strategic alliances and collaborations. Revenue for the six months ended June 30, 2015 included $3.2 million for research services and $2.9 million in pre-clinical and other milestones under Regulus’ strategic alliances and collaborations.

Research and Development (R&D) Expenses: R&D expenses were $18.0 million and $34.8 million for the three and six months ended June 30, 2016, respectively, compared with $19.2 million and $32.6 million for the same periods in 2015. R&D expenses were consistent for the three months ended June 30, 2016 and 2015, excluding non-recurring severance charges recorded in June 2015. The increase for the six months ended June 30, 2016 was driven by an increase in our aggregate clinical trial program costs.

General and Administrative (G&A) Expenses: G&A expenses were $3.7 million and $8.8 million for the three and six months ended June 30, 2016, respectively, compared with $5.8 million and $9.5 million for the same periods in 2015. These decreases were primarily driven by non-recurring severance charges recorded in June 2015, partially offset by an increase in recurring personnel costs for the three and six months ended June 30, 2016.

Net Loss: Net loss was $21.1 million, or $0.40 per share, and $42.3 million, or $0.80 per share, for the three and six months ended June 30, 2016, respectively, compared with a net loss of $21.0 million, or $0.41 per share, and $35.5 million, or $0.70 per share, for the same periods in 2015.

Cash Position: Cash, cash equivalents and short-term investments were $108.0 million as of June 30, 2016, compared with $106.0 million at March 31, 2016.

Highlights and Recent Events

In July, as anticipated, Regulus received a formal clinical hold letter from the FDA outlining information required to address the clinical hold for the IND of RG-101, which was announced in late June. The FDA initiated the clinical hold after the company reported a second serious adverse event (SAE) of jaundice. This second SAE occurred in a HCV patient with end-stage renal disease on dialysis enrolled in its on-going Phase I US study.
In June, Regulus secured a $30.0 million growth capital credit facility with Oxford Finance LLC and received $20.0 million at closing under an initial term loan. An additional $10.0 million will be available subject to the achievement of a certain specified milestone. The loans provide for interest-only payments for the first 24 months of the term, and will bear interest at a rate equal to the sum of 8.51% plus the greater of 0.44% or the 30-day LIBOR rate.
In June, Regulus reported positive top-line data from the primary endpoint analysis of our Phase II "closed-face sandwich" study, which demonstrated significant virologic response through 24 weeks of follow-up.
In May, Regulus expanded the clinical trial collaboration agreement with GSK to conduct a multi-centered, randomized, dose-ranging Phase II study evaluating the combination of RG-101 and GSK’s long-acting parenteral ("LAP") formulation of GSK2878175 as a potential single-visit cure in patients chronically infected with HCV.
In May, Regulus presented preclinical and longitudinal data from ATHENA, a natural history of disease study in patients with Alport Syndrome, at the ERA-EDTA 53rd Congress.