On May 3, 2016 Foundation Medicine, Inc. (NASDAQ:FMI) reported financial and operating results for its first quarter ended March 31, 2016 (Press release, Foundation Medicine, MAY 3, 2016, View Source [SID:1234511841]). Highlights for the quarter included:

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Achieved first quarter revenue of $30.4 million, 57% year-over-year growth;
Reported 8,985 clinical tests in the first quarter, 14% year-over-year growth;
Grew the FoundationCORE molecular information knowledgebase, now approaching 80,000 patient cases;
Presented analytic validation of FoundationACT, the company’s circulating tumor DNA (ctDNA) assay;
Publicly-released a broad pediatric data set from FoundationCORE for research purposes to enable precision medicine;
Published 9 manuscripts in high-quality, peer-reviewed journals and delivered 41 podium and poster talks at various medical and scientific meetings.
Foundation Medicine reported total revenue of $30.4 million in the first quarter of 2016, compared to $19.3 million in the first quarter of 2015 and $26.1 million in the fourth quarter of 2015. Revenue from clinical testing in the first quarter of 2016 was $10.2 million, compared to $11.1 million in the first quarter of 2015 and $12.0 million in the fourth quarter of 2015.

The company reported 8,985 clinical tests in the first quarter of 2016, a 14% increase from the same quarter last year. This number includes 7,957 FoundationOne tests and 1,028 FoundationOne Heme tests.

Revenue from biopharmaceutical customers more than doubled year-over-year to $20.2 million in the first quarter of 2016, compared to $8.2 million in the first quarter of 2015 and $14.1 million in the fourth quarter of 2015. This growth was fueled by the achievement of milestone revenue during the first quarter. The results of 2,622 tests were reported to biopharmaceutical customers in this year’s first quarter.

"Foundation Medicine delivered a solid first quarter highlighted by strong revenue growth and healthy clinical volume," said Michael Pellini, M.D., chief executive officer of Foundation Medicine. "Since the beginning of the year, we have also made great strides in generating a tremendous amount of data to support the clinical utility of our comprehensive genomic profiling approach across a diverse set of cancers. We expect that these data, coupled with our best-in-class portfolio of analytically validated assays, which now includes FoundationACT, will be critical differentiators with physicians, payers, and most importantly, patients."

The company’s molecular information knowledgebase, FoundationCORE, grew to nearly 80,000 patient cases. FoundationCORE is a unique asset and critical component of the value that Foundation Medicine delivers to its biopharmaceutical and physician customers. The increasing scale and breadth of a high quality, clinically relevant oncology data set derived from the company’s analytically validated testing platform continues to enhance clinical practice and enable improved outcomes for patients.

Total operating expenses for the first quarter of 2016 were approximately $36.5 million compared with $34.0 million for the fourth quarter of 2015. Net loss was approximately $17.3 million in the first quarter of 2016, or a $0.50 loss per share. At March 31, 2016, the company held approximately $213.5 million in cash, cash equivalents and marketable securities.

Recent Enterprise Highlights

Launched FoundationACT, the company’s ctDNA assay to clinical customers. FoundationACT was developed with the same rigorous analytical validation standards as FoundationOne and FoundationOne Heme, and is the third clinical product launch by the company in just four years.
Announced an agreement with AstraZeneca to develop novel companion diagnostic assays to enable physicians to identify patients most likely to benefit from targeted medicines within AstraZeneca’s oncology pipeline.
Expanded the company’s U.S. laboratory footprint to include a second site at Research Triangle Park in North Carolina. When operational, the company expects this new facility will support continued innovation and expansion of its product portfolio, provide important lab redundancies, increase operational flexibility, and broaden commercial opportunities.
2016 Outlook

Foundation Medicine’s business and financial outlook for 2016 remains unchanged:

The company expects 2016 revenue will be in the range of $110 to $120 million.
The company expects to deliver between 37,000 and 40,000 FoundationOne and FoundationOne Heme clinical tests in 2016.
The company expects operating expenses will be in the range of $175 and $185 million.
The company expects to expand upon reimbursement progress made in 2015 and drive additional coverage decisions.

On May 3, 2016 Illumina, Inc. (NASDAQ: ILMN) reported its financial results for the first quarter of fiscal year 2016 (Press release, Illumina, MAY 3, 2016, View Source [SID:1234511839]).

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First quarter 2016 results:

Revenue of $572 million, a 6% increase compared to $539 million in the first quarter of 2015, and an increase of 7% on a constant currency basis
GAAP net income attributable to Illumina stockholders for the quarter of $90 million, or $0.60 per diluted share, compared to $137 million, or $0.92 per diluted share, for the first quarter of 2015
Non-GAAP net income attributable to Illumina stockholders for the quarter of $106 million, or $0.71 per diluted share, compared to $135 million, or $0.91 per diluted share, for the first quarter of 2015 (see the table entitled "Itemized Reconciliation Between GAAP and Non-GAAP Net Income Attributable to Illumina Stockholders" for a reconciliation of these GAAP and non-GAAP financial measures)
Cash flow from operations of $40 million and free cash flow of negative $14 million for the quarter, compared to $67 million and positive $30 million in the prior year period. Increased operating expenses and higher capital expenditures contributed to the lower free cash flow.
Gross margin in the first quarter of 2016 was 69.4% compared to 69.6% in the prior year period. Excluding the effect of non-cash stock compensation expense and amortization of acquired intangible assets, non-GAAP gross margin was 71.7% for the first quarter of 2016 compared to 72.2% in the prior year period.

Research and development (R&D) expenses for the first quarter of 2016 were $124.0 million compared to $91.8 million in the prior year period. R&D expenses included $10.7 million and $11.3 million of non-cash stock compensation expense in the first quarters of 2016 and 2015, respectively. Excluding these charges and contingent compensation, R&D expenses as a percentage of revenue were 19.8%, including 0.9% attributable to GRAIL and Helix. This compares to 14.9% in the prior year period.

Selling, general and administrative (SG&A) expenses for the first quarter of 2016 were $149.2 million compared to $116.3 million in the prior year period. SG&A expenses included $22.0 million and $18.0 million of non-cash stock compensation expense in the first quarters of 2016 and 2015, respectively. Excluding these charges, amortization of acquired intangible assets, and contingent compensation, SG&A expenses as a percentage of revenue were 21.9%, including 0.6% attributable to GRAIL and Helix. This compares to 18.0% in the prior year period.

Depreciation and amortization expenses were $33.2 million and capital expenditures were $53.4 million during the first quarter of 2016. The company settled the remaining 0.25% Convertible Senior Notes of $75.5 million. At the close of the quarter, the company held $1.34 billion in cash, cash equivalents and short-term investments, compared to $1.39 billion as of January 3, 2016.

"As we have previously shared, Q1 was a slower start to the year than we expected," stated Jay Flatley, Chairman and CEO. "Our view of the growth potential of the sequencing market remains unchanged, as the largest opportunities are in their earliest stages of development. In the near-term, we are focused on improving execution to restore the growth rate we believe our markets can support."

Updates since our last earnings release:

Introduced BaseSpace Informatics Suite, a complete set of genomics software tools and solutions to facilitate precision medicine and genomics research
Applied CE mark to VeriSeq NIPT Analysis Software for use in clinical laboratories
Announced partnerships to enable long read applications including co-marketing agreements with 10X Genomics and NRGene
Entered into a partnership with Genomics England to develop a platform and knowledge base to improve and automate genome interpretation
Committed $100 million to a new venture capital firm that will pursue early stage investments which are strategically aligned with Illumina’s vision
Announced that on July 5, 2016 Jay Flatley will assume the role of Executive Chairman of the Board of Directors and Francis deSouza will be appointed President and Chief Executive Officer
Financial outlook and guidance

The non-GAAP financial guidance discussed below reflects certain pro forma adjustments to assist in analyzing and assessing our core operational performance. Please see our Reconciliation of Non-GAAP Financial Guidance included in this release for a reconciliation of the GAAP and non-GAAP financial measures.

For fiscal 2016, the company is projecting approximately 12% revenue growth and non-GAAP earnings per diluted share attributable to Illumina stockholders of $3.35 to $3.45. For the second quarter 2016, the company is projecting revenue of $590 million to $595 million and non-GAAP earnings per diluted share attributable to Illumina stockholders of $0.72 to $0.74.

Quarterly conference call information

The conference call will begin at 2:00 pm Pacific Time (5:00 pm Eastern Time) on Tuesday, May 3, 2016. Interested parties may listen to the call by dialing 888.687.3295 (passcode: 85797542), or if outside North America by dialing +1.503.406.4070 (passcode: 85797542). Individuals may access the live teleconference in the Investor Relations section of Illumina’s web site under the "company" tab at www.illumina.com.

A replay of the conference call will be available from 5:00 pm Pacific Time (8:00 pm Eastern Time) on May 3, 2016 through May 10, 2016 by dialing 855.859.2056 (passcode: 85797542), or if outside North America by dialing +1.404.537.3406 (passcode: 85797542).

Statement regarding use of non-GAAP financial measures

The company reports non-GAAP results for diluted net income per share, net income, gross margins, operating expenses, operating margins, other income, and free cash flow in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.

The company’s financial measures under GAAP include substantial charges such as stock compensation expense, amortization of acquired intangible assets, non-cash interest expense associated with the company’s convertible debt instruments that may be settled in cash, and others that are listed in the itemized reconciliations between GAAP and non-GAAP financial measures included in this press release. Management believes that presentation of operating results that excludes these items provides useful supplemental information to investors and facilitates the analysis of the company’s core operating results and comparison of operating results across reporting periods. Management also believes that this supplemental non-GAAP information is useful to investors in analyzing and assessing the company’s past and future operating performance.

The company encourages investors to carefully consider its results under GAAP, as well as its supplemental non-GAAP information and the reconciliation between these presentations, to more fully understand its business. Reconciliations between GAAP and non-GAAP results are presented in the tables of this release.

On May 3, 2016 Fresenius reported Q1 results for 2016(Press release, Fresenius, MAY 3, 2016, View Source [SID:1234511838]).

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Q1/2016:
Sales: €6.9 billion (+7%, +7% in constant currency)
EBIT1: €959 million (+13%, +11% in constant currency)
Net income1,2: €362 million (+24%, +23% in constant currency)
Ulf Mark Schneider, CEO of Fresenius, said: "We have seen a strong start into 2016, reflected in our double-digit earnings growth. All business segments and regions have contributed to this success, demonstrating yet again enormous consistency in our sales and earnings development. We remain fully on track to achieve our 2016 and mid-term targets."
12015 before special items
2Net income attributable to shareholders of Fresenius SE & Co. KGaA
Group guidance for 2016 confirmed
Fresenius confirms its guidance for 2016. Sales are expected to increase by 6% to 8% in constant currency. Net income1,2, is expected to grow by 8% to 12% in constant currency.
The net debt/EBITDA3 ratio is expected to be approximately 2.5 at the end of 2016.
1Net income attributable to shareholders of Fresenius SE & Co. KGaA
22015 before special items
3Calculated at FY average exchange rates for both net debt and EBITDA; excluding potential acquisitions
7% sales growth in constant currency
Group sales increased by 7% (7% in constant currency) to €6,914 million (Q1/2015: €6,483 million). Organic sales growth was 7%. Acquisitions contributed 1% and divestitures reduced sales by 1%.
Group sales by region:

23% net income1 growth in constant currency
Group EBITDA2 increased by 11% (10% in constant currency) to €1,237 million (Q1/2015: €1,115 million). Group EBIT2 increased by 13% (11% in constant currency) to €959 million (Q1/2015: €851 million). The EBIT margin2 increased to 13.9% (Q1/2015: 13.1%).
Group net interest decreased to -€152 million (Q1/2015: -€165 million), mainly due to more favorable financing terms and lower net debt.
The Group tax rate (before special items) decreased to 28.4% (Q1/2015: 30.2%), mainly due to a lower tax rate at Fresenius Medical Care.
Noncontrolling interest increased to €216 million (Q1/2015: €187 million), of which 95% was attributable to the noncontrolling interest in Fresenius Medical Care.
Group net income1,2, increased by 24% (23% in constant currency) to €362 million (Q1/2015: €292 million). Earnings per share1,2 increased by 22% (22% in constant currency) to €0.66 (Q1/2015: €0.54).
1Net income attributable to shareholders of Fresenius SE & Co. KGaA
22015 before special items
3Calculated at FY average exchange rates for both net debt and EBITDA; excluding potential acquisitions
Continued investment in growth
Spending on property, plant and equipment was €313 million (Q1/2015: €273 million), primarily for the modernization and expansion of dialysis clinics, production facilities and hospitals. Total acquisition spending was €204 million (Q1/2015: €104 million).
Cash flow development
Operating cash flow decreased by 37% to €334 million (Q1/2015: €531 million) with a margin of 4.8% (Q1/2015: 8.2%). The decrease was mainly due to an adjustment in invoicing within the quarter and the timing of cash payroll payments at Fresenius Medical Care North America. Fresenius Medical Care expects that these effects will have no meaningful impact on the full year 2016 cash flow.
Free cash flow before acquisitions and dividends decreased to €2 million (Q1/2015: €258 million). Free cash flow after acquisitions and dividends was -€241 million (Q1/2015: €256 million).
Solid balance sheet structure
The Group’s total assets decreased by 1% (increased 1% in constant currency) to €42,445 million (Dec. 31, 2015: €42,959 million). Current assets grew by 1% (3% in constant currency) to €10,584 million (Dec. 31, 2015: €10,479 million). Non-current assets decreased by 2% (increased 1% in constant currency) to €31,861 million (Dec. 31, 2015: € 32,480 million).
Total shareholders’ equity was virtually unchanged at €18,009 million (Dec. 31, 2015: €18,003 million). In constant currency, it increased by 3%. The equity ratio increased to 42.4% (Dec. 31, 2015: 41.9%).
Group debt decreased by 1% (increased 1% in constant currency) to €14,549 million (Dec. 31, 2015: € 14,769 million). As of March 31, 2016, the net debt/EBITDA ratio was 2.671 (Dec. 31, 2015: 2.681).
12015 before special items; at LTM average exchange rates for both net debt and EBITDA
Business Segments
Fresenius Medical Care
Fresenius Medical Care is the world’s largest provider of products and services for individuals with renal diseases. As of March 31, 2016, Fresenius Medical Care was treating 294,043 patients in 3,432 dialysis clinics. Along with its core business, the company seeks to expand the range of medical services in the field of care coordination.

9% sales growth in constant currency
Strong sales and EBIT growth in North America
2016 outlook confirmed
Sales increased by 6% (9% in constant currency) to US$4,205 million (Q1/2015: US$3,960 million). Organic sales growth was 7%. Acquisitions contributed 2%. Currency translation effects reduced sales by 3%.
Health Care services sales (dialysis services and care coordination) increased by 7% (9% in constant currency) to US$3,414 million (Q1/2015: US$3,182 million). Dialysis product sales increased by 2% (6% in constant currency) to US$791 million (Q1/2015: US$778 million).
In North America, sales increased by 10% to US$3,044 million (Q1/2015: US$2,771 million). Health Care services sales grew by 10% to US$2,832 million (Q1/2015: US$2,571 million). Dialysis product sales increased by 6% to US$212 million (Q1/2015: US$200 million).
Sales outside North America decreased by 2% (increased by 7% in constant currency) to US$1,158 million (Q1/2015: US$1,180 million). Health Care services sales decreased by 5% (increased by 6% in constant currency) to US$582 million (Q1/2015: US$611 million). Dialysis product sales increased by 1% (8% in constant currency) to US$576 million (Q1/2015: US$569 million).
EBIT increased by 7% (8% in constant currency) to US$540 million (Q1/2015: US$504 million). The EBIT margin was 12.8% (Q1/2015: 12.7%).
Net income1 increased by 9% (8% in constant currency) to US$228 million (Q1/2015: US$210 million).
Operating cash flow decreased by 60% to US$180 million (Q1/2015: US$447 million). The cash flow margin was 4.3% (Q1/2015: 11.3%). The decrease was mainly due to an adjustment in invoicing within the quarter and the timing of cash payroll payments at Fresenius Medical Care North America. Fresenius Medical Care expects that these effects will have no meaningful impact on the full year 2016 cash flow.
Fresenius Medical Care confirms its outlook for 2016. The company expects sales to grow by 7% to 10% in constant currency and net income1 is expected to increase by 15% to 20%2 in 2016.
For further information, please see Fresenius Medical Care’s Investor News at www.freseniusmedicalcare.com.
1Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA
22015 before GranuFlo/NaturaLyte settlement costs (-US$37 million after tax) and before acquisitions (US$9 million after tax); hence the basis for expected net income growth is US$1,057 million.

Fresenius Kabi
Fresenius Kabi offers intravenously administered generic drugs, clinical nutrition and infusion therapies for seriously and chronically ill patients in the hospital and outpatient environments. The company is also a leading supplier of medical devices and transfusion technology products.

10% organic sales growth in Q1
19% constant currency EBIT1 growth in Q1
2016 outlook confirmed
Sales increased by 5% (8% in constant currency) to €1,470 million (Q1/2015: €1,394 million). Organic sales growth was 10%. Divestitures and currency translation effects reduced sales by 2% and 3% respectively.
Sales in Europe decreased by 1% (increased organically by 1%) to €512 million (Q1/2015: €518 million), mainly due to the divestment of the German oncology compounding business in February 2015. Sales in North America increased by 22% (organic growth: 20%) to €567 million (Q1/2015: €473 million). North American sales growth was mainly driven by persisting IV drug shortages as well as new product launches. Adverse currency translation effects decreased sales in Asia-Pacific by 5% (increased organically by 7%) to €254 million (Q1/2015: €268 million) and in Latin America/Africa by 5% (increased organically by 21%) to €128 million (Q1/2015: €135 million).
EBIT1 increased by 20% (19% in constant currency) to €309 million (Q1/2015: €257 million). The EBIT margin1 improved to 21.0% (Q1/2015: 18.5%).
Net income2 increased by 28% (26% in constant currency) to €179 million (Q1/2015: €140 million).
Based on the excellent net income development operating cash flow increased by 49% to €124 million (Q1/2015: €83 million) with a margin of 8.4% (Q1/2015: 6.0%).
Fresenius Kabi confirms its outlook for 2016 and projects low single-digit organic sales growth. EBIT1 in constant currency is expected to be roughly flat compared with 2015.
12015 before special items
2Net income attributable to shareholders of Fresenius Kabi AG; 2015 before special items
Fresenius Helios
Fresenius Helios is Germany’s largest hospital operator. HELIOS operates 111 hospitals, thereof 87 acute care clinics (including seven maximum care hospitals in Berlin-Buch, Duisburg, Erfurt, Krefeld, Schwerin, Wiesbaden and Wuppertal) and 24 post-acute care clinics. HELIOS treats more than 4.7 million patients per year, thereof approximately 1.3 million inpatients, and operates more than 34,000 beds.

3% organic sales growth
50 bps EBIT margin1 increase to 11.1%
2016 outlook confirmed
Sales increased by 3% to €1,435 million (Q1/2015: €1,391 million). Organic sales growth was 3%. Acquisitions and divestitures had no material effect.
EBIT1 grew by 8% to €159 million (Q1/2015: €147 million). The EBIT margin1 increased to 11.1% (Q1/2015: 10.6%).
Net income2 increased by 16% to €124 million (Q1/2015: €107 million).
Fresenius Helios confirms its outlook for 2016 and projects organic sales growth of 3% to 5%. EBIT is expected to increase to €670 to €700 million.
12015 before special items
2Net income attributable to shareholders of HELIOS Kliniken GmbH; 2015 before special items
Fresenius Vamed
Fresenius Vamed manages projects and provides services for hospitals and other health care facilities worldwide. The portfolio ranges along the entire value chain: from project development, planning, and turnkey construction, via maintenance and technical management, to total operational management.

Project and service business contributed equally to 6% organic sales growth
Strong order intake of €237 million
2016 outlook confirmed
Sales increased by 5% (5% in constant currency) to €218 million (Q1/2015: €208 million). Organic sales growth was 6%. Sales in the project business increased by 6% to €85 million (Q1/2015: €80 million). Sales in the service business grew by 4% to €133 million (Q1/2015: €128 million).
EBIT remained unchanged with €7 million (Q1/2015: €7 million). The EBIT margin was 3.2% (Q1/2015: 3.4%).
Net income1 grew by 25% to €5 million (Q1/2015: €4 million).
Order intake increased to €237 million (Q1/2015: €192 million). As of March 31, 2016, order backlog grew to €1,803 million (December 31, 2015: €1,650 million).
Fresenius Vamed confirms its outlook for 2016 and expects organic sales growth in the range of 5% to 10% and EBIT growth of 5% to 10%.

On May 3, 2016 AMAG Pharmaceuticals, Inc. (NASDAQ: AMAG), a specialty pharmaceutical company with a diverse portfolio of products in the areas of maternal health, anemia management and cancer supportive care, reported unaudited consolidated financial results for the first quarter ended March 31, 2016 (Filing, Q1, AMAG Pharmaceuticals, 2016, MAY 3, 2016, View Source [SID:1234511834]).

Most notably, the first quarter of 2016 included the approval of a single-dose, preservative-free formulation of Makena (hydroxyprogesterone caproate injection). Prior to the commercial availability of this new Makena formulation, healthcare providers and patients who wanted a preservative-free formulation of hydroxyprogesterone caproate had to use non-FDA-approved, compounded versions. The company believes the commercial launch of the single-dose, preservative-free formulation of Makena will enable AMAG to capture significant additional share from the compounded segment of the market. The company estimates that compounding pharmacies currently hold approximately 37% of the Makena-eligible market. Additionally, AMAG entered into an agreement with a leading provider of home nursing services, which will exclusively administer Makena to all indicated patients who are eligible for their home health services.

"We are off to a strong start in 2016, achieving goals on our next-generation program for Makena, including the commercial launch of our new single-dose, preservative-free formulation, as well as solidifying an important new strategic relationship to further expand access to FDA-approved Makena," said William Heiden, AMAG’s chief executive officer. "First quarter 2016 sales of Makena increased 17% over the prior year, and early data from the recent launch of the new formulation of Makena, including April enrollment data at the Makena Care Connection that is up approximately 50% over March, suggests an acceleration in sales growth. We expect these trends to continue through the remainder of the year and are confirming our annual net product sales guidance for Makena."

"CBR, our newborn stem cell preservation offering, as well as our anemia management and cancer supportive care products, performed in-line with our expectations and remain on track with our 2016 sales guidance," added Mr. Heiden.

1 See summaries of non-GAAP adjustments for the three months ended March 31, 2016 and 2015 at the conclusion of this press release.

First Quarter 2016 and Recent Business Highlights:

· Increased net product sales of Makena to $65 million, compared with $55.5 million in the first quarter of 2015. This growth in sales was driven by a 16% increase in volume as more at-risk pregnant women were treated with Makena. Net revenue per injection was up 1% versus the first quarter of 2015.

· Received approval from the Food and Drug Administration (FDA) in February 2016 for a single-dose, preservative-free formulation of Makena and began commercial promotion in April 2016.

· Entered into a new agreement with a leading provider of home nursing services, which had previously utilized compounded hydroxyprogesterone caproate and now will exclusively provide at-home administration of Makena.

· Continued development of the next-generation program to deliver Makena subcutaneously via an auto-injector, with a range of activities underway, such as CMC work and pilot pharmacokinetic studies. The company currently anticipates filing the supplemental New Drug Application (sNDA) in the second quarter of 2017 and recently received confirmation from the FDA that the review time will be six months from submission.

· Generated a record $24.2 million of Feraheme (ferumoxytol) sales in the first quarter of 2016, or 13% growth over the same period in the prior year. Strong execution of the Feraheme business strategies by the commercial team enabled the company to realize a 7% increase in volume.

· Began enrolling patients in a head-to-head, Phase 3 clinical trial evaluating the safety of Feraheme compared to Injectafer (ferric carboxymaltose injection) in adults with iron deficiency anemia (IDA). This study is intended to support an sNDA filing to broaden the use of Feraheme beyond the current chronic kidney disease (CKD) indication to include all adult IDA patients who have failed or cannot tolerate oral iron treatment.

· Increased cash, cash equivalents and investments by $13.9 million to $480 million, net of $12 million utilized to purchase the company’s common stock and to repay debt.

· Strengthened the executive management team with the additions of Nik Grund as chief commercial officer and Ted Myles as chief financial officer.

First Quarter Ended March 31, 2016 (unaudited)

Financial Results (GAAP Basis)

Total revenues for the first quarter of 2016 were $109.3 million, compared with $89.5 million in the first quarter of 2015. Net product sales of Makena were $65.0 million in the first quarter of 2016, compared with $55.5 million in the same period last year. Sales of Feraheme and MuGard totaled $24.5 million in the first quarter of 2016, compared with $21.9 million in the first quarter of 2015. Service revenue from Cord Blood Registry (CBR), which AMAG purchased in August 2015, totaled $19.5 million in the first quarter of 2016.

Costs of product sales and services totaled $23.8 million in the first quarter of 2016. In the first quarter of 2015, cost of product sales totaled $21.0 million and did not include CBR cost of services. Total operating expenses for the first quarter of 2016 were $78.0 million, compared with $39.7 million for the same period in 2015. The increase in operating expenses was primarily due to the acquisition of CBR in the third quarter of 2015, including the non-cash amortization of intangible assets, and higher research and development

costs. These R&D costs included the initiation of the company’s Phase 3 clinical trial to broaden the use of Feraheme to include all adult IDA patients, costs to support our Makena subcutaneous auto-injector and costs associated with preparing and filing with the FDA for a second source manufacturer of the single-dose, preservative-free formulation of Makena.

The company reported operating income of $7.4 million and a net loss of $7.5 million, or ($0.22) per basic and diluted share, for the first quarter of 2016, compared with operating income of $28.8 million and net income of $12.9 million, or $0.47 per basic share and $0.39 per diluted share, for the same period in 2015.

Financial Results (Non-GAAP Basis)1,2

Non-GAAP revenues totaled $117.9 million in the first quarter of 2016, up from $83.1 million in the first quarter of 2015. Non-GAAP CBR revenue totaled $28.1 million in the first quarter of 2016. The difference between GAAP and non-GAAP revenue for CBR represents purchase accounting adjustments related to deferred revenue. Non-GAAP revenue in 2015 excludes certain non-cash revenue related to the company’s ex-U.S. marketing agreement with its former partner, Takeda Pharmaceutical Company Limited.

Total costs and expenses on a non-GAAP basis totaled $70.4 million resulting in a gross margin of 92% and adjusted EBITDA margin of 40% for the first quarter of 2016. This compares to costs and expenses of $35.7 million in the same period of 2015, which resulted in a gross margin of 96% and adjusted EBITDA margin of 57%. The decline in gross margin resulted from the acquisition of CBR, which carries lower gross margins than the company’s pharmaceutical products. Investments in research and development to enhance the long-term revenue potential of Makena and Feraheme contributed to the lower adjusted EBITDA margin in the first quarter of 2016. Non-GAAP adjusted EBITDA for the first quarter of 2016 was $47.5 million, compared with $47.4 million for the same period in 2015.

After deducting cash interest expense, the company generated first quarter 2016 non-GAAP net income of $32.9 million, or $0.95 per non-GAAP basic share and $0.94 per non-GAAP diluted share. In the first quarter of 2015, non-GAAP net income totaled $40.0 million, or $1.47 per non-GAAP basic share and $1.17 per non-GAAP diluted share.

Balance Sheet Highlights

As of March 31, 2016, the company’s cash and investments totaled approximately $480 million and total debt (principal amount outstanding) was approximately $1.04 billion.

"We are reiterating our full year 2016 guidance for revenue, adjusted EBITDA and non-GAAP net income, including top-line revenue growth of approximately 40%, which underscores the strong recent trends for Makena and the overall underlying demand we are generating across our portfolio of products," said Frank Thomas, president and chief operating officer. "During the quarter and throughout 2016, we are investing in our products through R&D to potentially expand our label for Feraheme and provide more patient- and provider-friendly versions of Makena. We believe these investments will enhance the long-term revenue potential of these products."

2 See share count reconciliation at the conclusion of this press release.

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On May 3, 2016 Nektar Therapeutics (Nasdaq: NKTR) reported its financial results for the first quarter ended March 31, 2016 (Press release, Nektar Therapeutics, MAY 3, 2016, View Source [SID:1234511831]).

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Discover why more than 1,500 members use 1stOncology™ to excel in:

Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

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Cash and investments in marketable securities at March 31, 2016 were $288.3 million as compared to $308.9 million at December 31, 2015. This balance at March 31, 2016 does not include $28.0 million received from AstraZeneca in April of 2016 for the sublicense of MOVENTIG to ProStrakan in Europe.

"I am very pleased with the progress of both our proprietary pipeline and partner programs," said Howard W. Robin, President and Chief Executive Officer of Nektar. "MOVANTIK has performed well in its first year with positive feedback from physicians and patients. ADYNOVATE, which was launched in the U.S. in December 2015 by Baxalta, recently received approval in Japan and has now been filed for approval in Europe. The NKTR-181 Phase 3 efficacy study in patients with chronic low back pain is on track to provide top-line results in early 2017. Finally, NKTR-214, our immuno-oncology candidate, is advancing in its first-in-human trial evaluating its safety and efficacy in cancer patients with solid tumors. We expect to report initial top-line data from the dose-escalation stage of the NKTR-214 study in the second half of 2016."

Revenue for the first quarter of 2016 was $58.9 million as compared to $108.8 million in the first quarter of 2015. Revenue for the first quarter of 2016 includes the recognition of $28.0 million received from AstraZeneca in April of 2016 for the sublicense of MOVENTIG to ProStrakan in Europe which occurred in the first quarter. Revenue in the first quarter of 2015 was higher primarily because of the one-time recognition of $90 million related to the U.S. commercial launch of MOVANTIK. Product sales and royalty revenue increased to $18.2 million in the first quarter of 2016 as compared to $8.1 million in the first quarter of 2015.

Revenue also included non-cash royalty revenue, related to our 2012 royalty monetization, of $6.5 million and $4.0 million for the three months ended March 31, 2016 and 2015, respectively. This non-cash royalty revenue is partially offset by non-cash interest expense also incurred in connection with the 2012 royalty monetization. Non-cash interest expense was $5.0 million in the first quarter 2016 as compared to $5.1 million in the first quarter 2015.

Total operating costs and expenses for the first quarter of 2016 were $68.4 million as compared to $65.8 million in the first quarter of 2015. Total operating costs and expenses increased primarily as a result of higher research and development (R&D) expense in the first quarter of 2016. R&D expense in the first quarter of 2016 was $49.3 million as compared to $47.0 million for the first quarter of 2015 and was higher in the first quarter of 2016 primarily due to expenses for the NKTR-181 Phase 3 studies and for initiation of the Phase 1/2 study of NKTR-214.

General and administrative expense was $10.2 million in the first quarter of 2016 as compared to $10.3 million in the first quarter of 2015.

In Q1 2016, net loss was $19.5 million, or $0.14 loss per share as compared to net income of $33.8 million, or $0.26 basic earnings per share in the first quarter of 2015. This decrease is primarily because of the one-time recognition of $90 million related to the U.S. commercial launch of MOVANTIK in the first quarter of 2015.

The company also announced upcoming presentations at the following scientific congresses during the first half of 2016:

SMI 16th Annual Pain Therapeutics Conference, London, England:

Abstract Title: "NKTR-181, A Novel Mu-Opioid Analgesic Designed for Inherent Low Abuse Liability" presented by Stephen Doberstein, Ph.D.
Session: Opioid Dependence
Date: May 24, 2016
ASCO Annual Meeting, Chicago, IL:

Abstract 11545: "Immune Memory in Nonclinical Models after Treatment with NKTR-214, an Engineered Cytokine Biased Towards Expansion of CD8+ T Cells in Tumor", D. Charych, et al.
Poster Session: Tumor Biology
Date: June 6, 2016, 1:00 p.m. – 4:30 p.m. Central Time