On August 8, 2016 Allergan plc (NYSE: AGN) reported its second quarter 2016 continuing operations performance (Press release, Allergan, AUG 8, 2016, View Source;p=irol-newsArticle&ID=2193636 [SID:1234514368]).

Schedule your 30 min Free 1stOncology Demo!
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

                  Schedule Your 30 min Free Demo!

Second Quarter 2016 Continuing Operations

($ in millions, except per share amounts)

Q2 ’16

Q2 ’15

Q1 ’16

Q2 ’16
v Q2
’15

Q2 ’16
v Q1
’16

Total net revenues

$ 3,684.8

$ 3,628.7

$ 3,399.3

1.5%

8.4%

Branded net revenues*

$ 3,709.2

$ 3,673.8

$ 3,431.2

1.0%

8.1%

Operating (Loss)

$ (487.6)

$ (476.1)

$ (171.5)

2.4%

184.3%

Diluted EPS – Continuing Operations

$ (1.25)

$ (1.38)

$ (0.41)

(9.4)%

204.9%

Cash Flow from Operations

$ 1,382.5

$ 1,401.3

$ 1,218.5

(1.3)%

13.5%

SG&A Expense

$ 1,210.0

$ 1,121.1

$ 1,096.3

7.9%

10.4%

R&D Expense

$ 636.5

$ 349.7

$ 403.1

82.0%

57.9%

Continuing Operations Tax Rate

37.9%

44.7%

81.6%

(6.8)%

(43.7)%

Non-GAAP Adjusted Operating Income

$ 1,860.0

$ 2,008.7

$ 1,734.1

(7.4)%

7.3%

Non-GAAP Diluted EPS

$ 3.35

$ 3.67

$ 2.99

(8.7)%

12.0%

Non-GAAP Adjusted EBITDA

$ 1,936.6

$ 2,080.8

$ 1,816.1

(6.9)%

6.6%

Non-GAAP SG&A Expense

$ 1,038.8

$ 899.4

$ 969.0

15.5%

7.2%

Non-GAAP R&D Expense

$ 345.0

$ 302.0

$ 276.5

14.2%

24.8%

Non-GAAP Continuing Operations Tax Rate

7.1%

8.0%

9.7%

(0.9)%

(2.6)%

* Excludes the reclassification of revenues of ($24.4) million in Q2 2016, ($45.1) million in Q2 2015, and ($31.9) million in Q1 2016 related to the portion of Allergan product revenues sold by our Anda Distribution Business into discontinued operations.

Logo – View Source

Total net revenues of $3.7 billion, a two percent increase versus the prior year quarter, were impacted by the loss of exclusivity on Namenda IR, offset by strong performance in key brands and new product launches.

"Allergan delivered another quarter of strong operating performance, while taking important steps to advance our evolution as a focused Growth Pharma leader," said Brent Saunders, CEO and President, Allergan. "Our teams delivered strong revenues powered by robust performance from key brands, including BOTOX, RESTASIS, LINZESS, JUVEDERM and LO LOESTRIN. Our R&D teams have delivered thirteen major U.S. and international approvals, including BYVALSON and NAMZARIC, and completed nine major regulatory submissions, including XEN for glaucoma and True Tear for dry eye to the Food and Drug Administration, so far this year."

"2016 has been a year of significant, positive transition for Allergan. On August 2, we announced the completion of the divestiture of our Global Generics business, and on August 3, announced the proposed divestiture of our Anda distribution business, to Teva. These steps position Allergan as a pure branded focused business able to maximize the power of its therapeutic areas and the promise of its leading Open Science pipeline of 65+ mid-to-late stage development programs," added Saunders.

"Thank you to our more than 16,000 colleagues around the world, who have delivered strong results despite a period of significant change, advanced important innovation for patients, and are the driving force behind our therapeutic area leadership and strong connection to the customers we serve. These efforts have helped us become the most dynamic and exciting Company in our industry," said Saunders.

GAAP operating loss from continuing operations in the second quarter 2016 was $488 million. Non-GAAP operating income from continuing operations in the second quarter 2016 was $1.86 billion. For the second quarter 2016, adjusted EBITDA from continuing operations was $1.94 billion, compared to $2.08 billion for the second quarter 2015. The decrease was primarily due to the loss of exclusivity on NAMENDA IR. Cash flow from operations for the second quarter of 2016 was $1.4 billion.

Operating Expenses
Total GAAP SG&A was $1.2 billion for the second quarter 2016 compared to $1.1 billion in the prior year period. Total non-GAAP SG&A was $1.0 billion for the second quarter 2016 compared to $899 million in the prior year period as a result of increased promotional spending to support the launches of new products including VIBERZI, VRAYLAR and KYBELLA. GAAP R&D investment for the second quarter 2016 was $637 million. Non-GAAP R&D investment for the second quarter 2016 was $345 million. R&D investment increased as a result of an increasing number of products moving into phase 3 development.

Amortization and Tax
Amortization expense from continuing operations for the second quarter 2016 was $1.63 billion, compared to $1.52 billion in the second quarter of 2015. The Company’s GAAP continuing operations tax rate was 37.9 percent in the second quarter 2016. The Company’s non-GAAP continuing operations tax rate was 7.1 percent in the second quarter 2016.

Capitalization
As of June 30, 2016, Allergan had cash and marketable securities of $507 million and outstanding indebtedness of $39.6 billion. "Post the completion of the Teva transaction we have made significant progress toward strengthening our balance sheet to support our long-term growth," said Tessa Hilado, Chief Financial Officer, Allergan. "Using the proceeds of the Teva transaction and cash flows from operations in the second quarter, we have repaid $9.3 billion in debt, leaving us with $33.3 billion in total outstanding debt and approximately $27.6 billion remaining in cash. We plan to commence our share repurchase program shortly with the initial focus on repurchasing approximately $5 billion in shares over the remainder of the year. Upon the conclusion of this program, we will evaluate whether to move forward and repurchase the remaining $5 billion authorized by the Allergan board. This is in-line with our larger capitalization strategy – which is focused on maximizing value for our shareholders over the long-term."

Discontinued Operations and Continuing Operations
As a result of the decision to hold for sale our Anda Distribution business as of June 30, 2016, which we subsequently announced we are selling to Teva, and the now completed divestiture of the Company’s Global Generics business to Teva on August 2, 2016, the second quarter 2016 financial results of these businesses are being reported as discontinued operations in the condensed consolidated statements of operations. The Company’s Anda Distribution results will be reported as discontinued operations until the close of that transaction. A portion of the third quarter 2016 Global Generics business results will be reported as discontinued operations in Allergan’s third quarter 2016 earnings report. Included in segment revenues are product sales that are sold by the Anda Distribution business once the Anda Distribution business has sold the product to a third party customer. These sales are included in segment results and are excluded from total continuing operations revenues through a reduction to Corporate revenues. Cost of sales for these products in discontinued operations is equal to our average third-party cost of sales for third-party brand products distributed by Anda Distribution.

Continuing operations includes the U.S. General Medicine, U.S. Specialized Therapeutics and International business segments. All prior year results have been recast to reflect continuing operations results and will be available along with other earnings materials on our website at View Source

Second Quarter 2016 Business Segment Results

U.S. Specialized Therapeutics

(Unaudited; $ in millions)
Three Months Ended June 30,

2016 (1)

2015 (1)

Eye Care
$ 636.1

$ 578.6
Total Medical Aesthetics
419.8

366.2
Facial Aesthetics

320.2

263.7
Plastic Surgery

52.8

54.1
Skin Care

46.8

48.4
Medical Dermatology
97.1

120.7
Neuroscience & Urology
326.3

277.7
Other Revenues
9.6

4.5
Net revenues
$ 1,488.9

$ 1,347.7
Operating expenses:

Cost of sales(2)

75.1

74.4
Selling and marketing

287.8

247.8
General and administrative

46.0

20.9
Segment contribution

$ 1,080.0

$ 1,004.6
Segment margin

72.5%

74.5%
Segment gross margin(3)

95.0%

94.5%

(1) Includes revenues earned that were distributed through the Anda Distribution business to third party customers.
(2) Excludes amortization and impairment of acquired intangibles including product rights.
(3) Defined as net revenues less segment related cost of sales as a percentage of net revenues.

U.S. Specialized Therapeutics net revenues grew 11 percent driven by strong growth in Eye Care, Facial Aesthetics and Neuroscience.

Eye Care

RESTASIS net revenues in the second quarter of 2016 were $371.3 million, driven by continued strong promotional efforts.
LUMIGAN/GANFORT net revenues in the second quarter of 2016 were $80.6 million, impacted by modest prescription declines.
ALPHAGAN/COMBIGAN net revenues in the second quarter of 2016 were $96 million. Overall prescriptions remain stable.
OZURDEX net revenues in the second quarter of 2016 were $21.5 million, driven by the acceleration of sales in DME following publication of new clinical data.
Medical Aesthetics

Facial Aesthetics
BOTOX Cosmetic net revenues in the second quarter of 2016 were $189.9 million, driven by continued market share expansion, enhanced promotional focus and overall continued strong demand for the product.
Fillers net revenues in the second quarter of 2016 were $117.6 million, reflecting strong sales of JUVEDERM and the continued benefit of new product introductions from the Vycross line.
KYBELLA net revenues in the second quarter of 2016 were $12.7 million, as we focus on developing the market for submental fullness.
Plastic Surgery
Breast implant net revenues in the second quarter of 2016 were stable at $51.7 million.
Skin Care
SkinMedica net revenues in the second quarter of 2016 were strong at $29.1 million.
Medical Dermatology

ACZONE and TAZORAC net revenues in the second quarter of 2016 were $54.1 million and $23.4 million, respectively.
Neurosciences & Urology

BOTOX Therapeutic revenues in the second quarter of 2016 were $296 million, driven by continued strong growth in migraine and overactive bladder.
RAPAFLO revenues in the second quarter of 2016 were stable at $29.4 million.
U.S. Specialized Therapeutics gross margin for the second quarter of 2016 was 95 percent. SG&A expenses increased 24 percent in the second quarter 2016 primarily due an expansion of the medical aesthetics salesforce and the launch of Kybella in the U.S. Segment contribution for the second quarter 2016 increased 7.5% percent versus the prior year period to $1.08 billion.

U.S. General Medicine

(Unaudited; $ in millions)

Three Months Ended June 30,

2016 (1)

2015 (1)

Central Nervous System

$ 317.5

$ 560.8
Gastroenterology

442.0

373.2
Women’s Health

296.1

219.4
Anti-Infectives

63.1

44.1
Established Brands

308.5

394.5
Other Revenues

21.9

16.0
Net revenues

$ 1,449.1

$ 1,608.0
Operating expenses:

Cost of sales(2)

214.9

238.0
Selling and marketing

332.7

309.2
General and administrative

43.7

18.1
Segment contribution

$ 857.8

$ 1,042.7
Segment margin

59.2%

64.8%
Segment gross margin(3)

85.2%

85.2%

(1) Includes revenues earned that were distributed through the Anda Distribution business to third party customers.
(2) Excludes amortization and impairment of acquired intangibles including product rights.
(3) Defined as net revenues less segment related cost of sales as a percentage of net revenues.

U.S. General Medicine net revenues were impacted by a decline in Central Nervous System and Established Brands revenues, offset by strong growth in Gastroenterology, Women’s Health and Anti-Infectives performance.

Central Nervous System
Allergan CNS franchise net revenues were down 43.4% year over year reflecting the loss of exclusivity of Namenda IR in July 2015. Sales of key products and new launches continued strong performance in the second quarter 2016.

NAMZARIC net revenues in the second quarter of 2016 were $12.8 million. Following approval of the expanded label, Namzaric is well-positioned to be the standard of care for patients with moderate Alzheimer’s disease.
NAMENDA XR net revenues in the second quarter of 2016 were $166.5 million, a decline of $38 million over the previous year as a result of lower net selling price and volume.
Overall, NAMENDA XR plus NAMZARIC days of therapy volume have been stable. Decreases in NAMENDA XR revenues were impacted by higher levels of investment to support the future of the franchise.
VRAYLAR continues to achieve rapid acceptance six months into launch with net revenues in the second quarter of 2016 of $11.1 million.
VIIBRYD/FETZIMA continue to perform well with net revenues in the second quarter of 2016 of $81.7 million.
SAPHRIS net revenues remained stable at $41.3 million for the quarter.
Gastrointestinal

LINZESS net revenues in the second quarter of 2016 were $150.5 million, driven by continued strong OTC conversion.
VIBERZI net revenues in the second quarter of 2016 were $20.4 million. The product continues to trend at approximately 90 percent of sales for Linzess at the same time of launch.
ASACOL/DELZICOL net revenues in the second quarter of 2016 were $119.8 million. ASACOL HD prescriptions declined as a result of lower promotion and formulary coverage. ASACOL HD is approaching loss of exclusivity on August 1, 2016.
Women’s Health

Lo LOESTRIN net revenues in the second quarter of 2016 were $101 million, driven by continuing strong demand.
ESTRACE Cream and MINASTRIN 24 net revenues in the second quarter of 2016 were $97.2 million and $83.0 million, respectively.
Anti-Infectives

TEFLARO, AVYCAZ and DALVANCE continue to experience strong performance with net revenues in the second quarter of 2016 of $35.2 million, $13.7 million and $10.2 million, respectively.
Established Brands

BYSTOLIC net revenues in the second quarter of 2016 were $150.3 million. Overall prescriptions experienced a modest decline following reintroduction of the 20 mg dosage form.
U.S. General Medicine gross margin for the second quarter of 2016 remained stable at 85.2 percent. SG&A expenses increased 15 percent in the second quarter 2016 primarily due to incremental promotional costs in support of VIBERZI and VRAYLAR. Overall profitability decreased with segment contribution for the second quarter 2016 decreasing 18 percent versus the prior year period to $858 million.

International

(Unaudited; $ in millions)
Three Months Ended June 30,

2016

2015

Eye Care
$ 318.7

$ 301.7
Total Medical Aesthetics
284.1

262.2
Facial Aesthetics

240.6

215.2
Plastic Surgery

40.3

43.2
Skin Care

3.2

3.8
Botox Therapeutics and Other
141.1

129.8
Other Revenues
13.1

23.4
Net revenues
$ 757.0

$ 717.1
Operating expenses:

Cost of sales(1)

115.0

111.8
Selling and marketing

207.2

196.1
General and administrative

30.9

35.0
Segment contribution

$ 403.9

$ 374.2
Segment margin

53.4%

52.2%
Segment gross margin (2)

84.8%

84.4%

(1) Excludes amortization and impairment of acquired intangibles including product rights.
(2) Defined as net revenues less segment related cost of sales as a percentage of net revenues.

International continues to experience strong growth, driven by Eye Care, Facial Aesthetics and Botox Revenues.

Eye Care

LUMIGAN/GANFORT revenues in the second quarter of 2016 were $94.5 million reflecting stable performance across Allergan’s glaucoma product franchise.
ALPHAGAN/COMBIGAN revenues in the second quarter of 2016 remained stable at $44.2 million.
OZURDEX revenues in the second quarter of 2016 were $45.7 million, driven by its launch in China.
OPTIVE revenues in the second quarter of 2016 remained stable at $26.0 million.
Medical Aesthetics

Facial Aesthetics
BOTOX Cosmetic revenues in the second quarter of 2016 were $132.7 million, driven by continued international market share expansion and strong demand for the product.
Fillers revenues in the second quarter of 2016 were $107.3 million, reflecting continued strong performance and the benefit of new product introductions in international markets.
Plastic Surgery
Breast implant revenues in the second quarter of 2016 were $40.2 million.
Botox Therapeutic & Other Products

BOTOX Therapeutic revenues in the second quarter of 2016 were $84.8 million, driven by continued strong performance of Botox Migraine and share expansion in key markets.
ASACOL/DELZICOL revenues in the second quarter of 2016 were $11 million.
International gross margin for the second quarter of 2016 remained stable at 84.8 percent. SG&A expenses increased 3 percent in the second quarter 2016 primarily due to incremental promotional costs for new product launches. Segment contribution increased 8 percent to $404 million due to higher sales of key products with higher margins, including Ozurdex.

Pipeline Update
R&D productivity continued during the second quarter of 2016. Key development highlights included:

U.S. and International Branded Product Approvals and Launches

TEFLARO (ceftaroline fosamil) received U.S. Food and Drug Administration (FDA) for its supplemental New Drug Application (sNDA) for pediatric patients 2 months of age to less than 18 years of age with acute bacterial skin and skin structure infections (ABSSSI).
BYVALSON (nebivolol and valsartan) 5 mg/ 80 mg tablets received FDA approval for the treatment of hypertension to lower blood pressure.
JUVÉDERM VOLBELLA XC, received FDA approval for use in the lips for lip augmentation and for correction of perioral rhytids, commonly referred to as perioral lines, in adults over the age of 21.
BOTOX Vista (Allergan’s botulinum toxin type A product) received approval from the Japanese Ministry of Health, Labour and Welfare for use as a treatment for crow’s feet lines (CFL).
JUVEDERM VOLITE with lidocaine received a CE mark in the European Union.
AVYCAZ (ceftazidime and avibactam) received FDA approval of its sNDA including clinical data from a Phase 3 trial evaluating the safety and efficacy of AVYCAZ, in combination with metronidazole, for the treatment of complicated intra-abdominal infections (cIAI) caused by designated susceptible microorganisms.
Allergan and Adamas Pharmaceuticals, Inc. announced that the FDA approved a new, expanded label for NAMZARIC (memantine and donepezil hydrochlorides). The expanded label allows patients with moderate to severe Alzheimer’s disease, who are currently stabilized on Aricept, donepezil hydrochloride (10 mg), to start combination therapy directly with NAMZARIC.
Second Quarter 2016 Regulatory Milestones & Clinical Updates

Allergan announced that its New Drug Application (NDA) filing for oxymetazoline HCl cream 1.0%, a topical prescription product for the treatment of persistent facial erythema (redness) associated with rosacea in adults, was accepted by the FDA for review.
Allergan and Ironwood Pharmaceuticals announced that the FDA accepted for review its sNDA for the 72 mcg dose of linaclotide for use in the treatment of adults with chronic idiopathic constipation (CIC).
Allergan announced that the FDA accepted its 510(k) Premarket Notification Application for the XEN Glaucoma Treatment System (consisting of the XEN45 Gel Stent and the XEN Injector).
Allergan announced positive results from two pivotal trials for True Tear, a handheld stimulator being studied to temporarily increase tear production upon activation in patients with dry eye disease due to decreased tear production. The studies, OCUN-009 and OCUN-010, each met their primary and secondary efficacy endpoints. The Company also filed a de novo application with the FDA for True Tear in the second quarter.
Allergan announced that the Committee for Medicinal Products for Human Use (CHMP) adopted a Positive Opinion for the Marketing Authorization of ENZEPI (pancrelipase) in the European Union.
Allergan plc and Gedeon Richter announced positive results from Venus I, one of two pivotal Phase III clinical trials evaluating the efficacy and safety of ulipristal acetate in women with uterine fibroids.
Allergan received a Positive Opinion from the Swedish Medical Products Agency (MPA) for BELKYRA (deoxycholic acid). BELKYRA will be the first prescription medicine to be licensed in Europe for the treatment of moderate to severe convexity or fullness associated with submental fat (often called double chin) in adults when the presence of submental fat has a psychological impact for the patient.
Full Year 2016 Continuing Operations Guidance1
Allergan’s full year 2016 continuing operations standalone estimates are based on management’s current belief about prescription trends, pricing levels, inventory levels and the anticipated timing of future product launches and events. Continuing operations includes the U.S. Specialized Therapeutics, U.S. General Medicine and International.

GAAP
NON-GAAP
Total Reported Net Revenues
$14.65 billion – $14.90 billion
$14.65 billion – $14.90 billion
Total Branded Net Revenues2
$14.75 billion — $15 billion (~10% growth*)
$14.75 billion — $15 billion (~10% growth*)
Gross Margin (as a % of revenues)
~88%
~89%
SG&A Expense
~$4.4 billion
~$4 billion
R&D Expense
~$2.1 billion
~$1.5 billion
Net Interest Expense
~$1.2 billion
~$1.3 billion
Tax Rate
~57%
~9%
Earnings / (Loss) Per Share3
($1.95 – $2.15)
$13.75 – $14.20
Share Count4
391 million shares
413 million shares
1 Excludes Anda from Net Revenues and expenses. Guidance based on reported net revenues.
2 Excludes revenues of Allergan products sold through Anda which are no longer included in our reported continuing operations revenue as a result of discontinued operations accounting.
* Excludes Namenda IR, divestitures and foreign exchange.
3 GAAP (loss) per share includes the impact of amortization of approximately $6.4 billion, IPR&D impairments and asset sales and impairments, net of $256 million, other income and expense of approximately $150 million and dividends on preferred shares of approximately $278 million.
4GAAP EPS shares do not include dilution of shares as earnings are a net loss. As such, the dilution impact of preferred share conversion and outstanding equity awards is not included in the forecasted shares.

On August 8, 2016 Cascadian Therapeutics (NASDAQ:CASC), a clinical-stage biopharmaceutical company, reported a corporate update and reported financial results for the quarter ended June 30, 2016 (Press release, Cascadian Therapeutics, AUG 8, 2016, View Source [SID:1234514367]).

Schedule your 30 min Free 1stOncology Demo!
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

                  Schedule Your 30 min Free Demo!

"During the second quarter, we continued to accelerate the clinical development of our lead product candidate ONT-380, a promising small molecule for the treatment of advanced, metastatic HER2+ breast cancer," said Scott Myers, President and CEO of Cascadian Therapeutics. "Early clinical results with ONT-380 when combined with T-DM1 or capecitabine have suggested a favorable safety and tolerability profile, systemic activity in advanced disease and the potential to improve outcomes in patients with and without brain metastases. We’re looking forward to reporting new data from the ongoing Phase 1b Triplet study expected later this year. In addition, we were granted Fast Track designation from the FDA for ONT-380 in HER2+ metastatic breast cancer."

"Our continued progress and the refocusing of resources on development of ONT-380 and our Chk1 inhibitor, supported by a recent financing in June, leave us well-positioned to deliver on our business and clinical development plans," said Mr. Myers.

SECOND QUARTER AND RECENT HIGHLIGHTS

Clinical Development

Presented positive results from the Phase 1b "Triplet" study of ONT-380 in combination with trastuzumab and capecitabine at the Company’s R&D Day in June. The study is evaluating ONT-380 in patients with locally advanced or metastatic breast cancer with and without brain metastases who have previously received treatment with multiple HER2 agents, including T-DM1. Topline results showed a progression free survival (PFS) of 6.3 months and an overall response rate (ORR) of 58%. A majority of adverse events were Grade 1, with most patients being able to continue on the full dose of ONT-380. Additionally, Grade 3 diarrhea was infrequent, without the need for a prophylactic anti-diarrheal medicine. These data suggest ONT-380’s promising systemic activity, favorable safety profile and activity against brain metastases as well as support the ongoing Phase 2 trial in this combination, known as HER2CLIMB, which the Company initiated in February 2016. The Company expects to present more mature data from the Triplet study before the end of the year.

Presented updated safety and activity data from the Phase 1b combination trial of ONT-380 with T-DM1 at the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) annual meeting in June. This study includes patients with advanced disease who were previously treated with trastuzumab and a taxane. Results showed a PFS of 8.2 months, with an ORR of 47%. Many of the patients with brain metastases in the study had long-term control of both brain metastases and systemic disease. PFS in the 30 patients with brain metastases was similar to patients without brain metastases, and there were no patients without brain metastases at baseline who developed new clinically apparent brain metastases while on the study.

Phase 2 ONT-380 combination trial, HER2CLIMB, continues to enroll patients with late-stage HER2+ metastatic breast cancer. This randomized, double-blind, placebo-controlled Phase 2 study is evaluating ONT-380 versus placebo in combination with capecitabine and trastuzumab in late stage HER2+ breast cancer patients, with and without brain metastases, who have previously been treated with a taxane, trastuzumab, pertuzumab and T-DM1. The Phase 2 trial is expected to enroll approximately 180 patients at sites in the U.S., Canada and select countries in Western Europe. Building on encouraging Phase 1b Triplet results, the primary and secondary endpoint objectives are designed to measure ONT-380’s contribution to treating systemic disease in patients with and without brain metastases. For more information, visit www.clinicaltrials.gov: NCT02614794.

Received Fast Track Designation for ONT-380 from FDA for the treatment of advanced HER2+ metastatic breast cancer. The Company continues to evaluate additional opportunities for ONT-380 and establish the most efficient regulatory and commercialization path forward.

Developing novel Chk1 cell cycle inhibitors with plans to move the program forward through IND-enabling studies in 2017. Topline preclinical results presented at the American Association for Cancer Research (AACR) (Free AACR Whitepaper) Annual Meeting 2016 showed that select Cascadian Chk1 inhibitors display cellular potency against Chk1, are active against a diverse range of cancer cell lines, and demonstrate synergistic activity in combination with certain chemotherapeutic drugs.
Corporate Update

Raised gross proceeds of $46 million in a concurrent, but separate, underwritten public offering and a registered direct offering to support ongoing program development.

Completed corporate name change to Cascadian Therapeutics from Oncothyreon, reflecting the shift in the Company’s focus from therapeutic vaccines to advancing targeted treatments for cancer.

Prioritized the Company’s pipeline to focus on ONT-380 and the Chk1 cell cycle inhibitor program and ceased development of the protocell research program.
SECOND QUARTER 2016 FINANCIAL HIGHLIGHTS

Cash, cash equivalents and investments totaled $80.9 million as of June 30, 2016, compared to $56.4 million at December 31, 2015, an increase of $24.5 million, or 43.4%. The increase was the result of net proceeds of $43.2 million from the Company’s June 2016 financing offset by cash used to fund operations of $18.7 million.

Net loss attributable to common stockholders for the three months ended June 30, 2016 was $25.1 million, or $0.26 per basic and diluted share, compared with a net loss attributable to common stockholders of $10.9 million, or $0.11 per basic and diluted share, for the comparable period in 2015. The increase in net loss attributable to common stockholders for the quarter was primarily due to the intangible asset impairment charge of $19.7 million during the three months ended June 30, 2016, which was the result of the mutual termination of the STC.UNM agreement and the Company’s intent to no longer develop, license or commercialize the protocell technology. In addition, the increase in net loss attributable to common stockholders was due to increases in general and administrative expenses of $1.7 million primarily due to higher professional fees associated with legal and regulatory compliance and expenses related to the Company’s Retention Payment Plan, and increases in research and development expenses of $0.7 million primarily due to greater activity related to the development of the Company’s product candidates. The Company also recognized a non-cash $1.6 million deemed dividend as a result of the beneficial conversion feature on the Series D convertible preferred stock. The increase in the net loss attributable to common stockholders was partially offset by a $6.9 million tax benefit that resulted from the reversal of the deferred tax liability that was associated with the impaired intangible asset during the three months ended June 30, 2016 and lower non-cash expense from the change in the fair value of the Company’s warrant liability, which was zero for the three months ended June 30, 2016 compared to $2.6 million for the three months ended June 30, 2015. The change in the fair value of warrant liability was due to the expiration of September 2010 warrants, which expired in October 2015.

Net loss attributable to common stockholders for the six month ended June 30, 2016 was $38.0 million, or $0.40 per basic and diluted share, compared with a net loss attributable to common stockholders of $18.8 million, or $0.19 per basic and diluted share, for the comparable period in 2015. The increase in net loss attributable to common stockholders for the six months ended June 30, 2016 was primarily due to the intangible asset impairment charge of $19.7 million during the six months ended June 30, 2016, increases in research and development expenses of $1.2 million primarily due to greater activity related to the development of the Company’s product candidates, and increases in general and administrative expenses of $6.0 million primarily related to the retirement and separation agreement that Cascadian entered into with its former Chief Executive Officer in January 2016, higher professional fees associated with legal and regulatory compliance and expenses related to the Company’s Retention Payment Plan. The Company also recognized a non-cash $1.6 million deemed dividend as a result of the beneficial conversion feature on the Series D convertible preferred stock. The increase in the net loss attributable to common stockholders was partially offset by a $6.9 million tax benefit during the six months ended June 30, 2016 and lower non-cash expense from the change in the fair value of the Company’s warrant liability, which was zero for the six months ended June 30, 2016 compared to $2.5 million for the six months ended June 30, 2015. The change in the fair value of warrant liability was due to the expiration of the September 2010 warrants, which expired in October 2015.
Financial Guidance
Cascadian Therapeutics believes the following financial guidance to be correct as of the date provided. Cascadian Therapeutics is providing this guidance as a convenience to investors and assumes no obligation to update it.

Cascadian Therapeutics currently expects cash used in operations in 2016 to be approximately $38.0 million to $40.0 million. With cash, cash equivalents and investments of $80.9 million as of June 30, 2016, Cascadian Therapeutics estimates that its cash, cash-equivalents and investments will be sufficient to fund operations for at least the next 12 months.

On August 8, 2016 Vericel Corporation (NASDAQ:VCEL), a leading developer of expanded autologous cell therapies for the treatment of severe diseases and conditions, reported financial results for the second quarter ended June 30, 2016 (Press release, Vericel, AUG 8, 2016, View Source [SID:1234514365]).

Schedule your 30 min Free 1stOncology Demo!
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

                  Schedule Your 30 min Free Demo!

Total net revenues for the quarter ended June 30, 2016 were approximately $12.8 million and included approximately $9.0 million of Carticel net revenues and approximately $3.8 million of Epicel net revenues. Previously announced downtime for the Carticel and Epicel cleanrooms to replace a rooftop air handler unit resulted in a two-week, or approximately 16%, reduction in product shipment dates for both products during the second quarter. As a result, total Carticel and Epicel net revenues decreased 3.9% compared to the second quarter of 2015, with Carticel net revenues decreasing less than $0.1 million and Epicel net revenues decreasing approximately $0.4 million, respectively, compared to the second quarter of 2015. For the first half of 2016, total net revenues were $26.9 million and included $17.8 million of Carticel net revenues and $9.1 million of Epicel net revenues. Total Carticel and Epicel net revenues for the first half of 2016 increased 12% compared to the first half of 2015, with Carticel revenues increasing 10% and Epicel revenues increasing 15%, respectively, compared to the same period in 2015.

Gross profit for the quarter ended June 30, 2016 was $5.5 million, or 43% of net product revenues, compared to $6.7 million, or 49% of net product revenues, for the second quarter of 2015. The reduction in gross profit was primarily due to the reduced volume resulting from the cleanroom downtime. Gross profit for the first half of 2016 was $13.1 million, or 49% of net product revenues, compared to $12.0 million, or 49% of net product revenues, for the first half of 2015.

Research and development expenses for the quarter ended June 30, 2016 were $4.1 million compared to $3.4 million in the second quarter of 2015. The increase in second-quarter research and development expenses is primarily due to an increase in expenses associated with the completion of the ixCELL-DCM clinical trial and preparing to treat patients in the open-label crossover extension portion of the study, as well as for research, development, and regulatory consulting expenses for MACI (Autologous Cultured Chondrocytes on Porcine Collagen Membrane). MACI is Vericel’s investigational third-generation autologous cultured chondrocyte implant intended for the treatment of symptomatic full-thickness cartilage defects of the knee.

Selling, general and administrative expenses for the quarter ended June 30, 2016 were $6.4 million compared to $5.6 million for the same period in 2015. The increase in selling, general and administrative expenses is primarily due to costs associated with the start-up of the Dohmen collaboration for patient support and reimbursement services for Carticel and MACI, if approved, professional services related to preparing for the potential launch of MACI, as well as legal fees, shared facility fees and an increase in personnel costs.

Loss from operations for the quarter ended June 30, 2016 was $5.0 million, compared to $2.3 million for the second quarter of 2015. Material non-cash items impacting the operating loss for the quarter included $0.8 million of stock-based compensation expense and $0.5 million in depreciation and amortization expense.

Other income for the quarter ended June 30, 2016 was $1.9 million compared to $0.1 million for the same period in 2015. The change in other income for the quarter is primarily due to the change in the fair value of warrants in the second quarter of 2016 compared to the same period in 2015.

Vericel’s reported GAAP net loss for the quarter ended June 30, 2016 was $3.0 million, or $0.22 per share, compared to a net loss of $2.2 million, or $0.16 per share, for the same period in 2015. Vericel reported an adjusted net loss for the quarter ended June 30, 2016 of $5.0 million dollars, or $0.21 per share, compared to an adjusted net loss of $2.3 million, or $0.10 per share, for the same period in 2015. The adjusted net loss excludes the non-cash change in the fair value of warrants and the non-cash accumulated dividend on the Series B convertible preferred stock. The adjusted net loss per share includes common shares reserved as treasury shares received in exchange for the Series A non-voting convertible preferred stock.

As of June 30, 2016, the company had $9.8 million in cash compared to $14.6 million in cash at December 31, 2015.

Recent Business Highlights

During and since the second quarter of 2016, the company:

Limited the impact of the manufacturing downtime for the Carticel and Epicel cleanrooms; total Carticel and Epicel net revenues increased 12% for the first half of 2016 compared to the same period in 2015;
Initiated the collaboration with Dohmen Life Science Services, LLC for patient support services, as well as payer contracting and product reimbursement services for Carticel and MACI, if approved, which is expected to increase operating profit margin for these products by retaining margin previously captured by a distributor;
Increased MACI launch preparation and operational activities in anticipation of the January 3, 2017, MACI PDUFA goal date;
Announced results from the Phase 2b ixCELL-DCM clinical trial of ixmyelocel-T in patients with advanced heart failure due to ischemic dilated cardiomyopathy, which were presented at the American College of Cardiology’s 65th Annual Scientific Session and published in The Lancet; and
Initiated activities to explore potential expedited development and review pathways and partnering discussions for ixymyelocel-T in the U.S., Japan and Europe in light of meeting the primary endpoint in the ixCELL-DCM clinical trial.
"We are pleased with the commercial performance of the business in light of the manufacturing downtime as we have generated strong growth in our core commercial business during the first half of the year," said Nick Colangelo, president and CEO of Vericel. "We believe that we are building a strong foundation for our cartilage repair franchise, and we look forward to continuing to work productively with the FDA during the ongoing MACI BLA review process as we prepare for the potential launch of MACI, if approved, in the first quarter of 2017."

On August 8, 2016 Kite Pharma, Inc. (Nasdaq: KITE), a clinical-stage biopharmaceutical company focused on developing engineered autologous cell therapy (eACT) products for the treatment of cancer, reported financial results for the second quarter 2016 and recent business highlights (Press release, Kite Pharma, AUG 8, 2016, View Source [SID:1234514363]).

Schedule your 30 min Free 1stOncology Demo!
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

                  Schedule Your 30 min Free Demo!

"During the second quarter we continued to expand our pipeline, broaden our engineered cell therapy capabilities through access to key enabling technologies, and advance the development of KTE-C19 as a potential first-to-market breakthrough immunotherapy for patients with advanced non-Hodgkin lymphoma (NHL)," noted Arie Belldegrun, M.D., FACS, Chairman, President, and Chief Executive Officer. "We have enrolled all 72 chemorefractory diffuse large B-cell lymphoma (DLBCL) patients in the pivotal portion of our ZUMA-1 study, and Kite remains on track to announce interim data from approximately 50 of these patients at 3-month follow-up later this quarter. Subject to these interim results and discussions with the U.S. Food and Drug Administration (FDA), we expect to submit a Biologics License Application (BLA) for KTE-C19 by the end of 2016. We look forward to sharing details about KTE-C19 commercial preparations, manufacturing readiness and new development programs at our Investor Day and webcast on October 18."

Second Quarter 2016 and Recent Highlights

Completed enrollment of all targeted chemorefractory DLBCL patients (n=72) in the Phase 2 portion of ZUMA-1, the first multi-center pivotal study of engineered T-cell therapy in chemorefractory DLBCL patients.
Obtained access for KTE-C19 to the recently initiated Priority Medicines (PRIME) regulatory initiative from the European Medicines Agency (EMA). PRIME provides early and enhanced regulatory support to optimize regulatory applications and speed up the review of medicines that address a high unmet need.
Reported at the June 2016 annual meeting of the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper):
Results from a study conducted at the National Cancer Institute (NCI) of low-dose chemotherapy conditioning followed by anti-CD19 chimeric antigen receptor (CAR) T-cell therapy showing that CAR T-cell therapy was effective in inducing a high response rate in patients with advanced non-Hodgkin lymphoma (NHL). Kite is using a similar conditioning regimen in its ZUMA-1 Study of KTE-C19.
Ongoing complete responses in 3 of 7 patients at 9-month study follow-up in the Phase 1 portion of the ZUMA-1 study of KTE-C19 in chemorefractory DLBCL. Grade 3 or higher cytokine release syndrome was observed in 14% and neurotoxicity in 57% of the Phase 1 patients; all were reversible except in one patient with dose-limiting toxicity.
Findings from a multi-institutional, retrospective meta-analysis of outcomes from 635 patients with chemorefractory DLBCL (SCHOLAR-1). The results document the consistently poor outcomes in this patient population, with an overall response rate of 26%, complete response rate of 8% and median overall survival of 6.6 months.
Opened Kite’s new state-of-the-art commercial manufacturing facility in El Segundo, California, which is expected to be operational for commercial launch in 2017.
Expanded the Company’s development of T-cell receptor (TCR) therapies targeting HPV-associated cancers by entering into a new Cooperative Research and Development Agreement (CRADA) with the Experimental Transplantation and Immunology Branch of the NCI and lead investigator Christian S. Hinrichs, M.D.
Entered a research collaboration with Cell Design Labs, Inc. to develop a molecular "switch" technology that provides dynamic control and precise regulation of engineered CAR-T cells after therapeutic administration.
Accessed technology for the development of allogeneic cell therapies through a license agreement and research collaboration with the Regents of the University of California. The technology platform supports the differentiation of engineered T-cells from pluripotent stem cells.
Appointed Paul Jenkinson, a corporate finance executive with extensive global operations experience, as Chief Financial Officer.
Second Quarter 2016 Financial Results

Revenue was $4.8 million for the second quarter of 2016.
Research and development expenses were $47.4 million for the second quarter of 2016, and include $8.5 million of non-cash stock-based compensation expense.
General and administrative expenses were $23.5 million for the second quarter of 2016, and include $11.3 million of non-cash stock-based compensation.
Net loss was $64.3 million, or $1.31 per share, for the second quarter of 2016.
Non-GAAP net loss for the second quarter of 2016 was $44.5 million, or $0.91 per share, which excludes non-cash stock-based compensation of $19.8 million.
As of June 30, 2016, Kite had $531.1 million in cash, cash equivalents, and marketable securities. Kite continues to expect the full year 2016 net cash burn to be $235 million to $250 million, which includes approximately $20 million in capital expenditures, but excludes any inflows or outflows from future business development activities, if any. The estimated full year 2016 net cash burn is primarily driven by an estimated net loss of $295 million to $310 million, which includes an estimated $80 million of non-cash stock-based compensation expense.

On August 8, 2016 Fate Therapeutics, Inc. (NASDAQ: FATE), a biopharmaceutical company dedicated to the development of programmed cellular immunotherapies for cancer and immune disorders, reported business highlights and financial results for the second quarter ended June 30, 2016 (Filing, Q2, Fate Therapeutics, 2016, AUG 8, 2016, View Source [SID:1234514362]).

"With the opening of enrollment in our Phase 1/2 clinical trial, we believe we are well-positioned in 2016 to complete the initial safety assessment and begin evaluating the potential of ProTmune for the prevention of life-threatening immunological conditions, including acute GvHD, in cancer patients undergoing allogeneic transplant for which there is a clear unmet and urgent medical need," said Scott Wolchko, President and Chief Executive Officer of Fate Therapeutics. "Additionally, we plan to collaborate with the University of Minnesota in filing an IND later this year for our Adaptive NK Cell cancer immunotherapy, which has shown persistent and potent tumor killing independent of antigen recognition in preclinical studies. We believe our allogeneic memory-like NK cell approach is a novel and promising intervention strategy for combating both liquid and solid tumors."

Recent Highlights & Program Updates

· Opened Patient Enrollment in ProTmune Phase 1/2 Clinical Trial. Fate Therapeutics opened patient enrollment across multiple clinical sites in support of its Phase 1/2 clinical trial of ProTmune for the prevention of acute graft-versus-host disease (GvHD) and cytomegalovirus (CMV) infection. The Company expects to enroll 10 subjects in the initial Phase 1 stage of the trial, all of whom will receive ProTmune. Following an independent data monitoring committee safety review of these 10 subjects, a randomized, controlled Phase 2 stage is expected to enroll 60 subjects in a 1:1 ratio. The open-label Phase 1/2 study is designed to evaluate the safety and efficacy profile of ProTmune in adult subjects with hematologic malignancies undergoing allogeneic mobilized peripheral blood (mPB) hematopoietic cell transplantation (HCT).

· Granted Fast Track Designation by the FDA for ProTmune. In June 2016, the U.S. Food and Drug Administration (FDA) granted Fast Track designation for ProTmune for the reduction of incidence and severity of acute GvHD in patients undergoing allogeneic HCT. GvHD is a leading cause of morbidity and mortality in patients undergoing HCT, and there are currently no approved therapies for its prevention.

· Presented Preclinical Data Supporting Clinical Development of Allogeneic Memory-Like NK Cell Product Candidate. At the Innate Killer Summit in May 2016, Dr. Jeffrey Miller, M.D., Professor of Medicine and Deputy Director, University of Minnesota Cancer Center, highlighted in vitro and in vivo preclinical data demonstrating that the Company’s Adaptive NK Cell cancer immunotherapy has enhanced anti-tumor activity, including improved persistence, enhanced cytokine production and increased resistance to immunosuppressive factors in the tumor microenvironment. Additionally, the Company’s Adaptive NK Cell product candidate was shown to synergize with several different therapeutic antibodies in vivo in preclinical studies, significantly augmenting antibody-directed cellular cytotoxicity (ADCC) against solid tumors.

Schedule your 30 min Free 1stOncology Demo!
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

                  Schedule Your 30 min Free Demo!

· Showcased Off-the-Shelf Cancer Immunotherapy Approach Using Renewable Pluripotent Cell Lines. The Company highlighted its patent-protected platform for producing off-the-shelf NK- and T-cell immunotherapies from engineered pluripotent cell lines at the Annual Meeting of the International Society for Stem Cell Research in June 2016. Fate Therapeutics is generating precisely-engineered, highly-stable pluripotent cell lines, from which it derives monoclonal populations of effector cells with enhanced properties, such as persistence, tumor targeting, and resistance to tumor suppression. Similar to master cell lines used for the manufacture of monoclonal antibodies, engineered pluripotent cell lines have the potential to serve as a renewable cell source for the consistent manufacture of homogeneous populations of effector cells for the treatment of many thousands of patients.

· Entered into $10.3M Common Stock Purchase Agreement with Certain Institutional Investors. On August 6, 2016, Fate Therapeutics entered into a securities purchase agreement for a private placement of the Company’s common stock, under which funds managed by Franklin Advisers, Inc., together with certain other institutional investors, agreed to purchase 5.25 million shares of common stock at $1.96 per share for gross proceeds of $10.3 million. The private placement transaction is expected to close on or about August 10, 2016, subject to customary closing conditions. Proceeds from the transaction will be used primarily to advance the Company’s pipeline of programmed cellular immunotherapies and for general corporate purposes. The Company did not use a placement agent in connection with the transaction.

· Appointed Chris M. Storgard, M.D. as Chief Medical Officer. In May 2016, Dr. Chris Storgard joined the Company as Chief Medical Officer. Dr. Storgard is an experienced drug development clinician with a proven history of advancing early stage programs through clinical development and product commercialization. He is primarily responsible for leading the design and execution of the Company’s clinical trials for its product candidates.

Second Quarter 2016 Financial Results

· Cash & Short-term Investment Position: Cash, cash equivalents and short-term investments as of June 30, 2016 were $45.9 million compared to $64.8 million as of December 31, 2015. The decrease is primarily driven by the Company’s use of cash to fund operating activities and to service principal and interest obligations under its loan agreement with Silicon Valley Bank. This balance as of June 30, 2016 did not include $10.3 million in proceeds which the Company expects to receive upon the closing of the private placement transaction.

· Total Revenue: Revenue was $1.0 million for the second quarter of 2016 compared to $0.3 million for the comparable period in 2015. All revenue was derived from the Company’s research collaboration and license agreement with Juno Therapeutics.

· Total Operating Expenses: Total operating expenses were $9.0 million for the second quarter of 2016 compared to $7.5 million for the comparable period in 2015. Operating expenses for the second quarter of 2016 included $0.8 million of stock compensation expense, compared to $0.7 million for the second quarter of 2015.

· R&D Expenses: Research and development expenses were $6.8 million for the second quarter of 2016 compared to $4.9 million for the comparable period in 2015. The increase in R&D expenses is primarily related to an increase in third-party service provider fees to support the Company’s clinical development of ProTmune and preclinical development of its Adaptive NK Cell product candidate in collaboration with the University of Minnesota, and an increase in personnel expenses resulting from the hiring of additional employees to support the conduct of its research activities, including activities under its collaboration with Juno.

· G&A Expenses: General and administrative expenses were $2.2 million for the second quarter of 2016 compared to $2.7 million for the comparable period in 2015. The decrease in G&A expenses is primarily related to a decrease in intellectual property-related expenses.

· Common Shares Outstanding: Common shares outstanding as of June 30, 2016 were 28.9 million compared to 28.7 million as of December 31, 2015. Common shares outstanding increased primarily as a result of the issuance of shares under the Company’s equity incentive plan. Common shares outstanding as of June 30, 2016 did not include 5.25 million shares which the Company expects to issue upon the closing of the private placement transaction.