On February 27, 2019 Madrigal Pharmaceuticals, Inc. (NASDAQ:MDGL) reported its fourth quarter and full year 2018 financial results and highlights (Press release, Synta Pharmaceuticals, FEB 27, 2019, View Source [SID1234533732]):

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"Madrigal made significant progress in 2018 in advancing the development of MGL-3196. We successfully completed Phase 2 studies in both NASH and dyslipidemia and expanded the Madrigal team to meet the demands of our clinical programs," stated Paul Friedman, M.D., Chief Executive Officer of Madrigal. "In June, we also raised approximately $312 million of net proceeds from a public offering of our common stock, and we believe we have significant financial resources to fund our currently planned Phase 3 programs."

Becky Taub, M.D., CMO and Executive VP, Research & Development of Madrigal added, "We had a positive end of phase 2 meeting with FDA for our NASH program, and we expect to initiate our Phase 3 clinical trial before the end of the first quarter of 2019. We continue to believe MGL-3196 has the potential to resolve NASH while decreasing cardiovascular risk, through reduction of levels of multiple atherogenic lipids as well as reduction of fat in the liver. Based on this potential cardiovascular risk reducing profile, we also intend to move ahead with our Phase 3 dyslipidemia clinical program later this year."

Financial Results for the Three Months and Twelve Months Ended December 31, 2018

As of December 31, 2018, Madrigal had cash, cash equivalents and marketable securities of $483.7 million, compared to $191.5 million at December 31, 2017. The increase in cash and marketable securities resulted primarily from the net proceeds of $311.8 million from Madrigal’s public offering of common stock in June 2018, partially offset by cash used in operations of $25.5 million.

Operating expenses were $14.5 million and $40.7 million, respectively, for the three month and twelve month periods ended December 31, 2018, compared to $8.9 million and $32.1 million in the comparable prior year periods.

Research and development expenses for the three month and twelve month periods ended December 31, 2018 were $8.9 million and $25.4 million, respectively, compared to $6.5 million and $24.4 million in the comparable prior year periods. The increases are primarily attributable to increases in non-cash stock compensation, personnel and

consulting costs, the effects of which were partially offset by lower clinical costs due to completion of treatment in our Phase 2 clinical studies in 2018.

General and administrative expenses for the three month and twelve month periods ended December 31, 2018 were $5.6 million and $15.3 million, respectively, compared to $2.4 million and $7.7 million in the comparable prior year periods. The increases are due primarily to higher non-cash stock compensation expense from stock option awards.

Interest income for the three month and twelve month periods ended December 31, 2018 was $3.0 million and $7.7 million, respectively, as compared to $216 thousand and $558 thousand in the comparable prior year periods. The change in interest income was due primarily to a higher average principal balance in our investment account in 2018, and increased interest rates.

Clinical Program Summaries for MGL-3196

NASH

Non-alcoholic Steatohepatitis (NASH) is a common liver disease in the United States and worldwide, unrelated to alcohol use, that is characterized by a build-up of fat in the liver, inflammation, damage (ballooning) of hepatocytes and increasing fibrosis. Although people with NASH may feel well and often do not know they have the disease, NASH can lead to permanent damage, including cirrhosis and impaired liver function in a high percentage of patients.

In October 2016, the first patient was treated in the ongoing Phase 2 trial of MGL-3196 for the treatment of NASH. The randomized, double-blind, placebo-controlled, multi-center Phase 2 study enrolled 125 patients 18 years of age and older with liver biopsy-confirmed NASH and included approximately 25 clinical sites in the United States. Patients were randomized to receive either MGL-3196 or placebo in a 2:1 ratio.

The primary endpoint of the study was the reduction of liver fat at 12 weeks compared with baseline (relative change), assessed by MRI-PDFF. Key secondary endpoints at 36 weeks included: reduction in liver fat compared with baseline (relative change), also assessed by MRI-PDFF; a two-point reduction in NAS (NALFD activity score) on biopsy; resolution of NASH on biopsy; and, safety and tolerability based on adverse events and changes in laboratory values.

The primary endpoint of the study at 12 weeks was achieved. Liver fat was reduced by 36.3% in all MGL-3196 treated patients (78) and 42.0% in a pre-specified group of high exposure MGL-3196 treated patients (44/78), as compared with 9.6% median reduction in liver fat in 38 placebo treated patients. These results were statistically significant (p<0.0001) for both MGL-3196 treatment groups. Further, 75% of the high-exposure MGL-3196 treated patients showed liver fat reductions of >30%.

At 36 weeks, MGL-3196 achieved multiple key secondary endpoints including a sustained highly significant (p<0.001) reduction in liver fat compared to placebo as measured by MRI-PDFF; mean relative fat reduction for MGL-3196 was 37% versus 8.9% for placebo. MGL-3196 was associated with a greater percentage of subjects with a 2-point improvement in NAS (56% of 73 patients vs 32% of 34 placebo subjects, p=0.02). NASH resolution (NR) was seen in 27% of MGL-3196 compared with 6% of placebo subjects, p=0.02. MGL-3196 patients with > 30% fat reduction on Week 12 MRI-PDFF demonstrated a higher percentage of 2-point improvement in NAS (70%, p=0.001) and NR (39%, p=0.001) compared with placebo, demonstrating a strong relationship between early reduction in liver fat as demonstrated by week 12 MRI-PDFF and NASH improvement on liver biopsy at Week 36. In patients with NASH Resolution, 35% of the MGL-3196 treated patients and no placebo patients had more advanced NASH (baseline NAS >5).

At Week 36, MGL-3196 treated patients showed sustained reduction of fibrosis biomarkers. In MGL-3196 patients with NASH resolution, fibrosis also resolved in 50% of patients and was decreased statistically significantly relative to all placebo patients.

There were statistically significant reductions in liver enzymes in MGL-3196 treated patients compared to placebo treated patients; reductions of greater magnitude were achieved with longer duration of MGL-3196 treatment. Statistically significantly more MGL-3196 treated patients than placebo treated patients had normalization of ALT (alanine transaminase).

Similar to week 12, at week 36 there were sustained, statistically significant reductions in low-density lipoprotein cholesterol (LDL-C), triglycerides, ApoB and lipoprotein(a).

MGL-3196 was well tolerated in this trial with mostly mild and a few moderate AEs which were balanced between drug treated and placebo patients. There was an increase in incidence of mild transient diarrhea in MGL-3196-treated, often a single episode, at the start of treatment. Diarrhea incidence was not increased later in the study.

Based on liver enzyme inclusion criteria, some patients are receiving extended treatment beyond 36 weeks for up to 36 additional weeks. All patients in this extension study will receive MGL-3196 and only non-invasive assessments will be made, including serial MRI-PDFF, safety labs, and circulating biomarkers.

Additional information about the study [NCT02912260] can be obtained at www.ClinicalTrials.gov.

Dyslipidemia

Patients with NASH, and its more prevalent precursor, Non-Alcoholic Fatty Liver Disease (NAFLD), are at heightened cardiovascular risk. In fact, patients suffering from these conditions die more frequently from cardiovascular events than from their liver

disease. Multiple factors may contribute to this risk, including elevated levels of LDL-C and excess liver fat. Patients with NASH and NAFLD, however, may not undergo a biopsy to confirm a NASH diagnosis until they reach the more advanced stages of fibrosis (F2 — F4). A significant segment of this large group of patients may also suffer from diabetes and metabolic syndrome, and have lipid levels that are above target despite treatment with established therapies. These patients may benefit from therapy to lower their lipid levels, including excess liver fat.

We believe Madrigal’s studies to date in patients with NASH and patients with heterozygous familial hypercholesterolemia (HeFH), have demonstrated the pleiotropic activity of MGL-3196 and the potential of the drug to reduce an array of atherogenic lipids, including liver fat, LDL-C, ApoB, triglycerides, ApoCIII, and Lp(a), as well as hs-CRP. As a result, Madrigal intends to focus its development of MGL-3196 for the treatment of patients across the entire NASH and NAFLD spectrum.

HeFH
Heterozygous familial hypercholesterolemia (HeFH), and a much rarer form called homozygous familial hypercholesterolemia (HoFH), are severe genetic dyslipidemias typically caused by inactivating mutations in the LDL receptor. Both forms of FH lead to early onset cardiovascular disease. HeFH, the most common dominantly inherited disease, is present in up to 1 in 200 people; the disease is found in higher frequencies in certain more genetically homogenous populations. Treatments exist for both HeFH and HoFH but many patients (as many as 40 percent of HeFH patients) are not able to reach their cholesterol (LDL-C) reduction goals on these therapies, reflecting the lifetime burden of cholesterol buildup in their bodies. Based on evidence of impressive LDL cholesterol lowering in Phase 1, and data suggesting that MGL-3196 has a mechanism of action that is different from and complementary to statins, Madrigal initiated a Phase 2 proof-of-concept trial in HeFH in February 2017 and enrolled 116 patients.

In this Phase 2 HeFH trial, patients who were not at their LDL-C goal were randomized in a 2:1 ratio to receive either MGL-3196 or placebo, in addition to their current cholesterol lowering regimen, which included approximately 75% taking high intensity statins (20/40 mg rosuvastatin or 80 mg atorvastatin), and about 2/3 of patients also taking ezetimibe. MGL-3196 treated patients (placebo corrected) achieved highly significant (p< 0.0001) LDL-C lowering of 18.8%, and 21% LDL-C lowering in those on an optimal dose of MGL-3196. LDL-C lowering was 28.5% in MGL-3196 treated compared to placebo in a prespecified group of patients who did not tolerate high intensity statin doses. Highly significant reductions (p<0.0001) relative to placebo were also observed with ApoB, triglycerides (TG) (25-31%), apolipoprotein CIII (Apo CIII) and Lp(a) (25-40%) in all MGL-3196 treated patients and prespecified subgroups, irrespective of statin treatment.

MGL-3196 was well-tolerated with primarily mild and some moderate AEs, the numbers of which were balanced between placebo and drug-treatment groups.

About MGL-3196

Among its many functions in the human body, thyroid hormone, through activation of its beta receptor, plays a central role in controlling lipid metabolism, impacting a range of health parameters from levels of serum cholesterol and triglycerides to the pathological buildup of fat in the liver. Attempts to exploit this pathway for therapeutic purposes in cardio-metabolic and liver diseases have been hampered by the lack of selectivity of older compounds for the thyroid hormone receptor (THR)-β, chemically-related toxicities and undesirable distribution in the body.

Madrigal recognized that greater selectivity for thyroid hormone receptor (THR)-β and liver targeting might overcome these challenges and deliver the full therapeutic potential of THR-β agonism. Madrigal believes that MGL-3196 is the first orally administered, small-molecule, liver- directed, truly β-selective THR agonist. MGL- 3196 has now demonstrated in two Phase 2 double-blind, placebo-controlled trials in NASH and HeFH the potential for a broad array of therapeutically beneficial effects, improving components of both metabolic syndrome, such as insulin resistance and dyslipidemia, and fatty liver disease, including lipotoxicity and inflammation. Based on evidence of these pleiotropic actions, coupled with an excellent safety profile, Madrigal plans to initiate a Phase 3 clinical program in NASH, and a Phase 3 clinical program is dyslipidemia

On February 27, 2019 Alpine Immune Sciences, Inc. (NASDAQ:ALPN), a leading clinical-stage immunotherapy company focused on developing innovative treatments for cancer, autoimmune/inflammatory, and other diseases, reported the company will participate in two upcoming investor conferences in March (Press release, Alpine Immune Sciences, FEB 27, 2019, View Source [SID1234533748]).

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Cowen and Company 39th Annual Health Care Conference
Date: Tuesday, March 12, 2019
Time: 9:20 a.m. Eastern Time
Location: Boston, MA

Oppenheimer 29th Annual Healthcare Conference – Analyst-Led Fireside Chat
Date: Tuesday, March 19, 2019
Time: 1:35 p.m. Eastern Time
Location: New York, NY

A live webcast of each presentation will be available online in the investor relations section of the company’s website at View Source A replay of the presentations will be available on the company website for 90 days following the webcast.

On February 27, 2019 FibroGen, Inc. (NASDAQ: FGEN), a leading biopharmaceutical company discovering and developing a pipeline of first-in-class therapeutics, reported financial results for the fourth quarter and full year 2018 and provided an update on the company’s recent developments (Press release, FibroGen, FEB 27, 2019, View Source;p=irol-newsArticle&ID=2389325 [SID1234533811]).

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Thomas B. Neff, FibroGen’s Chief Executive Officer, said, "FibroGen achieved a number of remarkable clinical and regulatory milestones in 2018. We received approval in China for roxadustat, a first-in-class treatment for anemia associated with chronic kidney disease for patients on dialysis in December 2018. Roxadustat will be the first HIF-PH inhibitor to be made available to CKD dialysis patients in need of anemia treatment.

"Following the release of positive efficacy data from our Phase 3 program, our team is now preparing for the submission of our U.S. NDA to the FDA in 2019. In addition, we were granted Fast Track designation from the FDA for pamrevlumab in idiopathic pulmonary fibrosis and in pancreatic cancer in 2018. Our team is focused on commencing Phase 3 clinical studies in both of these indications."

Recent Developments and Highlights
Roxadustat for CKD Anemia in U.S./ROW

FibroGen announced positive topline results from three U.S./EU Phase 3 trials of roxadustat for the treatment of anemia in patients with chronic kidney disease (CKD)
Our partner AstraZeneca announced positive topline results from two global Phase 3 trials of roxadustat for the treatment of anemia in patients with CKD
Our partner Astellas announced that roxadustat met its primary endpoint in its three Phase 3 trials of roxadustat for the treatment of anemia in patients with CKD
Roxadustat for CKD Anemia in China

Received marketing authorization from the National Medical Products Administration (NMPA) for roxadustat for the treatment of anemia caused by CKD in patients who are dialysis-dependent, including hemodialysis and peritoneal dialysis, triggering a total of $12 million in related milestone payments to FibroGen
Clinical results from two Phase 3 studies conducted in China were presented at the American Society of Nephrology (ASN) Kidney Week 2018 in a clinical late-breaking poster session
Roxadustat for CKD Anemia in Japan

Astellas announced positive topline results from the four Phase 3 dialysis-dependent studies
Astellas filed a New Drug Application (NDA) for roxadustat for anemia associated with dialysis-dependent CKD with the Pharmaceuticals and Medical Devices Agency (PMDA), triggering a $15 million milestone payment to FibroGen
Clinical results from two of the four Japan Phase 3 trials in dialysis-dependent patients were presented at the ASN Kidney Week 2018:
Phase 3 trial results in peritoneal dialysis patients presented in an oral session
Results of a Phase 3 darbepoetin alfa-controlled study in stable hemodialysis patients previously treated with ESA presented in a clinical late-breaking poster session
Roxadustat for MDS Anemia

Patient dosing ongoing in both a U.S./Europe Phase 3 study and a China Phase 2/3 study
Pamrevlumab for Idiopathic Pulmonary Fibrosis (IPF)

Granted Fast Track designation by the U.S. Food and Drug Administration (FDA) for the treatment of patients with idiopathic pulmonary fibrosis (IPF)
Presented positive Phase 2b efficacy and safety results (improvements in lung function (FVC), quantitative measure of fibrosis (HRCT) and quality of life (SGRQ)) in multiple poster presentations at the American Thoracic Society (ATS) 2018 Conference
Clinical and preclinical data presented at the European Respiratory Society International Congress (ERS) 2018 and 20th International Colloquium on Lung and Airway Fibrosis (ICLAF) 2018
Pamrevlumab for Pancreatic Cancer

Granted Fast Track designation by the FDA for the treatment of patients with unresectable locally advanced pancreatic cancer (LAPC)
Positive Phase 2 clinical trial results presented for presentation at the 2018 American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) Annual Meeting
Pamrevlumab for Duchenne Muscular Dystrophy

Completed Phase 2 clinical trial enrollment in the first quarter of 2018
Corporate and Financial

Net income for the fourth quarter of 2018 was $21.0 million, or $0.25 per basic share and $0.23 per diluted share, compared to a net loss of $33.9 million, or $0.41 net loss per basic and diluted share one year ago
Net loss for the year ended December 31, 2018, was $86.4 million, or $1.03 per share, compared to $120.9 million, or $1.66 per share one year ago
At December 31, 2018, FibroGen had $747.2 million in cash, restricted time deposits, cash equivalents, investments, and receivables, compared to $762.2 million at year-end 2017
The weighted average number of common shares used to calculate net loss per share was 84.1 million shares and 73.0 million shares for the years of 2018 and 2017, respectively
Total shares outstanding as of December 31, 2018 were 85.4 million shares
2019 Outlook
Roxadustat

Approval to treat non-dialysis-dependent CKD patients in China is expected in mid-2019
Regulatory decision on the treatment of dialysis-dependent CKD patients in Japan is expected in the second half of 2019
Full MACE adjudication procedures from our roxadustat Phase 3 studies for the NDA and MAA are expected to be completed in the first half of 2019
Submission of our U.S. NDA for the treatment of anemia associated with CKD to the FDA is anticipated in the third quarter of 2019; and we expect our partner Astellas to submit a marketing authorization application (MAA) to the European Medicines Agency (EMA) thereafter
In MDS, we plan to advance roxadustat into the double-blind, placebo-controlled pivotal portion of our U.S./EU Phase 3 study
In chemotherapy-induced anemia, we expect to start enrolling patients in our Phase 2 clinical study in the U.S. in 2019
Pamrevlumab

On track to start a randomized, double-blind, placebo-controlled pivotal Phase 3 study evaluating pamrevlumab in combination with gemcitabine and nab-paclitaxel as a neoadjuvant therapy for LAPC in approximately 260 patients in the second quarter of 2019
Expect to commence a randomized, double-blind, placebo-controlled Phase 3 clinical trial in IPF with a primary endpoint of change in forced vital capacity (FVC) from baseline in approximately 500 patients in the second quarter of 2019
Expect to complete the first year of treatment for all 21 non-ambulatory DMD patients in our Phase 2 trial in the first quarter of 2019
Conference Call and Webcast Details
FibroGen will host a conference call and webcast today, Wednesday, February 27, 2019, at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) to discuss financial results and provide a business update. A live audio webcast of the call may be accessed in the investor section of the company’s website, www.fibrogen.com. To participate in the conference call by telephone, please dial (888) 771-4371 (U.S. and Canada) or (847) 585-4405 (international), reference the FibroGen fourth quarter and full year 2018 financial results conference call, and use passcode 48309188. A replay of the webcast will be available shortly after the call for a period of two weeks. To access the replay, please dial (888) 843-7419 (domestic) or (630) 652-3042 (international), and use passcode 48309188#.

About Roxadustat
Roxadustat (FG-4592), discovered by FibroGen, is a first-in-class, orally administered small molecule currently approved in China for the treatment of anemia in CKD patients on dialysis. Roxadustat is a HIF-PH inhibitor that promotes erythropoiesis through increasing endogenous production of erythropoietin, improving iron regulation, and overcoming the negative impact of inflammation on hemoglobin syntheses and red blood cell production by downregulating hepcidin. Administration of roxadustat has been shown to induce coordinated erythropoiesis, increasing red blood cell count while maintaining plasma erythropoietin levels within or near normal physiologic range in multiple subpopulations of CKD patients, including in the presence of inflammation and without a need for supplemental intravenous iron.

FibroGen and its collaboration partners are pursuing four approval pathways in major jurisdictions to prepare for commercialization worldwide:

Astellas and FibroGen are collaborating on the development and commercialization of roxadustat for the treatment of anemia in territories including Japan, Europe, the Commonwealth of Independent States, the Middle East, and South Africa.
AstraZeneca and FibroGen are collaborating on the development and commercialization of roxadustat for the treatment of anemia in the U.S., China, and other markets in the Americas and in Australia/New Zealand as well as Southeast Asia.
About Pamrevlumab
Pamrevlumab is a first-in-class antibody developed by FibroGen to inhibit the activity of connective tissue growth factor (CTGF), a common factor in fibrotic and proliferative disorders characterized by persistent and excessive scarring that can lead to organ dysfunction and failure. Pamrevlumab is advancing towards Phase 3 clinical development for the treatment of idiopathic pulmonary fibrosis (IPF) and pancreatic cancer, has been granted Orphan Drug Designation (ODD) in each of these indications. Pamrevlumab has also received Fast Track designation from the U.S. Food and Drug Administration for the treatment of patients with IPF and for patients with locally advanced unresectable pancreatic cancer, and is currently in a Phase 2 trial for Duchenne muscular dystrophy (DMD). Across all trials, pamrevlumab has consistently demonstrated a good safety and tolerability profile to date. For information about pamrevlumab studies currently recruiting patients, please visit www.clinicaltrials.gov.

On February 27, 2019 United Therapeutics Corporation (Nasdaq: UTHR) reported its financial results for the fourth quarter and year ended December 31, 2018 (Press release, United Therapeutics, FEB 27, 2019, View Source [SID1234533733]).

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"2018 was a truly transformative year for United Therapeutics. We signed four major agreements to acquire new product candidates, including an in-licensing agreement for ralinepag, representing our largest deal to date," said Martine Rothblatt, Ph.D., Chairman and Chief Executive Officer of United Therapeutics. "At the same time, we continued to execute against our existing commercial and clinical goals, including the successful readout of our FREEDOM-EV clinical trial, significant progress toward near-term phase III readouts for our BEAT and DISTINCT studies, and an increase to a record number of patients being treated with our treprostinil therapies."

Recent Highlights

· Closed license agreement with MannKind for Treprostinil Technosphere

· Appointed Nilda Mesa to the Board of Directors

· Health Canada approved Unituxin (dinutuximab) for high-risk neuroblastoma

· Submitted efficacy supplement to FDA to include FREEDOM-EV data in the Orenitram label

· In-licensed global rights to ralinepag, a phase III PAH drug candidate

·Presented survival data from FREEDOM-EV study of Orenitram at the Pulmonary Vascular Research Institute Annual World Congress

Financial Results for the Quarter and Year Ended December 31, 2018 compared to the same periods in 2017

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

(1) See definition of non-GAAP earnings, a non-GAAP financial measure, and a reconciliation of net income to non-GAAP earnings below.

Revenues for the quarter and year ended December 31, 2018 decreased by $83.3 million and $97.5 million, respectively, as compared to the same periods in 2017.

Remodulin net product sales for the quarter and year ended December 31, 2018 decreased by $21.0 million and $71.9 million, respectively, as compared to the same periods in 2017. For the quarter and year ended December 31, 2018, international Remodulin net sales decreased by $30.7 million and $90.0 million, respectively, compared to the same periods in 2017, primarily due to the transfer of additional regulatory and commercial responsibilities to an international distributor in the third quarter of 2017. As a result of this transfer, we recognized $23.7 million and $47.4 million of net product sales in the quarter and year ended December 31, 2017, respectively, related to the one-time purchase of Remodulin inventory by that distributor and we reduced the price at which we sell Remodulin to that distributor. The remaining decrease was primarily due to a reduction in quantities shipped to that distributor. For the quarter and year ended December 31, 2018, U.S. Remodulin net sales increased by $9.7 million and $18.1 million, respectively, compared to the same periods in 2017, primarily due to a price increase that was implemented in April 2018, which was the first price increase for Remodulin since 2010, and an increase in the number of patients being treated with Remodulin. For the year ended December 31, 2018, these increases were partially offset by the one-time $4.5 million impact of a change in contractual minimum inventory levels with a U.S. distributor, as discussed below.

Tyvaso net product sales for the quarter and year ended December 31, 2018 increased by $14.5 million and $42.3 million, respectively, as compared to the same periods in 2017. These increases were primarily due to price increases that were implemented in April 2017 and January 2018 and the reversal in the fourth quarter of 2018 of an estimated $15.4 million liability for Medicaid rebates, of which $13.6 million was initially recorded in 2017. In addition, Tyvaso net product sales increased due to an increase in the number of patients being treated with Tyvaso. These increases were offset by (1) the impact of replacing $6.2 million of commercial Tyvaso product that our specialty pharmaceutical distributor previously used in connection with a clinical trial; and (2) the one-time $3.5 million impact of a change in contractual minimum inventory levels with a U.S. distributor, as discussed below.

Adcirca net product sales for the quarter and year ended December 31, 2018 decreased by $77.6 million and $96.0 million, respectively, as compared to the same periods in 2017. These decreases were primarily due to the launch of a generic version of Adcirca in August 2018, partially offset by price increases that were implemented by Eli Lilly and Company in May 2017 and January 2018. In addition, we increased our allowance for product returns for Adcirca by $16.4 million in the third quarter of 2018 based on our estimates of inventory held by distributors and other downstream customers that would expire unsold as a result of the increased use of a generic version of Adcirca.

Orenitram net product sales for the quarter and year ended December 31, 2018 increased by $1.6 million and $19.3 million, respectively, as compared to the same periods in 2017. These increases were primarily due to an increase in the number of patients being treated with Orenitram, a price increase that was implemented in January 2018 and, for the year ended December 31, 2018, the one-time $3.7 million impact of a change in contractual minimum inventory levels with a U.S. distributor, as discussed below.

Unituxin net product sales decreased by $0.8 million for the quarter ended December 31, 2018 and increased by $8.8 million for the year ended December 31, 2018, as compared to the same periods in 2017. For the year ended December 31, 2018, Unituxin net product sales increased due to an increase in the number of vials sold and price increases that were implemented in April and December 2017.

During the fourth quarter of 2017, we amended our agreements with one of our U.S. specialty pharmacy distributors, in part to make the monthly minimum inventory requirement consistent across Remodulin, Tyvaso and Orenitram. This change resulted in a one-time decrease in total net product sales of $4.3 million as the distributor adjusted to the new contractual inventory requirement levels in the first quarter of 2018. On an individual product basis, net product sales of Remodulin decreased by $4.5 million, net product sales of Tyvaso decreased by $3.5 million, and net product sales of Orenitram increased by $3.7 million.

(1)Refer to Share-based compensation below for discussion.

Cost of product sales, excluding share-based compensation. The decrease in cost of product sales of $14.5 million for the quarter ended December 31, 2018, as compared to the same period in 2017, was primarily attributable to a decrease in Adcirca sales.

The increase in cost of product sales of $98.8 million for the year ended December 31, 2018, as compared to the same period in 2017, was primarily attributable to a $96.9 million increase in royalty expense for Adcirca. As a result of an amendment to our license agreement with Lilly, effective December 1, 2017, our royalty rate on net product sales of Adcirca increased from five percent to an effective rate of approximately 42.5 percent.

Research and development expense. The table below summarizes research and development expense by major category (dollars in millions):

(1) Refer to Share-based compensation below for discussion.

Research and development expense, excluding share-based compensation. We continued to invest in our product pipeline during 2018, which includes products in multiple phase III clinical trials in cardiopulmonary diseases and oncology as well as programs in regenerative medicine and organ manufacturing. The increase in research and development expense of $48.4 million for the quarter ended December 31, 2018, as compared to the same period in 2017, was primarily due to an up-front payment of $45.0 million under our license agreement with MannKind.

The increase in research and development expense of $113.6 million for the year ended December 31, 2018, as compared to the same period in 2017, was driven by an increase of $95.9 million in research and development expense for the treatment of cardiopulmonary diseases, primarily due to up-front payments of $55.0 million under our license and research agreements with MannKind and $10.0 million under our license agreement with Samumed, increased spending of $22.9 million on the development of drug delivery devices, including the Implantable System for Remodulin and RemUnity, and increased spending on several clinical and non-clinical studies. Research and development expense for cancer-related projects increased by $13.9 million due to an increase in spending on the DISTINCT study. Research and development expense for organ manufacturing projects increased by $3.9 million due to increased preclinical work on technologies designed to increase the supply and distribution of transplantable organs and tissues.

Selling, general and administrative expense. The table below summarizes selling, general and administrative expense by major category (dollars in millions):

(1) Refer to Share-based compensation below for discussion.

General and administrative, excluding share-based compensation. The increase in general and administrative expenses of $6.7 million for the quarter ended December 31, 2018, as compared to the same period in 2017, primarily resulted from a $5.0 million increase in consulting fees.

The increase in general and administrative expenses of $14.7 million for the year ended December 31, 2018, as compared to the same period in 2017, primarily resulted from: (1) a $10.3 million increase in consulting expenses; (2) a $4.7 million increase in compensation due to an increase in staffing; and (3) a $4.4 million increase in acquisition and integration costs related to the SteadyMed acquisition. The increase was partially offset by a $7.1 million decrease in legal fees incurred in connection with intellectual property litigation and a Department of Justice (DOJ) investigation.

Sales and marketing, excluding share-based compensation. Sales and marketing expenses for the quarter ended December 31, 2018, remained relatively consistent as compared to the same period in 2017.

The decrease in sales and marketing expenses of $5.2 million for the year ended December 31, 2018, as compared to the same period in 2017, primarily resulted from a decrease in marketing consulting fees.

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

Share-based compensation. The decreases in share-based compensation of $115.7 million and $99.9 million, respectively, for the quarter and year ended December 31, 2018, were primarily due to decreases in STAP expense of $117.9 million and $120.5 million, respectively, primarily driven by a decrease in our stock price for the quarter and year ended December 31, 2018, as compared to the same periods in 2017. The decrease in STAP expense for the year-ended December 31, 2018 was partially offset by an increase of $15.5 million in stock option expense due to additional awards granted and outstanding in 2018 and a $5.1 million increase in restricted stock unit expense due to additional awards granted and outstanding in 2018.

Settlement of Loss Contingency

In December 2017, we entered into a civil Settlement Agreement with the U.S. Government to resolve a DOJ investigation. During the second quarter of 2017, we recorded a $210.0 million accrual relating to this matter, and ultimately paid this amount, plus interest, to the U.S. Government upon settlement.

Impairments of Investments in Privately-Held Companies

During the years ended December 31, 2018 and 2017, we recorded impairment charges of $53.5 million and $49.6 million, respectively, related to our investments in privately-held companies.

Income Taxes

The provision for income taxes was $169.7 million for the year ended December 31, 2018, compared to $351.6 million for the same period in 2017. The change in the provision for income taxes was primarily due to the impacts of The Tax Cuts and Jobs Act (Tax Reform) and the nondeductible portion of an accrual in 2017 in connection with a civil settlement with the DOJ. For the years ended December 31, 2018 and 2017, the effective tax rates were approximately 22 percent and 46 percent, respectively.

Non-GAAP Earnings

Non-GAAP earnings is defined as net income, adjusted for: (1) share-based compensation expense (including expenses relating to stock options, restricted stock units, share tracking awards, and our employee stock purchase plan); (2) loss contingency; (3) impairments of investments in privately-held companies; (4) license fees; (5) impact of Tax Reform; and (6) tax impact on non-GAAP earnings adjustments.

(1)We calculated the total tax impact of non-discrete quarterly non-GAAP earnings adjustments based on our annual effective tax rates, before considering discrete items, of approximately 21 percent and approximately 32 percent for each of the quarters and years ended December 31, 2018 and 2017, respectively.

(2) The tax benefit for the year ended December 31, 2017 includes $57.0 million of benefit for the estimated loss contingency recognized during the second quarter of 2017 relating to a DOJ investigation.

(3)This non-GAAP earnings adjustment is currently not considered tax deductible.

(4) The impact of Tax Reform is a significant and unusual component of tax expense, therefore in the calculation of non-GAAP earnings, it is presented separately from the tax benefit that is derived from the other non-GAAP adjustments.

Conference Call

We will host a one-hour teleconference on Wednesday, February 27, 2019, at 9:00 a.m. Eastern Time. The teleconference is accessible by dialing 1-877-351-5881, with international callers dialing 1-970-315-0533. A rebroadcast of the teleconference will be available for one week by dialing 1-855-859-2056, with international callers dialing 1-404-537-3406 and using access code 1595239.

This teleconference is also being webcast and can be accessed via our website at View Source

On February 27, 2019 Cullinan Oncology is reported that its co-founder and Chief Scientific Officer, Biologics, Patrick Baeuerle, has been honored by the European Molecular Biology Laboratory (EMBL) (Press release, Cullinan Oncology, FEB 27, 2019, View Source [SID1234533749]). The EMBL has presented Baeuerle with the 2019 Lennart Philipson Award for his pivotal role in developing cancer immunotherapies.

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The award focuses on Baeuerle’s many contributions to the field of immuno-oncology, including his efforts at Micromet and subsequently Amgen where he developed bispecific antibodies known as BiTEs (Bispecific T cell Engagers). BiTEs engage the body’s T cells to facilitate the destruction of cancer cells. Baeuerle led the development of Blincyto, the first bispecific antibody approved by the FDA, for relapsed/refractory acute lymphoblastic leukemia (ALL).

"Patrick’s contributions to the fight against cancer have been significant and this recognition is well deserved. We are fortunate to have his knowledge, expertise, and leadership at Cullinan as we work to develop the next breakthroughs for patients," said Owen Hughes, CEO at Cullinan Oncology.

In addition to his role at Cullinan, Patrick Baeuerle is an Executive Partner at MPM Capital. He is also the founder of MPM-funded cancer immunotherapy companies Harpoon Therapeutics (NASDAQ: HARP), TCR2 Therapeutics (NASDAQ GS: TCRR), iOmx Therapeutics, and Maverick Therapeutics.

To access the EMBL announcement click here.

About the Lennart Philipson Award

The Lennart Philipson Award (LPA) was created to honor EMBL’s second Director General, Lennart Philipson (1982-1993). The Award recognizes outstanding and validated contributions in translational research in human health and/or technology innovation in the life sciences.