Ligand Reports Fourth Quarter and Full Year 2016 Financial Results

On February 23, 2017 Ligand Pharmaceuticals Incorporated (NASDAQ: LGND) reported financial results for the three and 12 months ended December 31, 2016, and provided an operating forecast and program updates (Filing, Q4/Annual, Ligand, 2016, FEB 23, 2017, View Source [SID1234517872]). Ligand management will host a conference call today beginning at 4:30 p.m. Eastern time.

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"2016 was an exceptional year for Ligand. We reported substantial revenue growing more than 50% over last year and strong operating cash flow. Evomela, a new commercial product with a high royalty rate to Ligand, launched and joined Promacta and Kyprolis as major drivers of royalty revenue. We also had a very successful year operating our OmniAb business following the acquisition of OMT approximately one year ago. Additionally, many new deals entered our portfolio and numerous late-stage partnered assets generated meaningful positive news," said John Higgins, Chief Executive Officer. "2017 is positioned to be another year of strong growth in revenue and cash flow. We anticipate beginning to receive royalties from new product launches, and look forward to major data readouts from many late-stage partnered programs, results from our Phase 2 GRA trial and partners entering the clinic with antibodies from our OmniAb platform."

Fourth Quarter 2016 Financial Results

Total revenues for the fourth quarter of 2016 were $38.2 million, compared with $21.2 million for the same period in 2015, an increase of 80%. Royalty revenues were $19.6 million, compared with $11.5 million for the same period in 2015 primarily due to higher royalties from Promacta and Kyprolis. Material sales were $9.1 million, compared with $7.2 million for the same period in 2015 due to timing of Captisol purchases for use in clinical trials and commercial products. License and milestone revenues were $9.5 million, compared with $2.4 million for the same period in 2015 due to a higher number of contract payments and contributions from OmniAb-related deals.

Cost of goods sold was $2.9 million for the fourth quarter of 2016, compared with $0.9 million for the same period in 2015 due to the timing and mix of Captisol sales. Amortization of intangibles was $2.7 million, compared with $0.6 million for the same period in 2015 due primarily to additional amortization of intangibles related to the acquisition of OMT. Research and development expense was $6.4 million, compared with $2.3 million for the same period of 2015 as a result of the addition of OMT-related expenses, timing of spending on internal development programs and non-cash stock-based compensation expense. General and administrative expense was $6.6 million, compared with $6.2 million for the same period in 2015 due to costs associated with OMT and non-cash stock-based compensation expense.

GAAP net loss for the fourth quarter of 2016 was $3.1 million, or $0.15 per share, compared with GAAP net income for the fourth quarter of 2015 of $6.3 million, or $0.29 per diluted share. GAAP net income for the fourth quarter of 2016 was impacted by a $9.0 million non-cash charge related to Viking Therapeutics, primarily for a markdown of the book value of our holdings in Viking to current market values. Adjusted net income for the fourth quarter of 2016 was $16.1 million, or $0.74 per diluted share, compared with adjusted net income for the same period in 2015 of $12.2 million, or $0.59 per diluted share. Adjusted net income and EPS are now being reported on a fully-taxed basis, as disclosed in the Form 8-K filed with the Securities and Exchange Commission January 18, 2017. See "Adjusted Financial Measures" and the accompanying table below for the adjusted calculations and reconciliation to comparable GAAP financial measures.

As of December 31, 2016, Ligand had cash, cash equivalents and short-term investments of $141.0 million. Cash generated from operations was $21.0 million and $63.0 million for the 2016 fourth quarter and full year, respectively.

Full Year Financial Results

Total revenues in 2016 were $109.0 million, compared with $71.9 million for 2015, an increase of 52%. Royalty revenues were $59.4 million, compared with $38.2 million for 2015 primarily due to higher royalties from Promacta and Kyprolis. Material sales were $22.5 million, compared with $27.7 million for 2015 due to timing of Captisol purchases for use in clinical trials and commercial products. License and milestone revenues were $27.0 million, compared with $6.1 million for 2015 due to a higher number of contract payments and contributions from OmniAb-related deals.

Cost of goods sold was $5.6 million in 2016, compared with $5.8 million for 2015 due to the timing and mix of Captisol sales. Amortization of intangibles was $10.6 million, compared with $2.4 million for 2015 due primarily to additional amortization of intangibles related to the acquisition of OMT. Research and development expense was $21.2 million, compared with $11.0 million for 2015 as a result of the addition of OMT-related expenses, timing of spending on internal development programs and non-cash stock-based compensation expense. General and administrative expense was $26.6 million, compared with $24.4 million for 2015 due to costs associated with OMT and non-cash stock-based compensation expense.

GAAP net loss in 2016 was $1.6 million, or $0.08 per share, compared with GAAP net income in 2015 of $229.8 million, or $10.83 per diluted share. The difference is primarily attributable to a net income tax benefit in 2015 of $206.0 million, or $9.70 per diluted share, from the release of valuation allowance. 2016 GAAP net loss was also impacted by a $23.1 million non-cash charge associated with our investment in Viking, primarily consisting of a loss on dilution as a result of Viking financings and the mark-to-market charge taken in the fourth quarter of 2016. Adjusted net income for 2016 was $46.7 million, or $2.15 per diluted share, compared with adjusted net income in 2015 of $47.6 million, or $2.31 per diluted share.

2017 Financial Forecast

The Company expects 2017 revenues to consist of three components: royalties, material sales and contract (license and milestone) revenue. At this time, Ligand estimates 2017 core revenue to include royalties of approximately $87 million, material sales of approximately $23 million and contract payments of at least $20 million. During 2017, Ligand estimates it could potentially receive up to an additional $30 million of contract payments, however external events are out of Ligand’s control so the Company will provide more information about the timing and probability for any additional contract revenue expected to be booked in 2017 as the year progresses. Ligand estimates that cash expenses for 2017 will be in the range of $28 million to $30 million, consistent with the cash expenses incurred for 2016. Ligand notes that with core revenue of $130 million, adjusted earnings per diluted share would be approximately $2.70. This amount is expected to be higher in the event additional contract revenue is received in 2017. The core adjusted EPS figure reflects the Company’s new fully-taxed adjusted EPS methodology, including a 36% to 39% tax rate, but the Company continues to pay less than 1% cash taxes as it utilizes its over $500 million of remaining NOLs.

ASC 606 – Revenue Accounting Standard

In May 2014 the Financial Accounting Standards Board issued Accounting Standards Codification Topic 606 (ASC 606), Revenue From Contracts With Customers, which is intended to provide a single, comprehensive revenue recognition model for all contracts with customers and thereby improve comparability within industries, across industries, and across capital markets. Companies must implement this new standard no later than January 1, 2018 and they can elect to adopt the standard after January 1, 2017. At this time, Ligand does not expect to adopt ASC 606 as of January 1, 2017.

Fourth Quarter 2016 and Recent Business Highlights

Portfolio Program Progress

Promacta/Revolade


Novartis reported fourth quarter 2016 net sales of Promacta (eltrombopag) of $178 million, a $45 million or 34% increase over the same period in 2015.

Kyprolis (carfilzomib), an Amgen Product Utilizing Captisol


On February 2, 2017, Amgen reported fourth quarter 2016 net sales of Kyprolis (carfilzomib) of $183 million, a $35 million or 24% increase over the same period in 2015.

On February 2, 2017, Ono Pharmaceutical reported that Kyprolis sales in Japan were ¥11 billion ($9.7 million) since the product was launched in August of 2016 through December 31, 2016.

On November 10, 2016, Amgen announced a collaboration with Janssen Biotech, Inc. to evaluate the combination of Amgen’s Kyprolis (carfilzomib) and Janssen’s DARZALEX (daratumumab) in multiple clinical studies in patients with multiple myeloma. The first study initiated as part of this agreement is a Phase 3 registrational trial evaluating Kyprolis in combination with DARZALEX and dexamethasone compared to Kyprolis and dexamethasone alone in patients with multiple myeloma who have had one, two or three prior lines of therapy. The study is anticipated to start enrolling patients in April 2017.

Additional Pipeline and Partner Developments


Retrophin announced positive top-line results from the Phase 2 DUET study of sparsentan for the treatment of focal segmental glomerulosclerosis (FSGS). The study achieved statistical significance in the primary efficacy endpoint for the overall sparsentan treatment group, demonstrating a greater than two-fold reduction of proteinuria compared to irbesartan after the eight-week, double-blind treatment period. Additional data from the Phase 2 DUET study of sparsentan for the treatment of FSGS were presented at the late-breaking High-Impact Clinical Trials oral session at the American Society of Nephrology Kidney Week 2016. Retrophin also announced it would meet with the FDA in January 2017 regarding the regulatory pathway for sparsentan in FSGS.

Lundbeck announced FDA approval of Carnexiv (carbamazepine) injection as a short-term replacement therapy for oral carbamazepine formulations in adults with certain seizure types when oral administration is temporarily not feasible. Ligand earned a $1.25 million milestone payment upon approval and is entitled to receive a royalty of 2.75% on net sales of Carnexiv.

Sage Therapeutics announced an expedited development plan for brexanolone (SAGE-547) in the treatment of postpartum depression (PPD) following receipt of formal meeting minutes from a breakthrough therapy meeting with the FDA. Sage anticipates announcing top-line data from the PPD registration trials in 2H 2017.

Melinta Therapeutics announced that the NDAs for approval of IV and oral Baxdela (delafloxacin) for the treatment of patients with acute bacterial skin and skin structure infections (ABSSSI) were accepted for filing by the FDA and were granted a PDUFA date of June 19, 2017. If approved, Ligand is entitled to receive a 2.5% royalty on net sales of the IV formulation of Baxdela and a $1.5 million approval milestone payment.

The FDA granted orphan designation to Merck’s Noxafil for treatment of invasive aspergillosis.

Merck announced that it stopped the Phase 2/3 EPOCH study evaluating verubecestat in people with mild-to-moderate Alzheimer’s disease due to the conclusion that the efficacy endpoint could not be achieved. No safety concerns where noted. Results from EPOCH will be analyzed and presented at an upcoming scientific meeting.

The external Data Monitoring Committee recommended that the ongoing Phase 3 APECS study, which is evaluating verubecestat in people with prodromal Alzheimer’s disease, continue unchanged. Results from the APECS study are expected in February 2019.

Eli Lilly presented data on Captisol-enabled prexasertib (LY2606368) demonstrating activity in patients with BRCA wild type sporadic high-grade serous ovarian cancer at the European Society for Medical Oncology 2016 Congress.

Viking Therapeutics announced it expects the Phase 2 clinical trial of VK5211in patients recovering from hip fracture surgery and the Phase 2 clinical trial of VK2809 in patients with primary hypercholesterolemia and non-alcoholic fatty liver disease to be completed in the second quarter of 2017.

Viking Therapeutics announced positive initial results from a proof-of-concept study of VK2809 in an in vivo model of glycogen storage disease 1a (GSD 1a) and announced funding of initial clinical development of VK2809 for treatment of GSD 1a with plans to file and IND in the second half of 2017.

Aldeyra provided an update on its Phase 3 clinical program of ADX-102 in noninfectious anterior uveitis and anticipates beginning the Phase 3 trial in the second quarter of 2017.

Aldeyra announced that it had enrolled the first patient in a Phase 2b clinical trial of ADX-102 for the treatment of allergic conjunctivitis and also presented results of a Phase 2 clinical trial of ADX-102 topical ophthalmic solution in a challenge model of allergic conjunctivitis.

Merck KGaA announced it licensed rights to develop Captisol-enabled VX-970 from Vertex Pharmaceuticals. Economic terms of the original agreement between Ligand and Vertex remained unchanged.

Takeda presented clinical data on Captisol-enabled pevonedistat in older patients with acute myeloid leukemia at ASH (Free ASH Whitepaper) 2016.

XTL Biopharmaceuticals announced the company intends to pursue Sjögren-Larsson Syndrome as the second indication for its lead drug candidate hCDR1.

Oncobiologics presented final data from the Phase 1 trial evaluating bioequivalence of ONS-3010 (Humira biosimilar) and the U.S. and European originator versions of Humira (adalimumab).

Gilead Sciences highlighted Captisol-enabled GS-5734 for the treatment of Ebola virus infection at JP Morgan’s healthcare conference.

New Licensing Deals


Ligand announced a worldwide license agreement with Ono Pharmaceutical to use the OmniAb platform technologies to discover fully human antibodies. Ligand is eligible to receive annual access payments, milestone payments and royalties on future net sales of any antibodies discovered under these licenses.

Ligand announced global license and supply agreements with Novartis for the development and commercialization of a Captisol-enabled oral liquid formulation of trametinib, a kinase inhibitor currently indicated as a single agent or in combination with dabrafenib, for the treatment of patients with unresectable or metastatic melanoma with BRAF V600 mutation. Ligand will be eligible to receive royalties on future net sales and revenue from Captisol material sales. Novartis will be responsible for all costs related to the program.

Ligand entered into a Captisol Clinical Use/Supply Agreement with Eisai.

Internal Glucagon Receptor Antagonist (GRA) Program


Ligand announced its GRA program was featured in an article published in Nature Reviews Drug Discovery entitled Targeting hepatic glucose metabolism in the treatment of type 2 diabetes.

Adjusted Financial Measures

The Company reports adjusted results for diluted net income per share and net income, in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. The Company’s financial measures under GAAP include stock-based compensation expense, amortization of debt-related costs, amortization related to acquisitions, changes in contingent liabilities, net losses of Viking Therapeutics, mark-to-market adjustment for amounts owed to licensors, fair value adjustments to Viking Therapeutics convertible note receivable and warrants, unissued shares relating to the Senior Convertible Note, unissued shares relating to the anti-dilutive effect of fourth quarter and fiscal year 2016 GAAP net loss and adjustments for discontinued operations, and others that are listed in the itemized reconciliations between GAAP and adjusted financial measures included in this press release. However, other than with respect to total revenue, the Company only provides guidance on an adjusted basis and does not provide reconciliations of such forward-looking adjusted measures to GAAP due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation, including adjustments that could be made for changes in contingent liabilities, net losses of Viking Therapeutics, mark-to-market adjustments for amounts owed to licensors and fair value adjustments to Viking Therapeutics convertible note receivable. Management has excluded the effects of these items in its adjusted measures to assist investors in analyzing and assessing the Company’s past and future core operating performance. Additionally, adjusted diluted earnings per share is a key component of the financial metrics utilized by the Company’s board of directors to measure, in part, management’s performance and determine significant elements of management’s compensation.

RedHill Biopharma Reports 2016 Fourth Quarter and Full-Year Financial Results

On February 23, 2017 RedHill Biopharma Ltd. (NASDAQ:RDHL) (TASE:RDHL) ("RedHill" or the "Company"), a specialty biopharmaceutical company primarily focused on the development and commercialization of late clinical-stage, proprietary, orally-administered, small molecule drugs for gastrointestinal and inflammatory diseases and cancer, reported its financial results for the fourth quarter and full-year ended December 31, 2016 (Press release, RedHill Biopharma, FEB 23, 2017, View Source [SID1234517881]).

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Fourth Quarter 2016 Results1

Revenues for the fourth quarter of 2016 were $0.1 million, compared to immaterial revenues for the fourth quarter of 2015.

Research and Development Expenses for the fourth quarter of 2016 were $7.5 million, up 51% compared to the fourth quarter of 2015. The increase was mainly due to the ongoing Phase III and Phase II studies with BEKINDA for gastroenteritis and IBS-D, respectively, the ongoing Phase III study with RHB-104 for Crohn’s disease and ongoing studies with YELIVA for multiple indications.

General, Administrative and Business Development Expenses for the fourth quarter of 2016 were $1.6 million, down 6.9% compared to the fourth quarter of 2015. The decrease was mainly due to a decrease in professional services.

Operating Loss for the fourth quarter of 2016 was $9 million, up 33% compared to the fourth quarter of 2015. The increase was mainly due to an increase in research and development expenses, as detailed above.

Financial Income, net for the fourth quarter of 2016 was $0.6 million, up 214%, compared to the fourth quarter of 2015. The increase was mainly due to a fair value gain on derivative financial instruments.

Net Cash Used in Operating Activities for the fourth quarter of 2016 was $10.1 million, up 69% compared to the fourth quarter of 2015. The increase was mainly due to the increase in operating loss, as detailed above.

Net Cash Provided by Investment Activities for the fourth quarter of 2016 was $21.3 million, up 206% compared to the fourth quarter of 2015. The increase was mainly due to maturity of bank deposits.

Net Cash Provided by Financing Activities for the fourth quarter of 2016 was $35.9 million compared to an immaterial amount for the fourth quarter of 2015. The increase was mainly due to the December 2016 public offering.

Full-Year 2016 Results2

Revenues for 2016 were $0.1 million, compared to immaterial revenues in 2015.

Research and Development Expenses for 2016 were $25.2 million, up 42% compared to 2015. The increase was mainly due to the ongoing Phase III MAP US study with RHB-104 for Crohn’s disease, the ongoing Phase III and Phase II studies with BEKINDA for gastroenteritis and IBS-D, respectively, and the ongoing studies with YELIVA for multiple indications.

General, Administrative and Business Development Expenses for 2016 were $5.4 million, up 31% compared to 2015. The increase was mainly due to an increase in professional services, compensation and other operating expenses.

Operating Loss for 2016 was $30.5 million, up 39% compared to 2015. The increase was mainly due to an increase in research and development expenses, as detailed above.

Financial Income, net for 2016 was $1.2 million, up 29% compared to 2015. The increase was mainly due to a fair value gain on derivative financial instruments.

Net Cash Used in Operating Activities for 2016 was $28.2 million, up 59% compared to 2015. The increase was mainly due to an increase in operating loss, as detailed above.

Net Cash Provided by Investment Activities for 2016 was $24.5 million, up 215% compared to 2015. The difference was mainly due to maturity of bank deposits.

Net Cash Provided by Financing Activities for 2016 was $36 million, down 34% compared to 2015. The decrease resulted primarily from the two public offerings in February and July 2015 of the comparable period.

Cash Balance3 as of December 31, 2016 was $66.3 million, an increase of $8.2 million compared to $58.1 million as of December 31, 2015 and an increase of $25.8 million compared to $40.5 million as of September 30, 2016.

Micha Ben Chorin, RedHill’s CFO, said: "Our strong cash position of approximately $66 million at the end of 2016 should allow us to continue to execute our strategic plans for 2017. We are looking forward to an important year ahead, including the planned initiation of a confirmatory Phase III study with RHB-105 for H. pylori infection, a second independent DSMB meeting for the ongoing MAP US Phase III study with RHB-104 for Crohn’s disease, top-line results from the ongoing Phase III and Phase II studies with BEKINDA for gastroenteritis and IBS-D, respectively, and commencement of our promotional activities in the U.S. with Donnatal."

Conference Call and Webcast Information:

The Company will host a conference call on Thursday, February 23, 2017, at 9:00 am EST to review the financial results and business highlights.

To participate in the conference call, please dial the following numbers 5-10 minutes prior to the start of the call: United States: +1-877-280-1254; International: +1-646-254-3366; and Israel: +972-3-763-0145. The access code for the call is 4402478.

The conference call will be broadcasted live and available for replay on the Company’s website, View Source, for 30 days. Please access the Company’s website at least 15 minutes ahead of the conference to register, download, and install any necessary audio software.

Select 2016 and recent operational highlights:

RHB-105 – H. pylori bacterial infection (confirmatory Phase III) (QIDP status)

Following the announcement of the successful final results from a first Phase III clinical study with RHB-105 for the eradication of H. pylori infection (the ERADICATE Hp study) in March 2016, RedHill concluded two positive Type B meetings with the U.S. Food and Drug Administration (FDA) regarding RHB-105. The first meeting, announced in April 2016, confirmed the path to marketing approval of RHB-105 and the planned confirmatory Phase III study. A second Type B meeting, announced in November 2016, discussed the chemistry, manufacturing and controls (CMC) aspects of the RHB-105 Phase III development program towards filing the CMC package as part of the potential U.S. New Drug Application (NDA) to be submitted for RHB-105, subject to successful completion of the planned confirmatory Phase III study.

The two-arm, randomized, double-blind, active comparator confirmatory Phase III study, comparing RHB-105 against a dual therapy amoxicillin and omeprazole regimen at equivalent doses, is planned to be initiated in the second quarter of 2017, subject to the successful completion of the ongoing supportive pharmacokinetic (PK) program and submission of the Clinical Study Report to the FDA. The confirmatory Phase III study is planned to enroll approximately 440 patients in up to 55 clinical sites in the U.S.

RHB-104 – Crohn’s disease (Phase III), multiple sclerosis (Phase IIa) and nontuberculous mycobacteria (NTM) infections

In October 2016, RedHill provided an update on the RHB-104 Phase III Crohn’s disease development program, planned enhancements to the ongoing MAP US Phase III study and expected milestones, including an increase in the total number of patients planned to be enrolled in the MAP US study from 270 to 410, and the addition of an open-label extension study offering patients who complete 26 weeks of study participation and remain out of remission (Crohn’s disease active index (CDAI) > 150) the opportunity to receive treatment with RHB-104 for a 52-week period. The open-label extension study is expected to be initiated in the coming weeks.

Following a pre-planned review of safety data from its ongoing MAP US study by an independent Data and Safety Monitoring Board (DSMB), RedHill announced in December 2016 that it had received a unanimous recommendation to continue the MAP US study as planned. A second independent DSMB meeting of the MAP US study, expected in the second quarter of 2017, will include an interim efficacy analysis and will evaluate the option for an early stop for success for overwhelming efficacy, according to a pre-specified statistical significance threshold.

Taking into account the increase in the total number of patients planned in the MAP US study, and assuming the MAP US study is not stopped for success or inefficacy following the independent DSMB meeting in the second quarter of 2017, completion of recruitment is expected by the end of 2017.

In December 2016, RedHill announced encouraging top-line final results of a Phase IIa, proof-of-concept clinical study, evaluating RHB-104 as an add-on therapy to interferon beta-1a in patients treated for relapsing remitting multiple sclerosis (the CEASE MS study). The top-line final results (48 weeks) were consistent with previously announced interim results, suggesting meaningful positive safety and clinical signals upon 24 weeks of treatment with RHB-104 as an add-on therapy, thereby supporting further clinical development.

In January 2017, RedHill announced that RHB-104 had been granted Qualified Infectious Disease Product (QIDP) designation by the FDA for the treatment of nontuberculous mycobacteria (NTM) infections. RedHill plans to consult with the FDA regarding the RHB-104 development program for NTM infections.

BEKINDA (RHB-102) – acute gastroenteritis and gastritis (Phase III) and IBS-D (Phase II)

In February 2017, RedHill announced that the last patient enrolled in the randomized, double-blind, placebo-controlled Phase III clinical study with BEKINDA 24 mg in the U.S. for acute gastroenteritis and gastritis (the GUARD study) had completed the treatment course and observation period for the primary endpoint evaluation. Top-line results are expected in the second quarter of 2017.

A randomized, double-blind, placebo-controlled Phase II clinical study with BEKINDA 12 mg for the treatment of diarrhea-predominant irritable bowel syndrome (IBS-D) is ongoing in the U.S. with top-line results expected in mid-2017.

YELIVA (ABC294640) – Phase I/II studies for multiple oncology and inflammatory indications

In June 2016 , RedHill announced positive final results from a Phase I study with YELIVA in patients with advanced solid tumors. The Phase I study, conducted at the Medical University of South Carolina Hollings Cancer Center, successfully met its primary and secondary endpoints, demonstrating that the drug is well-tolerated and can be safely administered to cancer patients at doses predicted to have therapeutic activity.

In September 2016, RedHill announced a research collaboration with Stanford University School of Medicine for the evaluation of YELIVA. The research collaboration is intended to complement RedHill’s planned Phase Ib clinical study to evaluate YELIVA as a radioprotectant for prevention of mucositis in head and neck cancer patients undergoing therapeutic radiotherapy. The Phase Ib study is planned to be initiated in mid-2017.

In October 2016, RedHill announced the initiation of a Phase II clinical study with YELIVA for advanced hepatocellular carcinoma at the Medical University of South Carolina.

In December 2016, RedHill announced that the first patient was dosed in a Phase Ib/II study with YELIVA for refractory or relapsed multiple myeloma, conducted at Duke University Medical Center.

A Phase I/II clinical study evaluating YELIVA in patients with refractory/relapsed diffuse large B-cell lymphoma is ongoing at the Louisiana State University Health Sciences Center and was recently amended to address overall recruitment prospects and to include Kaposi sarcoma patients in the study.

A Phase II study to evaluate the efficacy of YELIVA in patients with moderate to severe ulcerative colitis is planned to be initiated in the second half of 2017.

RIZAPORT (RHB-103) – acute migraines (approved for marketing in Germany)

In 2016, RedHill and its co-development partner, IntelGenx Corp., entered into exclusive license agreements for the commercialization of RIZAPORT oral thin-film for acute migraines with Grupo JUSTE S.A.Q.F (now Exeltis Healthcare, S.L.) for Spain and with Pharmatronic Co. for South Korea.

Re-submission of the RIZAPORT NDA to the FDA is expected in the third quarter of 2017.
MESUPRON (upamostat) – Gastrointestinal and other solid tumors
In January 2017, RedHill announced the signing of a new collaboration agreement with the Department of Molecular Biology and Genetics of Denmark-based Aarhus University for the evaluation of RedHill’s Phase II-stage oncology drug candidate, MESUPRON. The new research collaboration follows previous non-clinical studies conducted with Denmark’s Aarhus University and is designed to identify additional high affinity molecular targets of MESUPRON. Further evaluation of MESUPRON, together with Aarhus University, may allow for selection of appropriate sub-populations of patients toward demonstrating the activity of MESUPRON in planned clinical trials.

RedHill is currently preparing a protocol for a Phase I/II study of the safety, efficacy and dose evaluation of MESUPRON in combination with chemotherapy in patients receiving adjuvant chemotherapy for resected pancreatic cancer. The Phase I/II study is expected to be initiated in the second half of 2017 in up to six sites in Germany.

Donnatal (Phenobarbital, Hyoscyamine Sulfate, Atropine Sulfate, Scopolamine Hydrobromide)

As part of RedHill’s strategic initiative to become a revenue-generating, gastrointestinal-focused, specialty pharmaceutical company with a commercial presence in the U.S., the Company entered in January 2017 into an exclusive co-promotion agreement with a subsidiary4 of Concordia International Corp., granting RedHill certain U.S. promotional rights for Donnatal, a prescription oral drug used with other drugs in the treatment of irritable bowel syndrome (irritable colon, spastic colon, mucous colitis) and acute enterocolitis (inflammation of the small bowel)5. RedHill expects to initiate promotion of Donnatal in the coming months.

Financial Highlights

In December 2016, RedHill closed an underwritten public offering and a registered direct offering of American Depositary Shares (ADSs) and warrants to purchase ADSs for aggregate net proceeds, after deducting underwriting discounts and commissions, placement agent fees and other offering expenses, of $35.9 million. Investors in the public offering included, among others, Sabby Management, LLC, DAFNA Capital Management, Rosalind Advisors, Inc., Koramic Holding, Lincoln Park Capital, and Nexthera Capital LP.

About Donnatal:
Donnatal (Phenobarbital, Hyoscyamine Sulfate, Atropine Sulfate, Scopolamine Hydrobromide), a prescription drug, is classified as possibly effective as an adjunctive therapy in the treatment of irritable bowel syndrome (irritable colon, spastic colon, mucous colitis) and acute enterocolitis. Donnatal slows the natural movements of the gut by relaxing the muscles in the stomach and intestines and acts on the brain to produce a calming effect. Donnatal comes in two formulations: immediate release Donnatal Tablets and immediate release Donnatal Elixir, a fast acting liquid.

Donnatal is contraindicated in patients who have glaucoma, obstructive uropathy, obstructive disease of the gastrointestinal tract, paralytic ileus, unstable cardiovascular status, severe ulcerative colitis, myasthenia gravis, hiatal hernia with reflux esophagitis, or known hypersensitivity to any of the ingredients. Patients who are pregnant or breast-feeding or who have autonomic neuropathy, hepatic or renal disease, hyperthyroidism, coronary heart disease, congestive heart failure, cardiac arrhythmias, tachycardia or hypertension should notify their doctor before taking Donnatal. Side effects may include: dryness of the mouth, urinary retention, blurred vision, dilation of pupils, rapid heartbeat, loss of sense of taste, headache, nervousness, drowsiness, weakness, dizziness, insomnia, nausea, vomiting and allergic reactions which may be severe.

Further information, including prescribing information, can be found on www.donnatal.com.

Please see the following website for important safety information about Donnatal: View Source

Cyclacel Announces Top-Line Results From Pivotal Phase 3 SEAMLESS Study in Elderly Patients With Acute Myeloid Leukemia

On February 23, 2017 Cyclacel Pharmaceuticals, Inc. (Nasdaq:CYCC) (Nasdaq:CYCCP) ("Cyclacel" or the "Company"), a biopharmaceutical company developing oral therapies that target the various phases of cell cycle control for the treatment of cancer and other serious disorders, reported top-line results from the pivotal Phase 3 SEAMLESS study in elderly patients aged 70 years or older with newly diagnosed acute myeloid leukemia (AML), who are not candidates for or have refused intensive induction chemotherapy (Press release, Cyclacel, FEB 23, 2017, View Source [SID1234517804]).

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The trial did not meet its primary endpoint of demonstrating statistically significant improvement in overall survival (OS) for the experimental arm versus an active control. An improved rate of complete remission (CR), a secondary endpoint, was observed in patients who had discontinued therapy at the time of analysis. Other endpoints and safety were similar between the arms. In the stratified subgroup of patients with low baseline peripheral white blood cell count, comprising approximately two-thirds of the study’s population, an improvement in OS was observed for the experimental arm. The opposite was true for patients with high white blood cell count. Full results from the SEAMLESS study will be submitted for presentation at an upcoming medical conference.

"The results of the SEAMLESS Phase 3 study demonstrate that sapacitabine is active and safe in elderly AML patients," said Hagop Kantarjian M.D., Professor and Chair, Department of Leukemia, The University of Texas MD Anderson Cancer Center, and chair of the SEAMLESS study. "Although the experimental arm of alternating decitabine-sapacitabine did not reach statistically significant superiority in overall survival, it is remarkable that an improvement in complete remission rate was observed. Additional analysis of stratified and exploratory subgroups is warranted to identify patients who are most likely to benefit from treatment with the experimental arm."

"We are disappointed not to have reached the primary endpoint of SEAMLESS. Nevertheless, the improvement in CR rate and similar safety profile are encouraging. We plan to discuss the data with European and US regulatory authorities once subgroup analyses are completed over the next few months and will report our further plans as they develop. We are grateful to the clinical investigators, and especially the patients and their families, for their contributions to this large study," said Spiro Rombotis, President and Chief Executive Officer of Cyclacel. "In parallel with data analysis and regulatory discussions, we will reevaluate our continued investment in sapacitabine in hematological malignancies. Our clinical development strategy in oncology will now concentrate on our two ongoing, clinical programs in DNA damage response and transcriptional regulation, which include our area of historical expertise in CDK inhibitors. These programs target biomarker-selected patients, such as those with BRCA mutations or resistance to existing cancer therapies. Our cash resources are projected to fund these activities and operations through the end of 2018."

Clinical Development Strategy

For the past few years the Company has been progressing clinical investigation of two programs in parallel with the SEAMLESS study based on promising scientific and preclinical data. The DNA damage response program is evaluating an orally-administered, sequential regimen of sapacitabine and seliciclib, a CDK2/9 inhibitor, in patients with BRCA positive, advanced solid cancers. The transcriptional regulation program is evaluating CYC065, a CDK2/9 inhibitor, in patients with advanced cancers with emphasis on downregulation of the Mcl-1 biomarker.

DNA Damage Response Program

Phase 1 data from this program in 67 patients with various advanced cancers were reported at an oral presentation during the 2016 American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) Annual Meeting. Antitumor activity with durable clinical responses was demonstrated in a subgroup of 45 patients with breast, ovarian and pancreatic cancers who tested positive for BRCA mutations. A cohort of breast cancer patients who carry BRCA mutations is being enrolled as an expansion of this study. A further cohort is in preparation which will evaluate alternative dosing schedules and collect more data in BRCA positive patients with solid tumors other than breast cancer. The DNA Damage Response program is benefiting from the historical experience with sapacitabine in hematological malignancies, understanding of its mechanism of action and sizable patient safety database.

Transcriptional Regulation Program

Cyclacel’s second generation CDK2/9 inhibitor, CYC065, is being evaluated in an ongoing, first-in-human, Phase 1 trial in patients with advanced solid tumors. In addition to determining safety and recommended dosing for Phase 2, the study aims to investigate CYC065’s effects on the Mcl-1 biomarker, which is implicated in the evolution of resistance in cancer. The study has reached the seventh dose escalation level without observations of serious toxicity. Evidence of target engagement of prolonged Mcl-1 suppression in peripheral blood cells was observed in patient samples from the study, as well as decreases in kinase substrate phosphorylation and increases in PARP cleavage, which were consistent with the Company’s preclinical data.

Similar to palbociclib, the first CDK inhibitor approved by FDA in 2015, CYC065 may be most useful as a therapy for patients with both liquid and solid tumors in combination with other anticancer agents, including Bcl-2 antagonists, such as venetoclax, or HER2 inhibitors, such as trastuzumab.

Conference Call and Webcast Information:

Cyclacel will hold a conference call on February 23, 2017 at 9:00 a.m. Eastern Time to discuss the Company’s plans with regard to SEAMLESS. Conference call and webcast details are as follows:

US/Canada call: (877) 493-9121/ international call: (973) 582-2750
US/Canada archive: (800) 585-8367 / international archive: (404) 537-3406
Code for live and archived conference call is: 77162157

For the live and archived webcast, please visit the Corporate Presentations and Events page on the Cyclacel website at www.cyclacel.com. The webcast will be archived for 90 days and the audio replay for 7 days.

About SEAMLESS

The Phase 3, randomized trial compared an investigational arm of oral sapacitabine administered in alternating cycles with intravenous decitabine compared with an active control arm of intravenous decitabine administered alone. The trial was conducted at 110 US and EU sites and randomized 491 patients, over an approximately three year period. Stratification factors at randomization were antecedent hematologic disorders, baseline peripheral white blood cells and baseline bone marrow blasts. In December 2014, the study’s monitoring committee determined after an interim analysis that the futility boundary was crossed. In accordance with the committee’s recommendations, the Company continued to follow up enrolled patients to maturity.

About Sapacitabine

Sapacitabine (CYC682), an orally-available nucleoside analogue, acts through a novel DNA single-strand breaking mechanism, leading to production of DNA double strand breaks (DSBs) and/or checkpoint activation. Unrepaired DSBs cause cell death. Repair of sapacitabine-induced DSBs is dependent on the homologous recombination repair (HRR) pathway. Both sapacitabine and its major metabolite, CNDAC, have demonstrated potent anti-tumor activity in preclinical studies.

In addition to the SEAMLESS Phase 3 study in elderly patients with AML who were unfit or refused intensive induction chemotherapy, other Phase 2 studies evaluated sapacitabine in patients with myelodysplastic syndromes (MDS), cutaneous T cell lymphoma (CTCL) and non-small cell lung cancer (NSCLC). The US FDA and the European Medicines Agency have designated sapacitabine as an orphan drug for the treatment of both AML and MDS. Sapacitabine is part of Cyclacel’s pipeline of small molecule drugs designed to target and stop uncontrolled cell division.

EMERGENT BIOSOLUTIONS REPORTS FOURTH QUARTER AND TWELVE MONTHS 2016 FINANCIAL RESULTS; REAFFIRMS 2017 GUIDANCE AND PROVIDES 2020 GOALS

On February 23, 2017 Emergent BioSolutions Inc. (NYSE: EBS) reported financial results for the quarter and twelve months ended December 31, 2016 (Filing, Q4/Annual, Emergent BioSolutions, 2016, FEB 23, 2017, View Source [SID1234517884]).

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2016 FINANCIAL HIGHLIGHTS (1) (2)

4Q 2016

CY 2016

(in millions)

Combined & Continuing Operations Basis

Combined
Basis

Continuing Operations
Basis

Total Revenues

$
151.7

$
510.2

$
488.8

Net Income

$
32.3

$
51.8

$
62.5

Adjusted Net Income (3)

$
36.6

$
73.1

$
77.5

EBITDA (3)

$
61.3

$
111.5

$
141.7

(1)
The presentation of Emergent’s financial performance using the "Combined Basis" method includes the impact of the operations associated with the Company’s former biosciences business which was spun-off into a separate publicly traded company, Aptevo Therapeutics Inc., on August 1, 2016. The presentation of Emergent’s financial performance using the "Continuing Operations Basis" method excludes the impact of the operations of Aptevo.

(2) See "Reconciliation of Statement of Operations" for a reconciliation of the Company’s Statement of Operations for the Three and Twelve Months Ended December 31, 2016 on a continuing operations basis to that on a combined basis.

(3) See "Reconciliation of Net Income to Adjusted Net Income and EBITDA" for a definition of terms and a reconciliation table.

2016 BUSINESS ACCOMPLISHMENTS
·
Signed a follow-on contract with the Centers for Disease Control and Prevention (CDC) to supply approximately 29.4 million doses of BioThrax (Anthrax Vaccine Adsorbed) to the Strategic National Stockpile (SNS) through September 2021, valued at up to $911 million
·
Signed a five-year contract with the Biomedical Advanced Research and Development Authority (BARDA) for advanced development and procurement of NuThrax (anthrax vaccine adsorbed with CPG 7909 adjuvant), the Company’s next generation anthrax vaccine candidate, valued at up to $1.6 billion
·
Received a Sole Source Notification issued by BARDA for the procurement of approximately $100 million of BioThrax for delivery into the SNS within 24 months from the date of contract award
·
Achieved U.S. Food and Drug Administration (FDA) licensure for large-scale manufacturing of BioThrax in Building 55
·
Completed the spin-off of Aptevo Therapeutics Inc.

2016 FINANCIAL PERFORMANCE
Note: The following discussion of Emergent’s year to date and quarter ended December 31, 2016 unaudited, financial performance is on a Continuing Operations Basis.

(I) Quarter Ended December 31, 2016

Revenues

Product Sales
For Q4 2016, product sales were $87.5 million, a decrease of 30% as compared to 2015. The decrease is principally attributable to lower BioThrax deliveries under the Company’s new contract with the CDC, signed in December 2016.


Three Months Ended
December 31,

(in millions)

2016

2015

% Change

Product Sales

BioThrax

$
43.8

$
111.9

(61
)%
Other

$
43.7

$
12.5

249
%
Total Product Sales

$
87.5

$
124.4

(30
)%

Contract Manufacturing
For Q4 2016, revenue from the Company’s contract manufacturing operations was $16.7 million, an increase of 59% as compared to 2015. The increase primarily reflects an increase in fill/finish services at the Company’s Camden facility in Baltimore.

Contracts and Grants
For Q4 2016, contracts and grants revenue was $47.5 million, an increase of 91% as compared to 2015. The increase primarily reflects an increase in development funding for the Company’s Bayview facility in Baltimore designated as a Center for Innovation in Advanced Development and Manufacturing (CIADM) and plasma collection for the Company’s VIGIV [Vaccinia Immune Globulin Intravenous (Human)] program.

Operating Expenses

Cost of Product Sales and Contract Manufacturing
For Q4 2016, cost of product sales and contract manufacturing was $38.3 million, an increase of 11% as compared to 2015. The increase reflects an increase in the BioThrax cost per dose sold associated with lower production yield in the period in which the doses sold were produced, along with increased costs associated with the increase in Other product sales volume, partially offset by a decrease in BioThrax sales to the CDC.

Research and Development
For Q4 2016, gross research and development (R&D) expenses were $27.1 million, an increase of 7% as compared to 2015.

For Q4 2016, net R&D was fully funded, resulting in a net contribution from funded development programs of $20.4 million, as compared to a net expense of $0.5 million in 2015. Net R&D, which is more representative of the Company’s actual out-of-pocket investment in product development, is calculated as gross research and development expenses less contracts and grants revenue.


Three Months Ended
December 31,

(in millions)

2016

2015

% Change

Research and Development Expenses [Gross]

$
27.1

$
25.3

(7
)%
Adjustments:

– Contracts and grants revenue

$
47.5

$
24.8

91
%
Net Research and Development Expenses (Income)

$
(20.4
)

$
0.5

Selling, General and Administrative
For Q4 2016, selling, general and administrative expenses were $35.4 million, an increase of 1% as compared to 2015.

Net Income
For Q4 2016, net income was $32.3 million, or $0.67 per diluted share, versus $42.5 million, or $0.90 per diluted share, in 2015.

For Q4 2016 and 2015, net income per diluted share is computed using the "if-converted" method. This method requires net income to be adjusted to add back interest expense and amortization of debt issuance cost, both net of tax, associated with the Company’s 2.875% Convertible Senior Notes due 2021. As a result, net income per diluted share for Q4 2016 is adjusted in the amount of $1.1 million, from $32.3 million to $33.4 million, and diluted shares outstanding were 49.6 million. Net income per diluted share for Q4 2015 is adjusted in the amount of $0.9 million, from $42.5 million to $43.4 million, and diluted shares outstanding were 48.1 million.

(II) Twelve Months Ended December 31, 2016

Revenues

Product Sales
For the twelve months of 2016, product sales were $296.3 million, a decrease of 10% as compared to 2015. The decrease is principally attributable to a 19% reduction in BioThrax sales, including reduced deliveries in 4Q 2016 related to the timing of signing the Company’s follow-on contract with CDC in December 2016.


Twelve Months Ended
December 31,

(in millions)

2016

2015

% Change

Product Sales

BioThrax

$
237.0

$
293.9

(19
)%
Other

$
59.3

$
35.1

69
%
Total Product Sales

$
296.3

$
329.0

(10
)%

Contract Manufacturing
For the twelve months of 2016, revenue from contract manufacturing operations was $49.1 million, an increase of 14% as compared to 2015. The increase reflects an increase in fill/finish services from the Company’s Camden facility and an increase in bulk manufacturing services from the Company’s facility in Winnipeg, partially offset by a decrease in contract manufacturing revenue related to the production of an MVA Ebola vaccine candidate in 2015.

Contracts and Grants
For the twelve months of 2016, contracts and grants revenue was $143.4 million, an increase of 22% as compared to 2015. The increase reflects an increase in development funding for the Company’s CIADM program, VIGIV program related to plasma collection, and the NuThrax program related to preparations for a Phase III clinical trial. These increases were offset by lower development funding for the Company’s Anthrasil [Anthrax Immune Globulin Intravenous (Human)] program related to timing of plasma collection, PreviThrax (recombinant protective antigen anthrax vaccine, purified) candidate related to reduced interest by the U.S. government to fund such a program, and Building 55 related to FDA licensure of the facility in August 2016.

Operating Expenses

Cost of Product Sales and Contract Manufacturing
For the twelve months of 2016, cost of product sales and contract manufacturing was $131.3 million, an increase of 22% as compared to 2015. The increase primarily reflects an increase in the BioThrax cost per dose sold associated with lower production yield, along with increased costs associated with the increase in Other product sales volume, partially offset by a decrease in BioThrax sales to the SNS.

Research and Development
For the twelve months of 2016, gross R&D expenses were $108.3 million, a decrease of 9% as compared to 2015. The decrease primarily reflects lower contract service costs.

For the twelve months of 2016, net R&D was fully funded, resulting in a net contribution from funded development programs of $35.1 million, as compared to a net expense of $1.8 million in 2015.


Twelve Months Ended
December 31,

(in millions)

2016

2015

% Change

Research and Development Expenses [Gross]

$
108.3

$
119.2

(9
)%
Adjustments:

– Contracts and grants revenue

$
143.4

$
117.4

22
%
Net Research and Development Expenses (Income)

$
(35.1
)

$
1.8

Selling, General and Administrative
For the twelve months of 2016, selling, general and administrative expenses were $143.7 million, an increase of 19% as compared to 2015. This increase includes costs associated with restructuring activities at the Company’s Lansing, Michigan site, along with increased professional services to support the Company’s strategic growth initiatives and increased information technology investments.

Net Income
For the twelve months of 2016, net income was $62.5 million, or $1.35 per diluted share, versus $107.6 million, or $2.36 per diluted share, in 2015.

Pursuant to the "if-converted" method, net income per diluted share for the twelve months of 2016 is adjusted in the amount of $4.0 million, from $62.5 million to $66.5 million, and diluted shares outstanding were 49.1 million. Net income from continuing operations per diluted share for the twelve months of 2015 is adjusted in the amount of $3.9 million, from $107.6 million to $111.5 million, and diluted shares outstanding were 47.3 million.

2017 FORECAST & OPERATIONAL GOALS
Full Year 2017 Forecast:
·
Total revenue of $500 to $530 million, including BioThrax sales of $265 to $280 million
·
GAAP net income of $60 to $70 million
·
Adjusted net income of $70 to $80 million (3)
·
EBITDA of $135 to $145 million (3)

(3)
See "Reconciliation of Net Income to Adjusted Net Income and EBITDA" for a definition of terms and a reconciliation table.

Revised 1Q 2017 Forecast:
·
Total revenue of $110 to $125 million

2017 Operational Goals:
·
Initiate three Phase I or II clinical studies for EID therapeutics
·
Advance NuThrax development to enable initiating a Phase III study in 2018
·
Initiate two human factor studies for a nerve agent antidote auto-injector
·
Complete an acquisition that generates revenue within 12 months of closing

2020 FINANCIAL & OPERATIONAL GOALS
The Company is targeting the following 2020 financial and operational goals:
·
Total Revenue: $1 billion
·
Revenue Mix: >10% of total revenue from ex-US customers
·
Expense Discipline: Net R&D <15% of net revenue (4); SG&A <25% of total revenue
·
Net Income: 13% of total revenue
·
Product Development Pipeline: Six products in clinical or advanced development (three dual market)

(4) Computed as Total Revenue less Contracts & Grants Revenue.

RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME AND EBITDA
This press release contains two financial measures (Adjusted Net Income and EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization)) that are considered "non-GAAP" financial measures under applicable Securities and Exchange Commission rules and regulations. These non-GAAP financial measures should be considered supplemental to and not a substitute for financial information prepared in accordance with generally accepted accounting principles. The Company’s definition of these non-GAAP measures may differ from similarly titled measures used by others. Adjusted Net Income adjusts for specified items that can be highly variable or difficult to predict, or reflect the non-cash impact of charges resulting from purchase accounting. EBITDA reflects net income excluding the impact of depreciation, amortization, interest expense and provision for income taxes. The Company views these non-GAAP financial measures as a means to facilitate management’s financial and operational decision-making, including evaluation of the Company’s historical operating results and comparison to competitors’ operating results. These non-GAAP financial measures reflect an additional way of viewing aspects of the Company’s operations that, when viewed with GAAP results and the reconciliations to the corresponding GAAP financial measure, may provide a more complete understanding of factors and trends affecting the Company’s business.

The determination of the amounts that are excluded from these non-GAAP financial measures are a matter of management judgment and depend upon, among other factors, the nature of the underlying expense or income amounts. Because non-GAAP financial measures exclude the effect of items that will increase or decrease the Company’s reported results of operations, management strongly encourages investors to review the Company’s consolidated financial statements and publicly filed reports in their entirety.

(I)
Reconciliation of Net Income to Adjusted Net Income

COMBINED BASIS
(in millions, except per share value)

Three Months Ended December 31,

2016

2015

Source
Net Income

$
32.3

$
33.3

NA
Adjustments:
+ Acquisition-related costs (transaction & integration)

1.0

2.0

SG&A
+ Non-cash amortization charges

1.9

2.7

COGS, SG&A,
Other Income
+ Exit and disposal costs

2.6

1.2

SG&A
+ Impact of purchase accounting on inventory step-up

1.1



COGS
Tax effect

(2.3
)

(2.1
)
NA
Total Adjustments

4.3

3.8

NA
Adjusted Net Income
Adjusted Net Income per Diluted Share

$
36.6
$0.74

$
37.1
$0.77

NA

CONTINUING OPERATIONS BASIS
(in millions, except per share value)

Three Months Ended December 31,

2016

2015

Source
Net Income

$
32.3

$
42.5

NA
Adjustments:
+ Acquisition-related costs (transaction & integration)

1.0

0.1

SG&A
+ Non-cash amortization charges

1.9

2.2

COGS, SG&A,
Other Income
+ Exit and disposal costs

2.6



SG&A
+ Impact of purchase accounting on inventory step-up

1.1



COGS
Tax effect

(2.3
)

(0.8
)
NA
Total Adjustments

4.3

1.5

NA
Adjusted Net Income
Adjusted Net Income per Diluted Share

$
36.6
$0.74

$
44.0
$0.91

NA

COMBINED BASIS
(in millions, except per share value)

Twelve Months Ended December 31,

2016

2015

Source
Net Income

$
51.8

$
62.9

NA
Adjustments:
+ Spin-off and acquisition-related costs (transaction & integration)

10.4

5.5

SG&A
+ Non-cash amortization charges

9.6

10.8

COGS, SG&A,
Other Income
+ Exit and disposal costs

11.7

1.2

SG&A
+ Impact of purchase accounting on inventory step-up

1.1

0.6

COGS
Tax effect

(11.5
)

(6.3
)
NA
Total Adjustments

21.3

11.8

NA
Adjusted Net Income
Adjusted Net Income per Diluted Share

$
73.1
$1.48

$
74.7
$1.58

NA

CONTINUING OPERATIONS BASIS
(in millions, except per share value)

Twelve Months Ended December 31,

2016

2015

Source
Net Income From Continuing Operations

$
62.5

$
91.4

NA
Adjustments:
+ Acquisition-related costs (transaction & integration)

1.7

2.1

SG&A
+ Non-cash amortization charges

8.4

8.9

COGS, SG&A,
Other Income
+ Exit and disposal costs

11.7



SG&A
+ Impact of purchase accounting on inventory step-up

1.1

0.3

COGS
Tax effect

(8.0
)

(4.0
)
NA
Total Adjustments

15.0

7.4

NA
Adjusted Net Income From Continuing Operations
Adjusted Net Income per Diluted Share

$
77.5
$1.57

$
98.8
$2.09

NA

(II)
Reconciliation of Net Income to EBITDA

COMBINED BASIS

(in millions, except per share value)

Three Months Ended December 31,


2016

2015

Net Income

$
32.3

$
33.3

Adjustments:

+ Depreciation & Amortization

9.7

9.1

+ Provision For Income Taxes

16.8

14.5

+ Total Interest Expense

2.5

1.6

Total Adjustments

29.0

25.2

EBITDA
EBITDA per Diluted Share

$
61.3
$1.24

$
58.5
$1.22

CONTINUING OPERATIONS BASIS

(in millions, except per share value)

Three Months Ended December 31,


2016

2015

Net Income From Continuing Operations

$
32.3

$
42.5

Adjustments:

+ Depreciation & Amortization

9.7

8.3

+ Provision For Income Taxes

16.8

20.7

+ Total Interest Expense

2.5

1.6

Total Adjustments

29.0

30.6

EBITDA From Continuing Operations
EBITDA per Diluted Share

$
61.3
$1.24

$
73.1
$1.52

COMBINED BASIS

(in millions, except per share value)

Twelve Months Ended December 31,


2016

2015

Net Income

$
51.8

$
62.9

Adjustments:

+ Depreciation & Amortization

36.7

33.8

+ Provision For Income Taxes

15.4

26.9

+ Total Interest Expense

7.6

6.5

Total Adjustments

59.7

67.2

EBITDA
EBITDA per Diluted Share

$
111.5
$2.26

$
130.1
$2.75

CONTINUING OPERATIONS BASIS

(in millions, except per share value)

Twelve Months Ended December 31,


2016

2015

Net Income From Continuing Operations

$
62.5

$
91.4

Adjustments:

+ Depreciation & Amortization

34.9

31.2

+ Provision For Income Taxes

36.7

44.3

+ Total Interest Expense

7.6

6.5

Total Adjustments

79.2

82.0

EBITDA From Continuing Operations
EBITDA per Diluted Share

$
141.7
$2.87

$
173.4
$3.67

RECONCILIATION OF STATEMENT OF OPERATIONS
The following table provides a reconciliation of the Company’s Statement of Operations for the Twelve Months Ended December 31, 2016 on a continuing operations basis to that on a combined basis, which takes into account the impact of the Aptevo-related discontinued operations.

Emergent BioSolutions Inc. and Subsidiaries

Consolidated Statements of Operations





Year Ended December 31, 2016


Continuing Operations

Discontinuing Operations

Combined

Revenues:

(Unaudited)

Product sales

$
296.3

$
21.2

317.5

Contract manufacturing

49.1



49.1

Contracts and grants

143.4

0.2

143.6

Total revenues

488.8

21.4

510.2


Operating expenses:

Cost of product sales and contract manufacturing

131.3

11.6

142.9

Research and development

108.3

18.0

126.3

Selling, general and administrative

143.7

23.8

167.5

Income from operations

105.5

(32.0
)

73.5


Other income (expense):

Interest income

1.1



1.1

Interest expense

(7.6
)



(7.6
)
Other income, net

0.2



0.2

Total other expense, net

(6.3
)

(0.0
)

(6.3
)

Income (loss) before provision for (benefit) from income taxes

99.2

(32.0
)

67.2

Provision for (benefit from) income taxes

36.7

(21.3
)

15.4

Net income

$
62.5

$
(10.7
)

$
51.8

WT35021 – Anticancer agent

One of the most consistent changes in invasive solid tumors versus normal cells is a change in lysosomal characteristics, yet few drugs exploit this difference. WT35021 selectively kills tumor cells by targeting the lysosomal phenotype characteristic of invasive cancers.

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

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