On November 9, 2016 BioSpecifics Technologies Corp. (NASDAQ: BSTC), a biopharmaceutical company that originated and continues to develop collagenase based-therapies with a first in class collagenase-based product collagenase clostridium histolyticum, or CCH, marketed as XIAFLEX in the U.S. and Xiapex in Europe reported its financial results for the third quarter ended September 30, 2016 and provided a corporate update (Press release, BioSpecifics Technologies, NOV 9, 2016, View Source [SID1234516537]).

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"BioSpecifics concentrates on developing XIAFLEX for medically necessary indications, and we look forward to the initiation of our Phase 1 clinical trial for the treatment of uterine fibroids by the end of this year," said Thomas L. Wegman, President of BioSpecifics. "Our partner Endo continues to see XIAFLEX as a core U.S. branded product and growth driver going forward. Cellulite is their main focus for non-marketed indications and they plan to announce Phase 2b data upon the completion of that trial. Endo is conducting a full commercial assessment and analysis of the R&D pipeline which will determine the clinical trial timelines moving forward."

Third Quarter 2016 Financial Results
BioSpecifics reported net income of $3.1 million for the third quarter ended September 30, 2016, or $0.43 per basic share and $0.42 per share on a fully diluted basis, compared to net income of $2.9 million, or $0.42 per basic share and $0.39 per share on a fully diluted basis, for the same period in 2015.

Total revenue for the third quarter ended September 30, 2016 was $6.9 million, compared to $6.3 million for the same period in 2015. The increase in total revenue was due to increased royalties received and licensing fees related to the exercise of an opt-in right by Endo International plc (Endo) for the human lipoma indication.

Royalty and mark-up on cost of goods sold (COGS) revenues recognized under BioSpecifics’ agreement with Endo for the third quarter ended September 30, 2016 were $6.1 million, compared to $5.3 million for the same period in 2015, an increase of $0.8 million, or 15 percent. This increase in royalties and the mark-up on cost of goods sold was primarily due to the increase in sales of XIAFLEX for the treatment of Dupuytren’s contracture and Peyronie’s disease.

Licensing revenue consists of licensing fees, sublicensing fees and milestones. BioSpecifics recognized licensing fees related to the exercise of an opt-in right by Endo for the human lipoma indication of $750,000 for the three months ended September 30, 2016 as compared to zero in the corresponding 2015 period. In addition, the Company recognized certain licensing fees related to the cash payments received under the agreement with Endo in prior years and amortized them over the expected development period. For each of the three month periods ended September 30, 2016 and 2015, the Company recognized licensing revenue related to the development of injectable collagenase of approximately $12,000.

Milestone revenue recognized for the three months ended September 30, 2016 was zero as compared to $1.0 million for the corresponding 2015 period. The $1.0 million milestone revenue recognized in the corresponding 2015 period related to the first commercial sale of XIAFLEX by Asahi Kasei Pharma Corporation for the treatment of Dupuytren’s contracture in Japan.
Research and development (R&D) expenses for each of the third quarters ended September 30, 2016 and 2015 were $0.3 million.
General and administrative expenses for the third quarter ended September 30, 2016 were $1.8 million, compared to $1.7 million for the same period in 2015.

Provision for income taxes for the third quarter ended September 30, 2016 were $1.8 million, compared to $1.5 million for the same period in 2015.

As of September 30, 2016, BioSpecifics had cash and cash equivalents and investments of $51.3 million, compared to $37.1 million as of December 31, 2015.

XIAFLEX U.S. Commercial Highlights
On November 8, 2016, Endo reported U.S. commercial highlights for XIAFLEX for the third quarter of 2016 (Endo’s third quarter 2016 financials are reported in BioSpecifics’ fourth quarter 2016 financials). For the third quarter of 2016, U.S. net sales were $47.7 million, an increase of 19 percent compared to the third quarter of 2015.

CCH Pipeline Updates and Anticipated Upcoming Milestones
BioSpecifics manages the development of collagenase clostridium histolyticum (CCH) for uterine fibroids, and initiates the development of CCH in new potential indications, not licensed by Endo. In addition to Dupuytren’s contracture and Peyronie’s disease, Endo’s licensed rights include human and canine lipoma, adhesive capsulitis, cellulite, lateral hip fat and plantar fibromatosis.

BioSpecifics expects to initiate a Phase 1 clinical trial of CCH in uterine fibroids in the fourth quarter of 2016.
Top-line data for the Phase 2b clinical trial of CCH for cellulite will be reported upon the completion of that trial.
Endo has announced that they are conducting a full commercial assessment and analysis for the R&D pipeline to determine the clinical trial timelines moving forward.

BioSpecifics will present a company update at the upcoming Stifel 2016 Healthcare Conference on Tuesday, November 15, 2016 at 8:00 AM E.T. in New York, NY.

On November 9, 2016 Nektar Therapeutics (Nasdaq: NKTR) reported that new Phase 1 clinical data for Nektar’s lead immuno-oncology agent, NKTR-214, were presented at the SITC (Free SITC Whitepaper) 2016 Annual Meeting (Press release, Nektar Therapeutics, NOV 9, 2016, View Source [SID1234516469]). NKTR-214 is an investigational immuno-stimulatory therapy designed to expand specific cancer-fighting T cells and Natural Killer (NK) cell abundance directly in the tumor micro-environment and increase expression of PD-1 on these immune cells. The results were presented by Adi Diab, MD, Assistant Professor, Department of Melanoma Medical Oncology, Division of Cancer Medicine, The University of Texas MD Anderson Cancer Center in an oral presentation during today’s session entitled "New Cancer Immunotherapy Agents in Development."

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Interim results presented were from the ongoing Phase 1 dose-escalation, first-in-human, trial of single-agent NKTR-214 in patients with locally advanced or metastatic solid tumors, including melanoma, renal cell carcinoma (RCC), bladder, colorectal and other solid tumor cancers. A total of 20 patients were treated in four separate every three-week (q3w) dose cohorts (ranging from 0.003 mg/kg q3w to 0.012 mg/kg q3w) with 18 of these patients evaluable for anti-tumor activity. Based upon encouraging anti-tumor activity and tolerability of NKTR-214 observed at the 0.006 mg/kg q3w dose, an every two week (q2w) cohort of the 0.006 mg/kg dose began enrolling in September 2016 with an additional 5 patients enrolled to this cohort, all of which are continuing on therapy.

"NKTR-214 resulted in robust activation of the immune system and encouraging anti-tumor activity, including a partial response observed in a patient who continues to be treated with NKTR-214," said Dr. Ivan Gergel, Senior Vice President, Drug Development & Chief Medical Officer of Nektar. "NKTR-214 was also well tolerated in patients when administered as an every two-week or every three-week outpatient therapy. We are very encouraged by the clinical profile emerging for NKTR-214 and the totality of the data from this ongoing single-agent trial of NKTR-214."

Preliminary encouraging evidence of anti-tumor activity has been observed to date in the ongoing study:

12/18 (67%) evaluable patients had stable disease at the initial 8 week scan
7/18 (39%) evaluable patients had radiographic reductions in tumor size per RECIST 1.1 on NKTR-214
One patient with metastatic melanoma (prior treatment with ipilimumab and a BRAF inhibitor) has received 13 cycles of treatment (0.003 mg/kg q3w) with stable disease and continues on therapy with NKTR-214
In the 18 evaluable patients, a total of 5 patients with metastatic RCC who had progressed on 1 prior tyrosine kinase inhibitor (TKI) were treated with NKTR-214 at the 0.006 mg/kg q3w dose level:
1/5 (20%) of these RCC patients had a uPR per RECIST 1.1 (at 16 week scan) and treatment with NKTR-214 is ongoing
2/5 of these RCC patients had additional tumor reductions of 6% and 10% per RECIST 1.1 while on NKTR-214
NKTR-214 also demonstrated a favorable safety and tolerability profile with convenient, outpatient q2w or q3w administration in 25 patients evaluable for safety to-date:

No immune-related AEs were observed (e.g. colitis, dermatitis, hepatitis pneumonitis, adrenal insufficiency)
No deaths or grade 4 AEs related to NKTR-214
No capillary leak syndrome was observed at any dose
One patient experienced a dose-limiting toxicity (DLT) of hypotension/syncope at 0.012 mg/kg q3w and continued on treatment at 0.006 mg/kg q3w
3/25 patients experienced grade 3 hypotension, which was rapidly reversed with fluid administration and all patients continued on treatment with NKTR-214
Most common grade 1-2 adverse events were fatigue, pruritis, cough, decreased appetite, pyrexia, and hypotension
Immune pheno-typing was conducted and biomarkers of immune activation were measured in patients with evaluable tumor biopsies and blood samples. Treatment with NKTR-214 produced a robust elevation in immune cell frequency and activation, including:

Increase in total and newly proliferating (Ki67+) CD4+ T cells, CD8+ T cells, and Natural Killer (NK) cells in 9/9 patients with blood samples evaluated in the trial to-date, with increases of up to 30-fold observed
Increase in frequency of PD-1+ T cell subsets of up to 9-fold in the blood
Increase in CD8+ T cells and Natural Killer (NK) cells of up to 10-fold in the tumor micro-environment in patients with evaluable tumor biopsies (pre-dose and post-dose at week 3), with minimal intratumoral changes to T regulatory cells
Increase in expression of cell-surface PD-1 on T cell subsets of up to 2-fold in the tumor micro-environment
Induction of an activation gene signature in the tumor micro-environment, including increases of 5-fold or greater in expression of interferon γ, perforin and granzyme B genes
Changes in T cell repertoire (TCR), which is a measure of T cell clonality, in the tumor micro-environment
"We are extremely pleased with the single-agent activity of NKTR-214 and the potential of NKTR-214 to transform the immuno-oncology landscape," said Howard W. Robin, President & CEO of Nektar Therapeutics. "As the first I-O agent to demonstrate that it can increase tumor-infiltrating lymphocytes (TILs) and increase PD-1 expression on immune cells in humans, NKTR-214 complements not only existing checkpoint inhibitors, such as nivolumab, but also other I-O mechanisms in development."

In September 2016, Nektar entered into a clinical collaboration with Bristol-Myers Squibb to evaluate NKTR-214 as a potential combination treatment regimen with Bristol-Myers Squibb’s Opdivo (nivolumab) in five tumor types and seven potential indications. The Phase 1/2 clinical trials will enroll up to 260 patients and will evaluate the potential for the combination of Opdivo (nivolumab) and NKTR-214 to show improved and sustained efficacy and tolerability above the current standard of care in melanoma, kidney, triple-negative breast cancer, bladder and non-small cell lung cancer patients. The initial dose-escalation trial is underway with Opdivo (nivolumab) and NKTR-214.

NKTR-214 is an experimental therapy designed to stimulate cancer-killing immune cells in the body by targeting CD122 specific receptors found on the surface of these immune cells, known as CD8+ effector T cells and Natural Killer (NK) cells. In preclinical studies, treatment with NKTR-214 resulted in a rapid expansion of these cells and mobilization into the tumor micro-environment.1 NKTR-214 has an antibody-like dosing regimen similar to the existing checkpoint inhibitor class of approved medicines. A Phase 1/2 clinical study is ongoing to evaluate single-agent NKTR-214 in cancer patients.

On November 9, 2016 Calithera Biosciences, Inc. (Nasdaq:CALA), a clinical-stage pharmaceutical company focused on discovering and developing novel small molecule drugs directed against tumor and tumor immune cell metabolism targets for the treatment of cancer, reported its financial results for the third quarter ended September 30, 2016 (Press release, Calithera Biosciences, NOV 9, 2016, View Source;p=RssLanding&cat=news&id=2221119 [SID1234516512]). As of September 30, 2016, cash, cash equivalents and investments totaled $56.3 million.

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"During the third quarter, we continued enrolling the two cohorts evaluating our glutaminase inhibitor CB-839 in triple negative breast cancer and in renal cell carcinoma. We expect to be in a position to provide additional updates at medical meetings in the fourth quarter," said Susan Molineaux, Ph.D., President and Chief Executive Officer of Calithera. "In addition, we opened two new immuno-oncology trials in the quarter, both of which should have an initial read out in 2017."

Third Quarter 2016 and Recent Highlights

CB-839: First patient enrolled and dosed in combination with checkpoint modulator. In August 2016, we enrolled the first patient in a Phase 1/2 clinical trial assessing the safety and efficacy of CB-839, in combination with Opdivo for the treatment of renal cell carcinoma (RCC), malignant melanoma and non-small cell lung cancer. The Phase 1/2 study will assess the safety, pharmacokinetics and pharmacodynamics of CB-839 and Opdivo. The study will enroll patients with clear cell RCC who are naïve to checkpoint inhibitors, as well as clear cell RCC, melanoma, and non-small cell lung cancer patients who are receiving anti-PD-1 monotherapy as their current therapy without having a tumor response.
CB-839: Data in renal cell carcinoma selected for oral presentation. In September, we announced that clinical data for CB-839 will be presented in a plenary session at the 28th Annual EORTC-NCI-AACR (Free EORTC-NCI-AACR Whitepaper) Symposium on Molecular Targets and Cancer Therapeutics, November 29 to December 2, 2016 in Munich, Germany. The clinical presentation will be focused on data from Calithera’s CB-839 Phase I RCC combination trial with everolimus.
CB-839: Data in triple negative breast cancer selected for presentation. Clinical data for CB-839 will be presented at the San Antonio Breast Cancer Symposium in San Antonio, December 6 to 10, 2016 in San Antonio, Texas. The clinical presentation will be focused on data from Calithera’s CB-839 Phase I triple negative breast cancer combination trial with paclitaxel.
CB-1158: First patient dosed in a phase 1 study of our first-in-class inhibitor of the immuno-oncology target arginase. In September 2016, we announced dosing of the first patient in a Phase I clinical trial assessing the safety and efficacy of our drug candidate as a treatment for advanced solid tumors. Arginase is an enzyme in myeloid-derived suppressor cells (MDSCs), which prevents T-cell and natural killer (NK) cell activation in tumors.
Board of Directors. In August 2016, Suzy Jones was appointed to our Board of Directors, and added to the Audit committee. Ms. Jones is currently Founder and Managing Partner of DNA Ink, a boutique life sciences advisory firm.
Selected Third Quarter 2016 Financial Results

Research and development expenses were $6.3 million for the three months ended September 30, 2016, compared with $6.8 million for the same period in the prior year. The decrease of $0.5 million was primarily due to the timing of manufacturing clinical supply to support our CB-839 and CB-1158 clinical trials, partially offset by increased personnel-related costs primarily due to higher headcount, salary increases and stock-based compensation expense, and costs associated with our licensing arrangements.

General and administrative expenses were $2.3 million for the three months ended September 30, 2016, compared with $2.2 million for the same period in the prior year. The increase of $0.1 million was primarily due to higher personnel-related costs as a result of higher headcount, salary increases and stock-based compensation expense.

Net loss for the three months ended September 30, 2016 was $8.5 million, or $0.44 per share.

Based on the results for the first nine months of 2016 and our current expectations for the remainder of the year, we are raising our guidance and expect cash, cash equivalents and investments will be at least $50 million at the end of 2016.

On November 9, 2016 Puma Biotechnology, Inc. (NYSE: PBYI), a biopharmaceutical company, reported financial results for the third quarter ended September 30, 2016 (Press release, Puma Biotechnology, NOV 9, 2016, View Source [SID1234516720]).

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Unless otherwise stated, all comparisons are for the third quarter and nine months ended September 30, 2016, compared to the third quarter and nine months ended September 30, 2015.

Based on accounting principles generally accepted in the United States (GAAP), Puma reported a net loss applicable to common stock of $65.8 million, or $2.02 per share, for the third quarter of 2016, compared to a net loss of $60.4 million, or $1.87 per share, for the third quarter of 2015. Net loss applicable to common stock for the nine months ended September 30, 2016 was $203.4 million, or $6.26 per share, compared to $177.6 million, or $5.55 per share, for the nine months ended September 30, 2015.

Non-GAAP adjusted net loss was $36.0 million, or $1.11 per share, for the third quarter of 2016, compared to non-GAAP adjusted net loss of $35.5 million, or $1.10 per share, for the third quarter of 2015. Non-GAAP adjusted net loss for the nine months ended September 30, 2016 was $115.4 million, or $3.55 per share, compared to $104.3 million, or $3.26 per share, for the nine months ended September 30, 2015. Non-GAAP adjusted net loss excludes stock-based compensation expense, which represents a significant portion of overall expense and has no impact on the cash position of the Company. For a reconciliation of GAAP net loss to non-GAAP adjusted net loss and GAAP net loss per share to non-GAAP adjusted net loss per share, please see the financial tables at the end of this news release.

Net cash used in operating activities for the third quarter of 2016 was $34.9 million. Net cash used in operating activities for the nine months ended September 30, 2016 was $100.7 million. At September 30, 2016, Puma had cash and cash equivalents of $52.5 million and marketable securities of $56.4 million, compared to cash and cash equivalents of $31.6 million and marketable securities of $184.3 million at December 31, 2015. The Company’s balance of cash, cash equivalents and marketable securities at the end of the quarter does not include the net proceeds of approximately $162 million received from the Company’s public offering in October 2016.

"During the third quarter, we achieved several key milestones, including the European Medicines Agency’s (EMA) validation of the Marketing Authorization Application (MAA) for neratinib as an extended adjuvant treatment of HER2-positive early stage breast cancer in Europe, and the U.S. Food and Drug Administration’s (FDA) acceptance of the New Drug Application (NDA) for neratinib as an extended adjuvant treatment for patients with early stage HER2-overexpressed/amplified breast cancer who have received prior adjuvant trastuzumab (Herceptin)-based therapy," said Alan H. Auerbach, Chairman, Chief Executive Officer and President of Puma.

"We anticipate a number of additional milestones through the end of 2016 and first half of 2017," Mr. Auerbach added. "These include: (i) reporting additional data in the fourth quarter of 2016 from the Phase II trial of neratinib as an extended adjuvant treatment in HER2-positive early stage breast cancer using loperamide and budesonide prophylaxis; (ii) reporting additional Phase II data in the fourth quarter of 2016 from the FB-7 neoadjuvant HER2-positive breast cancer trial in the subgroup of patients who are MammaPrint High; (iii) reporting data in the fourth quarter of 2016 from the Phase II trial of neratinib plus fulvestrant in patients with HER2 non-amplified breast cancer that has a HER2 mutation; (iv) reporting data in the first half of 2017 from the Phase III trial of neratinib in third-line HER2-positive metastatic breast cancer patients; and (v) reporting data during the first half of 2017 from the Phase II trial of neratinib in HER2-positive metastatic breast cancer patients with brain metastases."

Operating Expenses

Operating expenses were $66.0 million for the third quarter of 2016, compared to $60.7 million for the third quarter of 2015. Operating expenses for the nine months ended September 30, 2016 were $203.7 million, compared to $178.2 million for the nine months ended September 30, 2015.

General and Administrative Expenses:

General and administrative expenses were $14.0 million for the third quarter of 2016, compared to $8.8 million for the third quarter of 2015. General and administrative expenses for the nine months ended September 30, 2016 were $37.3 million, compared to $22.2 million for the nine months ended September 30, 2015. The increase of approximately $15.1 million during the nine months ended September 30, 2016 compared to the same period in 2015 resulted primarily from increases of approximately $7.5 million in stock-based compensation, $1.9 million in payroll and related costs, $3.7 million in professional fees and expenses, and $1.6 million in facility and equipment costs. These increases reflect higher legal and compliance expenses, as well as overall corporate growth.

Research and Development Expenses:

Research and development expenses were $52.0 million for the third quarter of 2016, compared to $51.9 million for the third quarter of 2015. Research and development expenses for the nine months ended September 30, 2016 were $166.4 million, compared to $156.0 million for the nine months ended September 30, 2015. The increase of approximately $10.4 million during the nine months ended September 30, 2016 compared to the same period in 2015 resulted primarily from increases of approximately $7.2 million in stock-based compensation, $3.7 million for internal clinical development, regulatory affairs and quality assurance and internal chemical manufacturing expenses, and $2.7 million in consultants and contractors related expenses, offset by a $3.3 million decrease in clinical trial expenses.

On November 8, 2016 Endo International plc (NASDAQ: ENDP) (TSX: ENL) reported third quarter 2016 financial results, including:
Revenues of $884 million including the addition of sales from its 2015 acquisition of Par Pharmaceutical, a 19 percent increase compared to third quarter 2015 revenues of $746 million(Press release, Endo, NOV 8, 2016, View Source;p=RssLanding&cat=news&id=2220454 [SID1234516401]).

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Reported net loss from continuing operations of $191 million compared to third quarter 2015 reported net loss from continuing operations of $804 million.

Reported diluted loss per share from continuing operations of $0.86 compared to third quarter 2015 reported diluted loss per share from continuing operations of $3.84.

Adjusted net income from continuing operations of $226 million, a 5 percent increase compared to third quarter 2015 adjusted net income from continuing operations of $214 million.1

Adjusted diluted EPS from continuing operations of $1.01 compared to third quarter 2015 adjusted diluted EPS from continuing operations of $1.02.1

"During the third quarter 2016, Endo further sharpened its focus on operational execution. We have continued to deliver results across all of our businesses that are on-track or ahead of Company expectations for the quarter. Today we are reaffirming our full year 2016 revenue and adjusted diluted EPS financial guidance," said Paul Campanelli, President and CEO of Endo. "This is an important time for Endo. The leadership team is working closely and collaboratively to build on our strengths and develop a go-forward strategy that best positions the Company to improve the lives of the patients and customers we serve."
FINANCIAL PERFORMANCE

(in thousands, except per share amounts)

Three Months Ended
September 30,

Nine Months Ended
September 30,

2016

2015

Change

2016

2015

Change
Total Revenues
$
884,335

$
745,727

19
%

$
2,768,761

$
2,195,021

26
%
Reported Income (Loss) from
Continuing Operations
$
(191,496)

$
(803,706)

(76)
%

$
109,553

$
(744,108)

NM
Reported Diluted Weighted Average
Shares
222,767

209,274

6
%

223,060

188,085

19
%
Reported Diluted Income (Loss) per
Share from Continuing Operations
$
(0.86)

$
(3.84)

(78)
%

$
0.49

$
(3.96)

NM
Adjusted Income from Continuing
Operations
$
225,519

$
214,110
1

5
%

$
658,591

$
625,805
1

5
%
Adjusted Diluted Weighted Average
Shares
223,139

210,787

6
%

223,060

192,144

16
%
Adjusted Diluted EPS from
Continuing Operations
$
1.01

$
1.02
1

(1)
%

$
2.95

$
3.26
1

(10)
%

(1) Refer to footnote 12 and 14 in the Reconciliation of GAAP and Non-GAAP Financial Measures tables for three and nine months ended September 30, 2015, respectively, for further discussion.
CONSOLIDATED RESULTS
Total revenues increased by 19 percent to $884 million in third quarter 2016 compared to the same period in 2015, primarily attributable to revenues related to the September 2015 Par acquisition. GAAP net loss from continuing operations in third quarter 2016 decreased to $191 million compared to a GAAP net loss from continuing operations of $804 million during the same period in 2015, primarily attributable to the amount of goodwill and intangible asset impairment charges recorded during the third quarter 2015. GAAP net loss per share from continuing operations for the three months ended September 30, 2016 was $0.86, compared to a GAAP net loss from continuing operations of $3.84 in third quarter 2015.
Adjusted net income from continuing operations for third quarter 2016 increased by 5 percent to $226 million compared to third quarter 2015, driven primarily by the contribution of Par, offset partially by an increase in interest expense. Adjusted net income per share from continuing operations for the three months ended September 30, 2016 decreased 1 percent to $1.01 compared to third quarter 2015.
U.S. BRANDED PHARMACEUTICALS
During third quarter 2016, the U.S. Branded Pharmaceuticals business unit continued to focus on supporting demand growth for XIAFLEX in both the Dupuytren’s contracture and Peyronie’s disease indications and the BELBUCA launch continues to progress.
Third quarter 2016 U.S. Branded Pharmaceuticals results include:
Revenues of $280 million, an 8 percent decrease compared to third quarter 2015; this decrease was primarily attributable to a generic entrant for Voltaren Gel in March 2016 and volume contraction across our established pain products.
Net sales of XIAFLEX increased 19 percent compared to third quarter 2015; this increase reflects high single-digit demand growth for the product and expected inventory build in the quarter.
U.S. GENERIC PHARMACEUTICALS
During third quarter 2016, the U.S. Generic Pharmaceuticals business unit continued to execute on its sales and marketing, research and development (R&D), and manufacturing plans for the year.
Third quarter and recent 2016 U.S. Generic Pharmaceuticals results include:
Revenues of $534 million, a 45 percent increase compared to third quarter 2015; this increase was primarily attributable to growth from the addition of sales by Par.
Generics Base business revenues declined approximately 20 percent sequentially compared to the second quarter 2016, due to deepening consortium pricing pressures and additional competitive entrants and product discontinuations as well as discrete factors, including destocking and shifts in purchase timing due to market conditions. The sequential decline would have been approximately 15 percent without these discrete factors and this deeper decline may continue into 2017.
On November 1, 2016, the Company launched the generic form of SEROQUEL XR, for which it has first-to-file status and 180 days of marketing exclusivity.
INTERNATIONAL PHARMACEUTICALS
During third quarter 2016, the International Pharmaceuticals business unit continued to focus on expanding adjusted margins for its emerging markets businesses, while in-licensing new products and managing the expected loss of exclusivity for certain products at Paladin.
Third quarter 2016 International Pharmaceuticals results include:
Revenues of $71 million, a 3 percent decrease compared to third quarter 2015.
Paladin revenues of $28 million, a 10 percent increase compared to third quarter 2015, due primarily to solid performance across the base business, the Canadian launch of Nucynta and the continuing management of the expected loss of exclusivity for two products.
Emerging market revenues from Litha and Somar of $38 million, a 4 percent decrease compared to third quarter 2015, driven primarily by a decrease in Litha revenues as it manages its recent divestiture of non-core assets and integrates its new portfolio of products and pipeline programs acquired from Aspen.
2016 Financial Guidance
For the full twelve months ended December 31, 2016, at current exchange rates, Endo is reaffirming its full year revenue and adjusted diluted EPS financial guidance. The Company estimates:
Total revenues to be between $3.87 billion and $4.03 billion;
Diluted GAAP EPS from continuing operations is now expected to be between $0.98 and $1.28; and
Adjusted diluted EPS from continuing operations to be between $4.50 and $4.80.
The Company’s 2016 financial guidance is based on the following assumptions:
Adjusted gross margin of approximately 60 percent;
Adjusted operating expenses as a percentage of revenues to be approximately 22.5 percent;
Adjusted interest expense of approximately $450 million;
Adjusted effective tax rate of approximately zero to 2 percent; and
Adjusted diluted EPS from continuing operations assumes full year adjusted diluted shares outstanding of approximately 223 million shares.
Balance Sheet, Liquidity and Other Updates
As of September 30, 2016, the Company had $561.6 million in unrestricted cash; net debt of approximately $7.7 billion and a net debt to adjusted EBITDA ratio of 4.9.
Third quarter 2016 cash used in operating activities was $111.3 million, primarily attributable to the funding of mesh payments, offset partially by improved cash collections.
During third quarter 2016, the Company recorded impairment charges of $93.5 million primarily related to unfavorable formulary changes and market conditions impacting its Sumavel DosePro product.