On November 3, 2016 Cerus Corporation (NASDAQ: CERS) reported financial results for the third quarter ended September 30, 2016 (Press release, Cerus, NOV 3, 2016, View Source [SID1234516264]).

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Recent developments include:
The U.S. Food and Drug Administration’s (FDA) revised recommendations for protecting blood components from Zika virus was expanded to recommend use of pathogen reduction technology and/or an investigational blood screening test to all U.S. blood centers.

The first Cerus U.S. blood center customers have submitted biologics license applications to the FDA to request allowance for the interstate transport of INTERCEPT-treated platelet components.

Hemolife Fundacion Banco Nacional de Sangre became the first blood center to enter into routine use with the INTERCEPT Blood System in Colombia.

Cerus’ global commercial leadership was strengthened with the appointment of Vivek Jayaraman as chief commercial officer.
"U.S. momentum continues to build, with the number of customers initiating INTERCEPT production accelerating from just three at the beginning of the year to 17 customers to date. With another 22 contracted customers slated to begin production, we are in a healthy position for growth," said William ‘Obi’ Greenman, Cerus’ president and chief executive officer. "Beyond platelets and plasma, we are also moving forward with activities related to our red cell program, with plans to submit for European CE Mark approval and to initiate a U.S. Phase III trial."

Revenue
Product revenue for the third quarter of 2016 was $10.2 million, up 26% from the $8.0 million recognized during the same period in 2015. The increase in reported product revenue for the quarter was primarily driven by a year-over-year increase in INTERCEPT disposable kit demand of 30% in our EMEA and U.S. commercial regions. Product revenue for the first nine months of 2016 was $27.1 million, up 10% from the first nine months of 2015, driven primarily by increased kit sales in our EMEA region and sales to U.S. customers.

Revenue from our Biomedical Advanced Research and Development Authority (BARDA) agreement for the three and nine months ended September 30, 2016, was $0.3 million. We did not recognize any revenue from our BARDA agreement during the three and nine months ended September 30, 2015.

The Company continues to expect 2016 global product revenue in the range of $37 million to $40 million with anticipated growth supported by new business opportunities in both its European and U.S. markets.

Gross Margins
Gross margins on product revenue for the third quarter of 2016 were 46%, compared to 31% for the third quarter of 2015. Gross margins on product revenue for the first nine months of 2016 were 46%, compared to 30% for the first nine months of 2015. Gross margins on product revenue for the three and nine months ended September 30, 2016, increased primarily due to the Company’s disposable kit manufacturing agreement with Fresenius Kabi AG, entered into during the fourth quarter of 2015, and efficiencies realized in 2016 related to inventory management.

Operating Expenses
Total operating expenses for the third quarter of 2016 were $19.2 million, compared to $18.7 million for the third quarter of 2015. Total operating expenses for the first nine months of 2016 were $59.0 million, compared to $53.3 million for the first nine months of 2015. Selling, general and administrative expenses increased for the three and nine months ended September 30, 2016, primarily due to increased spending related to selling and marketing activities associated with the commercialization of INTERCEPT in the U.S. market. Research and development expenses drove the majority of the reported increase for the nine months ended September 30, 2016, primarily due to activities associated with clinical development of the red blood cell system, the pursuit of potential premarket applications supplement approvals for the platelet and plasma systems and the initial activities under the BARDA agreement.

Operating and Net Loss
Operating losses during the third quarter of 2016 were $14.3 million, compared to $16.2 million for the third quarter of 2015, and $46.3 million compared to $46.1 million for the nine months ended September 30, 2016 and September 30, 2015, respectively.
Net loss for the third quarter of 2016 was $14.4 million, or $0.14 per diluted share, compared to a net loss of $15.7 million, or $0.17 per diluted share, for the third quarter of 2015. Net loss for the first nine months of 2016 was $49.4 million, or $0.49 per diluted share, compared to a net loss of $41.1 million, or $0.48 per diluted share, for the same period of 2015.

Net loss for the third quarter of 2015 was positively impacted by the mark-to-market adjustments of the Company’s previously outstanding warrants, which resulted in non-cash gains of $1.1 million and $4.7 million during the third quarter of 2015 and first nine months of 2015, respectively. The Company has no remaining outstanding warrants and as such, does not expect mark-to-market adjustments going forward.

Cash, Cash Equivalents and Investments
At September 30, 2016, the Company had cash, cash equivalents and short-term investments of $81.2 million compared to $107.9 million at December 31, 2015.

At September 30, 2016, the Company had approximately $19 million in outstanding debt under its loan agreement with Oxford Finance.

On November 3, 2016 Genmab A/S (Nasdaq Copenhagen: GEN) reported that 17 daratumumab abstracts have been accepted for presentation at the 58th American Society of Hematology (ASH) (Free ASH Whitepaper) Annual Meeting and Exposition taking place December 3-6 in San Diego, California (Press release, Genmab, NOV 3, 2016, View Source [SID1234516215]). The daratumumab abstracts are sponsored by our collaboration partner Janssen Biotech, Inc., with the exception of one that was based on an investigator-sponsored study, and one that used commercial daratumumab. One abstract on a study with ofatumumab has also been scheduled for a poster presentation at the meeting. All abstracts are available on the ASH (Free ASH Whitepaper) website at www.hematology.org. A list of the key daratumumab abstracts is included below.

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"A number of presentations will highlight additional analyses and details from the daratumumab Phase III POLLUX and CASTOR studies that formed the basis of regulatory filings earlier this year. Additional presentations include the Phase I study of the subcutaneous formulation of daratumumab, data on the immuno-modulatory properties of daratumumab, and novel ‘real life’ clinical practice data on daratumumab plus pomalidomide retreatment of refractory multiple myeloma patients. We are excited that daratumumab will be featured in so many presentations at this key hematology conference," said Jan van de Winkel, Ph.D., Chief Executive Officer of Genmab.
Key Daratumumab Abstracts
Efficacy of Daratumumab, Bortezomib, and Dexamethasone Versus Bortezomib and Dexamethasone in Relapsed or Refractory Myeloma Based on Prior Lines of Therapy: Updated Analysis of CASTOR – Oral presentation
Efficacy of Daratumumab, Lenalidomide, and Dexamethasone Versus Lenalidomide and Dexamethasone in Relapsed or Refractory Multiple Myeloma Patients with 1 to 3 Prior Lines of Therapy: Updated Analysis of POLLUX – Oral presentation
Efficacy of Daratumumab, Lenalidomide and Dexamethasone Versus Lenalidomide and Dexamethasone Alone for Relapsed or Refractory Multiple Myeloma Among Patients with 1 to 3 Prior Lines of Therapy Based on Previous Treatment Exposure: Updated Analysis of POLLUX – Oral presentation
Evaluation of Minimal Residual Disease (MRD) in Relapsed/Refractory Multiple Myeloma (RRMM) Patients Treated with Daratumumab in Combination with Lenalidomide Plus Dexamethasone or Bortezomib Plus Dexamethasone – Oral presentation
Open-Label, Multicenter, Dose Escalation Phase 1b Study to Assess the Subcutaneous Delivery of Daratumumab in Patients (pts) with Relapsed or Refractory Multiple Myeloma (PAVO) – Oral presentation
Clinical Efficacy of Daratumumab, Pomalidomide and Dexamethasone in Relapsed, Refractory Myeloma Patients: Utility of Retreatment with Daratumumab Among Refractory Patients — Oral presentation
This is an independent study, not sponsored by Janssen.
Daratumumab, Bortezomib and Dexamethasone Versus Bortezomib and Dexamethasone Alone for Relapsed or Refractory Multiple Myeloma Based on Prior Treatment Exposure: Updated Efficacy Analysis of CASTOR – Poster presentation
Daratumumab in Combination with Lenalidomide Plus Dexamethasone Induces Clonality Increase and T-Cell Expansion: Results from a Phase 3 Randomized Study (POLLUX) – Poster presentation
High-parameter Mass Cytometry (CyTOF) Evaluation of Relapsed/Refractory Multiple Myeloma (MM) Pts (Pts) Treated with Daratumumab Supports Immune Modulation as a Novel Mechanism of Action – Poster presentation

On November 3, 2016 Bellicum Pharmaceuticals, Inc. (Nasdaq:BLCM), a clinical stage biopharmaceutical company focused on discovering and developing novel cellular immunotherapies for cancers and orphan inherited blood disorders, reported that three abstracts on the Company’s lead product candidate, BPX-501, including an oral presentation by Dr. Neena Kapoor, to review results from a study of pediatric patients with immune deficiencies, were accepted for presentation at the 58th American Society of Hematology (ASH) (Free ASH Whitepaper) Annual Meeting (Press release, Bellicum Pharmaceuticals, NOV 3, 2016, View Source;p=RssLanding&cat=news&id=2219233 [SID1234516245]). The Company will also present data highlighting preclinical results from the application of its GoCAR-T and GoTCR technologies in two poster presentations. ASH (Free ASH Whitepaper) 2016 is being held in San Diego, California on December 3-6.

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Investor/Analyst Luncheon

Bellicum will host an investor and analyst luncheon on Monday, December 5, 2016 at 12:15 PM -1:15 PM PST at the San Diego Marriott Gaslamp Quarter Hotel. Management and investigators Dr. Franco Locatelli (Ospedale Pediatrico Bambino Gesù), Dr. Neena Kapoor (Children’s Hospital of Los Angeles), and Dr. Kris Mahadeo (Montefiore Medical Center) will discuss BPX-501 Phase 2 clinical data in the malignant and non-malignant setting. The luncheon will be webcast live and may be accessed from the News & Events section of the Bellicum website. An archived version of the webcast will be available for replay for at least two weeks following the event.

ASH Presentations on Bellicum Programs

BPX-501:

Oral Presentation: "Outcome of Children with Primary Immune-Deficiencies (PIDs) Enrolled in a Phase I-II Trial Based on the Infusion of BPX-501 Donor T Cells Genetically Modified with a Novel Suicide Gene (Inducible Caspase 9, iC9) After T-Cell Depleted HLA-Haploidentical Allogeneic Stem Cell Transplantation (Haplo-HSCT)"

Abstract Number: 72
Session Name: 732.Clinical Allogeneic Transplantation: Results: Predicting Outcome
Date: Saturday, December 3, 2016
Session Time: 7:30 AM – 9:00 AM PST
Presentation Time: 8:45 AM PST

Poster Presentation: "T-Cell Depleted HLA-Haploidentical Allogeneic Hematopoietic Stem Cell Transplantation (Haplo-HSCT) Followed by Donor Lymphocyte Infusion with T Cells Transduced with the Inducible Caspase 9 (iC9) Suicide Gene in Children with Hematological Malignancies"

Abstract Number: 4683
Session Name: 732.Clinical Allogeneic Transplantation: Results: Poster III
Date: Monday, December 5, 2016
Presentation Time: 6:00 PM – 8:00 PM PST

Poster Presentation: "Clinical Outcome and Immune Recovery after Adoptive Infusion of BPX-501 Cells (Donor T Cells Transduced with iC9 Suicide Gene) in Children with Hemoglobinopathies and Diamond-Blackfan Anemia Given a/b T-Cell Depleted HLA-Haploidentical Stem Cell Transplantation (HSCT)"

Abstract Number: 2286
Session Name: 732.Clinical Allogeneic Transplantation: Results: Poster I
Date: Saturday, December 3, 2016
Presentation Time: 5:30 PM – 7:30 PM PST

CAR-T Program: (CD123 CARs)

Poster Presentation: "Inducible MyD88/CD40 (iMC) Costimulation Provides Ligand-Dependent Tumor Eradication by CD123-Specific Chimeric Antigen Receptor T Cells"

Abstract Number: 4551
Session Name: 703.Adoptive Immunotherapy: Poster III
Date: Monday, December 5, 2016
Presentation Time: 6:00 PM – 8:00 PM PST

TCR Program: (PRAME and Bob-1 TCRs)

Poster Presentation: "Inducible MyD88/CD40 (iMC) Enhances Proliferation and Survival of Tumor-Specific TCR-Modified T Cells and Improves Anti-Tumor Efficacy in Myeloma"

Abstract Number: 4550
Session Name: 703.Adoptive Immunotherapy: Poster III
Date: Monday, December 5, 2016
Presentation Time: 6:00 PM – 8:00 PM PST

On November 3, 2016 Clovis Oncology, Inc. (NASDAQ:CLVS) reported financial results for the quarter ended September 30, 2016, and provided an update on the Company’s clinical development programs and regulatory outlook for the remainder of 2016 (Press release, Clovis Oncology, NOV 3, 2016, View Source;p=RssLanding&cat=news&id=2219461 [SID1234516267]).

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"We are actively preparing for a U.S. launch of rucaparib pending FDA’s decision on our NDA, and we have completed our Marketing Authorization Application submission seeking European approval for rucaparib," said Patrick J. Mahaffy, President and CEO of Clovis Oncology. "Importantly, we remain focused on exploring rucaparib more broadly, and expect several studies to initiate this quarter, including the TRITON2 study in prostate cancer, the ARIEL4 confirmatory study in ovarian cancer and investigator-sponsored studies exploring rucaparib as maintenance therapy in gastroesophageal cancer and also in combination with bevacizumab in ovarian cancer."

Third Quarter 2016 Financial Results

Clovis had $318.8 million in cash, cash equivalents and available-for-sale securities as of September 30, 2016. Cash used in operating activities was $60.3 million for the third quarter of 2016 and $212.0 million for the first nine months of 2016, compared with $71.7 million and $177.4 million for the comparable periods of 2015. Clovis had approximately 38.6 million outstanding shares of common stock as of September 30, 2016.

Clovis reported a net loss of $65.7 million, or ($1.70) per share, for the third quarter of 2016 and $278.4 million or ($7.24) per share for the first nine months of 2016. The net loss for the third quarter of 2015 was $98.6 million or ($2.62) per share and $233.3 million or ($6.62) per share for the first nine months of 2015. Net loss for the third quarter of 2016 included share-based compensation expense of $9.2 million and $29.7 million for the third quarter and the first nine months of 2016, respectively, compared to $12.4 million and $29.5 million for the comparable periods of 2015.

Notably, the net loss for the first nine months of 2016 includes a net expense non-cash impact of $49.9 million relating to the lucitanib product rights recorded in 2013 in connection with the Company’s acquisition of Ethical Oncology Science S.p.A. (EOS), comprised of a $104.5 million non-cash expense for the impairment of the intangible asset, a $25.5 million non-cash expense credit for the reduction in the fair value of the contingent purchase consideration liability and a $29.2 million related non-cash income tax benefit. The adjusted net loss excluding these items was $228.5 million or ($5.95) per share for the first nine months of 2016.

Research and development expenses totaled $54.3 million for the third quarter of 2016, and $196.7 million for the first nine months of 2016, compared to $76.1 million and $193.3 million, respectively, for the comparable periods in 2015. The decrease in expenses for the third quarter is primarily due to decreased development activities for rociletinib compared to the prior year partially offset by higher expenses associated with rucaparib development programs and launch preparation. The increase in expenses for the nine-month period is primarily due to increased development activities for the rucaparib program, launch preparation and increased personnel-related expenses, partially offset by lower expenses related to decreased clinical development activities for rociletinib.

General and administrative expenses totaled $9.2 million for the third quarter of 2016, and $28.5 million for the first nine months of 2016, compared to $8.3 million and $22.3 million for the comparable periods in 2015. The increase year over year is primarily due to higher legal expense and personnel costs for employees engaged in general and administrative activities.

Clovis expects cash used in operating activities for 2016 will total approximately $276 – $286 million, and to end the year with approximately $245 – $255 million in cash, cash equivalents and available-for-sale securities. This change to cash guidance is primarily related to the recent amendment to the worldwide license agreement with Pfizer for rucaparib which allows Clovis the option to defer payment of the milestone payments payable upon U.S. Food and Drug Administration (FDA) approval of a first NDA in the US and European Medicines Authority (EMA) approval of a first Marketing Authorization Application (MAA) in EU to a date that is 18 months after the date of achievement of such milestones, in exchange for certain higher payments related to the achievement of such milestones. The Company anticipates being able to continue to fund operations into 2018 from currently available cash, cash equivalents and available-for-sale securities.

2016 Key Milestones and Objectives for Rucaparib

During the third quarter of 2016, the rucaparib NDA regulatory filing was accepted by FDA for accelerated approval and granted priority review status with a PDUFA date of February 23, 2017. The application is for rucaparib as monotherapy treatment of patients with advanced ovarian cancer with deleterious BRCA-mutated tumors previously treated with two or more chemotherapies. Tumor BRCA mutations include germline and/or somatic mutations. Rucaparib was granted Breakthrough Therapy designation by the FDA in April 2015.

Foundation Medicine, Clovis’ companion diagnostic partner, has submitted a Premarket Approval (PMA) application for its tissue-based diagnostic assay designed to identify tumor BRCA mutations, including germline and somatic mutations, with the FDA. The timing of the submission is expected to allow for regulatory approval of the companion diagnostic at substantially the same time that rucaparib could be approved.

In addition, the Company submitted an MAA for rucaparib to the European Medicines Agency for a comparable ovarian cancer treatment indication earlier this week.

In October, in support of the potential U.S. commercial launch of rucaparib, we announced the signing of a long-term manufacturing agreement with Lonza, our current manufacturer. We expect that this new agreement for a dedicated manufacturing line will provide security of supply and reduce our cost of goods over time.

Clovis has completed enrollment in the ARIEL3 Phase 3 randomized maintenance study, with data expected to be available in 2H 2017. Pending positive data, the Company intends to follow up with a supplemental NDA (sNDA) for second-line maintenance therapy in women with ovarian cancer who have responded to platinum based therapy.

At the 2016 ESMO (Free ESMO Whitepaper) Congress in early October, the primary efficacy and safety data from the NDA dataset for rucaparib were presented in an oral session, including the following highlights:

The RECIST ORR (objective response rate as assessed by the investigator, which includes complete and partial responses) in the 106 patients evaluable for efficacy was 54% (95% CI: 43.8-63.5).
Duration of response by investigator assessment in the efficacy population was 9.2 months (95% CI: 6.6-11.7 months).
The most common treatment-emergent adverse events (AEs) (all grades) reported in ≥20 percent of patients in the safety population (n=377) included nausea (77%), asthenia/fatigue (77%), vomiting (46%), anemia (44%), increased ALT/AST (41%) and constipation (40%). The most common Grade 3/4 treatment-emergent AEs reported in ≥10 percent of patients were anemia (25%), asthenia/fatigue (11%) and ALT/AST elevations (11%).
Several clinical studies, including both Clovis-sponsored and investigator-initiated trials, recently initiated or are planned to begin enrolling patients during the fourth quarter. These include the Clovis-sponsored ARIEL4 confirmatory study in advanced BRCA mutant (inclusive of germline and somatic) ovarian cancer; an investigator-sponsored study evaluating rucaparib and bevacizumab in combination as a first-line maintenance therapy for advanced ovarian cancer; the investigator-initiated RUBY study in women with breast cancer whose tumors have a somatic BRCA mutation or homologous recombination deficient (HRD) signature other than a known germline BRCA mutation; the investigator-initiated PLATFORM study in gastroesophageal cancer in the first-line maintenance setting; and the Clovis-sponsored TRITON2 (Trial of Rucaparib in Prostate Indications) study in metastatic castrate-resistant prostate cancer (mCRPC), a Phase 2 single-arm study enrolling patients with BRCA mutations and ATM mutations (both inclusive of germline and somatic) or other deleterious mutations in other homologous recombination (HR) repair genes and all patients will have progressed after receiving one line of taxane-based chemotherapy and one or two lines of androgen-receptor (AR) targeted therapy.

The Clovis-sponsored TRITON3 study, a Phase 3 comparative study in mCRPC enrolling BRCA mutant and ATM mutant (both inclusive of germline and somatic) patients who have progressed on AR-targeted therapy and who have not yet received chemotherapy in the castrate-resistant setting is planned to initiate during the first quarter of 2017. TRITON3 will compare rucaparib to physician’s choice of AR-targeted therapy or chemotherapy in these patients. Also during the first quarter of 2017, the Phase 1b combination study of Genentech’s cancer immunotherapy Tecentriq (atezolizumab; anti-PDL1) and rucaparib for the treatment of gynecological cancers, with a focus on ovarian cancer, is expected to have the first patient initiated (FPI).

About Rucaparib

Rucaparib is an oral, small molecule inhibitor of PARP1, PARP2 and PARP3 being developed for advanced ovarian cancer. Rucaparib was granted Breakthrough Therapy designation by the FDA in April 2015; and its NDA submission for the treatment of advanced ovarian cancer is currently under active review with the FDA. The MAA submission in Europe for a comparable ovarian cancer indication completed during the fourth quarter of 2016. Additionally, rucaparib is being developed as maintenance therapy in the ARIEL3 trial for patients with tumors with BRCA mutations and other DNA repair deficiencies beyond BRCA, including those with high genomic loss of heterozygosity (LOH) commonly referred to as "BRCA-like." Data from ARIEL3 are expected in 2H 2017, which is expected to be followed by the submission of a sNDA for a second line or later maintenance indication. Clovis is also exploring rucaparib in other solid tumor types with significant BRCA and BRCA-like populations, including prostate, breast and gastroesophageal cancers. Clovis holds worldwide rights for rucaparib.

On November 3, 2016 Ironwood Pharmaceuticals, Inc. (NASDAQ: IRWD), a commercial biotechnology company, reported an update on its third quarter 2016 results and recent business activities (Press release, Ironwood Pharmaceuticals, NOV 3, 2016, View Source [SID1234516300]).

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"Ironwood demonstrated outstanding third quarter performance, including a 67% increase in revenue year-over-year driven by strong growth in LINZESS demand. With the launch of ZURAMPIC, our salesforce is now bringing three products for chronic, debilitating conditions to roughly 30,000 of the highest prescribing primary care physicians in the U.S.," said Peter Hecht, chief executive officer of Ironwood. "Over the coming year, we expect continued revenue and prescription growth and a number of value-creating milestones, including three additional commercial launches and at least three Phase II data readouts from our pipeline. We remain on track to deliver positive cash flow beginning in 2018 and believe our continued execution and financial discipline will provide the opportunity for sustained revenue growth and shareholder returns."

Third Quarter 2016 and Recent Highlights

Irritable Bowel Syndrome with Constipation (IBS-C) / Chronic Idiopathic Constipation (CIC) Franchise

LINZESS. U.S. net sales, as provided by Ironwood’s U.S. collaboration partner Allergan plc, were $164.4 million in the third quarter of 2016, a 40% increase compared to the third quarter of 2015. Ironwood and Allergan share equally in brand collaboration profits or losses.
Approximately 700,000 total LINZESS prescriptions were filled in the third quarter of 2016, a 26% increase compared to the third quarter of 2015, according to IMS Health.
Net profit for the LINZESS U.S. brand collaboration, including commercial and research and development (R&D) expenses, was $81.5 million in the third quarter of 2016, a 128% increase compared to the third quarter of 2015. LINZESS commercial margin was 61% in the third quarter of 2016, compared to 44% in the third quarter of 2015.
Ironwood and Allergan expect to launch a 72 mcg dose of linaclotide in early 2017 that, if approved by the Food and Drug Administration (FDA), could increase physician prescribing of LINZESS among the estimated 35 million adult CIC patients.
Linaclotide Colonic Release. Ironwood and Allergan expect data from the Phase IIb clinical trial later this year. Linaclotide colonic release is a second-generation guanylate cyclase-C (GC-C) agonist product candidate that, if approved by the FDA, has the potential to provide better symptom improvement, including improved abdominal pain relief in adult IBS-C patients, to expand the IBS-C and CIC markets, and to extend patent protection for linaclotide to the mid-2030s.
In October 2016, Ironwood and Allergan received Paragraph IV certification notice letters regarding Abbreviated New Drug Applications (ANDAs) submitted to the FDA by generic drug manufacturers seeking approval to manufacture, use and sell generic versions of LINZESS. One of the ANDAs was submitted to the FDA by Teva Pharmaceuticals USA, Inc. (Teva). Teva contends that the U.S. patents for LINZESS listed in the FDA’s Approved Drugs Product with Therapeutic Equivalence Evaluations list, commonly known as the Orange Book, are invalid, unenforceable and/or would not be infringed by Teva’s manufacture, use or sale of a generic version of LINZESS. Ironwood and Allergan are evaluating filing patent infringement suits against such generic drug manufacturers. Filing of a patent infringement suit would trigger a 30-month stay of any approval of the subject ANDA that will not expire until 2020, unless the court earlier decides that the relevant patents are invalid, unenforceable and/or not infringed. LINZESS is currently covered by nine patents listed in the Orange Book, which expire between 2024 and 2031.
Uncontrolled Gout Franchise

ZURAMPIC. In October 2016, Ironwood’s clinical sales specialists began promoting ZURAMPIC for the treatment of hyperuricemia in patients with uncontrolled gout who are already taking a xanthine oxidase inhibitor (XOI), such as allopurinol or Uloric (febuxostat). Gout is a form of inflammatory arthritis caused by an underlying metabolic disorder, hyperuricemia – or high levels of uric acid in the blood. An estimated two million patients in the U.S. suffer from uncontrolled gout in which traditional first-line XOI treatment alone is not sufficient to achieve target serum uric acid (sUA) levels. ZURAMPIC is not recommended for the treatment of asymptomatic hyperuricemia and should not be used as monotherapy.
Lesinurad-allopurinol fixed-dose combination product. A New Drug Application (NDA) for the fixed-dose combination of lesinurad and allopurinol was submitted in October 2016 for review by the FDA. If approved, Ironwood expects to launch the fixed-dose combination product by late 2017.
Refractory Gastroesophageal Reflux Disease (rGERD) Franchise

IW-3718. Ironwood continues to enroll patients in a dose-ranging Phase IIb clinical trial of IW-3718, a wholly-owned asset being studied as a potential treatment of rGERD. IW-3718 is a novel, investigational gastric retentive formulation of a bile acid sequestrant designed to work with a proton pump inhibitor (PPI) to reduce the detrimental effects of bile and acid on the esophagus. An estimated 10 million people in the U.S. suffer from rGERD and continue to experience heartburn symptoms despite treatment with PPIs.
Vascular and Fibrotic Franchise

IW-1973. Ironwood initiated a Phase IIa open-label, placebo-controlled study in patients with Type 2 diabetes and hypertension. This study is designed to explore the tolerability, pharmacokinetic and pharmacodynamic effects of IW-1973 across multiple doses, as well as to explore its effects on biomarkers. Data from this study are expected in the first quarter of 2017.
IW-1701. Data from the IW-1701 Phase Ib multiple ascending dose study are expected by year-end. Ironwood initiated a Phase IIa randomized, double-blind, placebo-controlled single-dose study of IW-1701 designed to evaluate its safety, tolerability, pharmacokinetics and pharmacodynamics in patients with Type II achalasia. Data from this study are expected in 2017.
Global Collaborations and Partnerships

Linaclotide is currently under review by the Pharmaceuticals and Medical Devices Agency (PMDA) in Japan for potential approval for the treatment of adult patients with IBS-C. Under the terms of Ironwood’s license agreement with Astellas Pharma Inc., Ironwood will earn a $15 million development milestone payment upon approval of linaclotide by the PMDA.
Astellas continues to enroll patients in the Phase III clinical trial of linaclotide in Japan for adults with chronic constipation.
Ironwood continues co-promoting Allergan’s VIBERZI (eluxadoline) in the U.S. for adults suffering from IBS with diarrhea.
Ironwood and Exact Sciences Corp. terminated their agreement for the U.S. co-promotion of Cologuard, a noninvasive stool DNA screening test for colorectal cancer.
Corporate and Financials

Collaborative Arrangements Revenue
Collaborative arrangements revenue was $66.1 million in the third quarter of 2016, compared to $39.6 million in the third quarter of 2015. Included in collaborative arrangements revenue was $60.0 million associated with Ironwood’s share of the net profits from the sales of LINZESS in the U.S., up from $34.8 million in the third quarter of 2015.
Operating Expenses
Operating expenses were $94.4 million in the third quarter of 2016, compared to $65.8 million in the third quarter of 2015. Operating expenses in the third quarter of 2016 consisted of $37.5 million in R&D expenses and $45.0 million in selling, general and administrative (SG&A) expenses, as well as $3.2 million in acquired intangible asset amortization expenses and an $8.7 million loss on fair value remeasurement of contingent consideration resulting from Ironwood’s U.S. licensing agreement with AstraZeneca for the exclusive rights to all products containing lesinurad.
Other Expense
Interest Expense. Net interest expense was $9.5 million in the third quarter of 2016, in connection with the $175 million Linaclotide PhaRMA 11% Note debt financing executed in January 2013 and the approximately $336 million convertible debt financing executed in June 2015 and due in 2022. Interest expense recorded in the third quarter of 2016 includes $6.0 million in cash expense and $3.8 million in non-cash expense. Both the cash and non-cash components of the 2022 convertible notes are recorded quarterly.
In September 2016, Ironwood closed a $150 million debt refinancing with an annual interest rate of 8.375%. The transaction is expected to fund on January 5, 2017, with the net proceeds from this transaction being used to redeem the remaining principal balance of the existing PhaRMA Notes.
Gain/Loss on Derivatives. Ironwood records a gain/loss on derivatives related to the change in fair value of the convertible note hedges and note hedge warrants issued in connection with the convertible debt financing in June 2015. A gain on derivatives of $4.5 million was recorded in the third quarter of 2016.
Net Loss
GAAP net loss was $33.2 million, or $0.23 per share, in the third quarter of 2016, compared to $47.4 million, or $0.33 per share, in the third quarter of 2015.
Non-GAAP net loss was $25.9 million, or $0.18 per share, in the third quarter of 2016, compared to $36.1 million, or $0.25 per share, in the third quarter of 2015. Non-GAAP net loss excludes the impact of mark-to-market adjustments on the derivatives related to Ironwood’s convertible debt, as well as the amortization of acquired intangible assets and the fair value remeasurement of contingent consideration related to Ironwood’s U.S. lesinurad license. See Non-GAAP Financial Measures below.
Cash Position
Ironwood ended the third quarter of 2016 with $320 million of cash, cash equivalents and available-for-sale securities, a decrease of $5 million from the end of the second quarter of 2016. Cash used in operations was $645,000 in the third quarter of 2016.
2016 Financial Guidance
Ironwood now expects to use less than $50 million in cash for operations in 2016, down from previous guidance of less than $70 million.
Ironwood continues to expect:
R&D expenses to be within a range of $140 million to $150 million,
SG&A expenses to be within a range of $170 million to $180 million,
amortization of intangible assets to be $8 million (not applicable prior to the U.S. lesinurad license), and
combined Allergan and Ironwood total 2016 LINZESS marketing and sales expenses to be in the mid to higher end of $230 million to $260 million.
Non-GAAP Financial Measures

The company presents non-GAAP net loss and non-GAAP net loss per share to exclude the impact of net gains and losses on the derivatives related to our convertible notes that are required to be marked-to-market, as well as the amortization of acquired intangible assets and the fair value remeasurement of contingent consideration associated with Ironwood’s U.S. licensing agreement with AstraZeneca for the exclusive rights to all products containing lesinurad. The derivative gains and losses may be highly variable, difficult to predict and of a size that could have a substantial impact on the company’s reported results of operations in any given period. The acquired intangible assets are valued at the time of acquisition and are amortized over their estimated economic useful life, and management believes excluding the amortization of acquired intangible assets provides more consistency with the treatment of internally developed intangible assets for which research and development costs were previously expensed. The contingent consideration balance is remeasured each reporting period, and the resulting change in fair value impacts the company’s reported results of operations. The changes in the fair value remeasurement of contingent consideration do not correlate to the company’s actual cash payment obligations in the relevant period. The company has presented non-GAAP net loss and non-GAAP net loss per share in prior calendar quarters, and this is the first calendar quarter in which the company has contingent consideration that is excluded from such non-GAAP financial measures. Management believes this non-GAAP information is useful for investors, taken in conjunction with Ironwood’s GAAP financial statements, because it provides greater transparency and period-over-period comparability with respect to Ironwood’s operating performance. These measures are also used by management to assess the performance of the business. Investors should consider these non-GAAP measures only as a supplement to, not as a substitute for or as superior to, measures of financial performance prepared in accordance with GAAP. In addition, these non-GAAP financial measures are unlikely to be comparable with non-GAAP information provided by other companies. For a reconciliation of these non-GAAP financial measures to the most comparable GAAP measures, please refer to the table at the end of this press release.