On February 27, 2018 Supernus Pharmaceuticals, Inc. (NASDAQ:SUPN), a specialty pharmaceutical company focused on developing and commercializing products for the treatment of central nervous system (CNS) diseases, reported record financial results for the fourth quarter and full year 2017 and associated Company developments (Press release, Supernus, FEB 27, 2018, View Source [SID1234524264]).

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Commercial Update

Fourth quarter 2017 product prescriptions for Trokendi XR and Oxtellar XR, as reported by IQVIA (formerly IMS), totaled 198,715, a 47.3% increase over the fourth quarter of 2016. Full year 2017 product prescriptions for Trokendi XR and Oxtellar XR, as reported by IQVIA, totaled 672,709, a 33.8% increase over full year 2016.

Prescriptions

Q4 2017 Q4 2016 Change % FY 2017 FY 2016 Change %
Trokendi XR 162,208 101,869 59.2% 533,541 378,584 40.9%
Oxtellar XR 36,507 33,081 10.4% 139,168 124,270 12.0%
Total 198,715 134,950 47.3% 672,709 502,854 33.8%

Source: IQVIA

Net product sales for the fourth quarter of 2017 were $86.3 million, a 41.2% increase over $61.1 million in the same period in the prior year. Net product sales for full year 2017 were $294.1 million, a 40.0% increase over $210.1 million in 2016.

Net Product Sales ($millions)

Q4 2017 Q4 2016 Change % FY 2017 FY 2016 Change %
Trokendi XR $69.1 $46.7 48.0% $226.5 $158.4 43.0%
Oxtellar XR $17.2 $14.4 19.4% $67.6 $51.7 30.8%
Total $86.3 $61.1 41.2% $294.1 $210.1 40.0%

"The strong financial results achieved in the fourth quarter and full year of 2017 reflect the successful launch of Trokendi XR in migraine, as well as continued double digit growth by Oxtellar XR," said Jack Khattar, President and CEO of Supernus Pharmaceuticals. "These results substantiate the value our products provide to patients and the impressive execution of our commercial organization."

Progress of Product Pipeline

Overall enrollment in the four Phase III trials for SPN-812, a novel non-stimulant for the treatment of ADHD, is approximately 38% complete. The program consists of four three-arm, placebo-controlled trials: two pediatric trials and two adolescent trials. The Company expects to continue enrollment through mid-2018 and to have data from this Phase III program available by the first quarter of 2019.

Enrollment continues in both Phase III trials (P301 and P302) for SPN-810, currently in development for Impulsive Aggression in pediatric patients who have ADHD. Enrollment in P301 and P302 is approximately 80% and 65% complete, respectively, and is expected to continue through mid-2018, with data from the trials anticipated by the first quarter of 2019. In addition, a Phase III trial for SPN-810 treating Impulsive Aggression in adolescents who have ADHD is anticipated to start mid-2018. This adolescent trial is not expected to materially affect the overall timing of the regulatory submission process for SPN-810.

Regarding Oxtellar XR, the investigator-sponsored trial in bipolar disorder is expected to complete enrollment by year end 2018.

"Our strategy in 2018 is to advance SPN-810 and SPN-812 through Phase III clinical development, moving us closer to our goal of delivering from our current pipeline two novel products, both addressing billion-dollar market opportunities," said Jack Khattar. "In addition, we remain focused on progressing Oxtellar XR as a potential therapy for bipolar disorder, another clinically important and significant commercial opportunity for Supernus."

Operating Expenses

Research and development expenses in the fourth quarter of 2017 were $16.2 million, as compared to $13.3 million in the same quarter last year, and, for the full year 2017, $49.6 million, as compared to $42.8 million for 2016. These increases were due primarily to the initiation of the four Phase III clinical trials for SPN-812 in the second half of 2017.

Selling, general and administrative expenses in the fourth quarter of 2017 were $33.8 million, as compared to $29.1 million in the same quarter last year, and, for the full year 2017, $137.9 million as compared to $106.0 million in 2016. The increases for both periods were due primarily to the expansion of the salesforce by 40 salespeople, which was fully deployed in the fourth quarter of 2017, the development and production of promotional materials and marketing programs associated with the launch of the migraine indication for Trokendi XR, and an increase in share-based compensation expense.

Operating Earnings and Earnings Per Share

Operating earnings in the fourth quarter of 2017 were $34.3 million, a 110.4% increase over $16.3 million in the same period the prior year. Operating earnings in full year 2017 were $99.5 million, an 83.6% increase over $54.2 million in 2016. The improvement in operating earnings in both periods was primarily due to increased net product sales.

Net earnings (GAAP) in the fourth quarter of 2017 was $13.7 million, as compared to $14.3 million in the same period last year. Net earnings (GAAP) were $57.3 million in 2017, as compared to $91.2 million in 2016. The decrease was due primarily to the increase in research and development and selling, general and administrative spending, the increase in income tax expense as a result of the elimination of the valuation allowance against deferred tax assets in 2016, and the impact of the Tax Cuts and Jobs Act (Tax Act) in 2017.

Full year 2017 net earnings would have increased by 90.3% to $67.0 million, compared to $35.2 million in 2016, if net earnings were adjusted to eliminate the one-time favorable impact of releasing the valuation allowance on deferred tax assets in 2016, and eliminating the one-time unfavorable impact related to the passage of the Tax Act in 2017. (See reconciliation of GAAP net earnings to non-GAAP net earnings in the table at the end of this release).

Diluted earnings per share (GAAP) were $1.08 in 2017, compared to $1.76 in 2016. Adjusting for the aforementioned tax effects in 2016 and 2017, diluted earnings per share in 2017 would have increased by 85.3% to $1.26, compared to $0.68 in 2016. (See reconciliation of GAAP diluted EPS to non-GAAP diluted EPS in the table at the end of this release).

Weighted-average diluted common shares outstanding were approximately 53.5 million and 53.3 million in the fourth quarter and full year of 2017, respectively, as compared to approximately 52.0 million and 51.7 million in each of the respective prior year periods.

As of December 31, 2017, the Company had $273.7 million in cash, cash equivalents, marketable securities, and long term marketable securities, a $108.2 million increase over $165.5 million at December 31, 2016.

Financial Guidance

For full year 2018, the Company estimates net product sales, research and development expenses, operating earnings, and an effective tax rate as set forth below:

Net product sales in the range of $375 million to $400 million.
Research and development expenses of approximately $80 million.
Operating earnings in the range of $125 million to $135 million, including approximately $7 million of licensing and non-cash royalty revenue.
Effective tax rate of approximately 23% to 25%.

Conference Call Details

The Company will hold a conference call hosted by Jack Khattar, President and Chief Executive Officer, and Greg Patrick, Vice President and Chief Financial Officer, to discuss these results at 9:00 a.m. Eastern Time, on Wednesday, February 28, 2018. An accompanying webcast also will be provided.

Please refer to the information below for conference call dial-in information and webcast registration. Callers should dial in approximately 10 minutes prior to the start of the call.

Conference dial-in: (877) 288-1043
International dial-in: (970) 315-0267
Conference ID: 9385269
Conference Call Name: Supernus Pharmaceuticals Fourth Quarter and Full Year 2017 Earnings Conference Call

Following the live call, a replay will be available on the Company’s website, www.supernus.com, under "Investor Relations".

Acceleron Pharma has filed a 10-K – Annual report [Section 13 and 15(d), not S-K Item 405] with the U.S. Securities and Exchange Commission (Filing, 10-K, Acceleron Pharma, 2018, FEB 27, 2018, View Source [SID1234524200]).

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On February 27, 2018 MacroGenics, Inc. (NASDAQ:MGNX), a clinical-stage biopharmaceutical company focused on discovering and developing innovative monoclonal antibody-based therapeutics for the treatment of cancer, reported a corporate progress update and financial results for the year ended December 31, 2017 (Press release, MacroGenics, FEB 27, 2018, View Source [SID1234524243]).

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"We have had multiple advances in our portfolio of product candidates recently," said Scott Koenig, M.D., Ph.D., President and CEO of MacroGenics. "In addition to margetuximab passing an interim futility analysis for the SOPHIA Phase 3 metastatic breast cancer study, a combination of margetuximab with an anti-PD-1 agent has shown encouraging activity in the treatment of gastric cancer patients in a Phase 2 study. Furthermore, we continue to enroll relapsed/refractory acute myeloid leukemia (AML) patients in the flotetuzumab dose expansion study following the promising results that were presented at recent medical conferences. As we continue to advance these and our other candidates, we look forward to presenting additional data in 2018 and defining future development strategies across our portfolio."

Key Pipeline Updates

Margetuximab. Recent highlights related to the Company’s Fc-optimized monoclonal antibody that targets the human epidermal growth factor receptor 2, or HER2, include:

Phase 3 Metastatic Breast Cancer Study. The pivotal SOPHIA study is evaluating the efficacy of margetuximab plus chemotherapy compared to trastuzumab plus chemotherapy in approximately 530 relapsed/refractory HER2-positive metastatic breast cancer patients. In January 2018, the Company announced the completion of a pre-planned interim futility analysis with the recommendation of an independent data safety monitoring committee to continue SOPHIA as planned without modification. This analysis was based on a pre-specified assessment of progression-free survival as determined by independent central review. The Company also announced that the U.S. FDA had granted Fast Track designation for the investigation of margetuximab for treatment of patients with metastatic or locally advanced HER2 positive breast cancer who have previously been treated with anti-HER2-targeted therapy. MacroGenics remains on track to complete enrollment of the study by the end of 2018.
Phase 2 Gastric Cancer Study. In January 2018, MacroGenics presented interim clinical data from a Phase 2 study of margetuximab plus an anti-PD-1 agent in patients with gastric and gastroesophageal junction (GEJ) cancer. These results included encouraging tolerability, a 32% objective response rate and median progression-free survival of 5.5 months in a subpopulation of 25 patients with gastric cancer. Based on these results, MacroGenics is expanding the study by enrolling 25 additional gastric cancer patients and will continue to evaluate biomarkers to determine the patients who are most likely to benefit from margetuximab plus anti-PD-1 therapy.

Flotetuzumab. Recent highlights of the Company’s bispecific, humanized DART molecule that recognizes both CD123 and CD3, include:

Monotherapy Study. Updated data from an ongoing dose expansion study of flotetuzumab in patients with AML and myelodysplastic syndrome (MDS) were presented at the Annual American Society of Hematology (ASH) (Free ASH Whitepaper) Meeting in December 2017. Consistent with previously disclosed earlier dose escalation data, flotetuzumab demonstrated acceptable tolerability as well as evidence of anti-leukemic activity. MacroGenics continues to enroll the AML and MDS dose-expansion cohorts and anticipates presenting updated clinical data in 2018. The Company’s collaborator, Servier, has development and commercialization rights outside North America, Japan, Korea and India for flotetuzumab, also known as S80880.
Planned Combination Study with anti-PD-1. At the Annual ASH (Free ASH Whitepaper) Meeting in December 2017, MacroGenics presented data supporting the rationale for using checkpoint blockade as an approach to potentially enhance the anti-leukemic activity of flotetuzumab. MacroGenics intends to initiate a combination study with MGA012, an anti-PD-1 monoclonal antibody (mAb), by mid-2018.

Other Pipeline Assets Update

Additional programs that the Company is advancing include the following:

PD-1-Directed Immuno-Oncology Franchise. MacroGenics is advancing multiple PD-1-directed programs to enable both a broad set of combination opportunities across the Company’s portfolio and provide further differentiation from existing PD-1-based treatment options. These programs include:

MGA012. MGA012 is a humanized, proprietary anti-PD-1 monoclonal antibody being developed for use as monotherapy as well as in combination with other potential cancer therapeutics. MGA012 was licensed to Incyte Corporation in 2017 under a global collaboration and license agreement. Patients are being enrolled across multiple dose expansion cohorts in a Phase 1 study.
MGD013. MacroGenics designed a DART molecule, MGD013, to provide co-blockade of two immune checkpoint molecules expressed on T cells, PD-1 and LAG-3, for the potential treatment of a range of solid tumors and hematological malignancies. MGD013 is currently being evaluated in a Phase 1 dose escalation study. MacroGenics expects to establish the dose and schedule for MGD013 administration as well as initiate dose expansion cohorts in 2018.
MGD019. This DART molecule is designed to provide co-blockade of both PD-1 and CTLA-4 on T cells. The Company is completing Investigational New Drug (IND)-enabling studies and anticipates submitting the IND application for MGD019 in 2018.

B7-H3 Franchise. MacroGenics is developing a portfolio of therapeutics that target B7-H3, a member of the B7 family of molecules involved in immune regulation. The Company is advancing multiple programs that target B7-H3 through complementary mechanisms of action that take advantage of this antigen’s broad expression across multiple solid tumor types. These molecules include:

Enoblituzumab: The Company continues to recruit patients with various solid tumors in an ongoing study of this Fc-optimized monoclonal antibody that targets B7-H3, in combination with an anti-PD-1 mAb. The Company expects to present clinical data from this study in 2018.
MGD009: This DART molecule targeting B7-H3 and CD3 is being evaluated in a Phase 1 study across multiple solid tumor types. The Company expects to establish the dose and schedule for MGD009 administration as well as initiate monotherapy dose expansion cohorts in 2018. In addition, a combination study of MGD009 and MGA012 was recently initiated.
MGC018: The Company is completing IND-enabling activities to support submission of an IND application for this anti-B7-H3 antibody drug conjugate (ADC) in 2018.

Additional DART Clinical Programs. Additional DART molecules in Phase 1 clinical development being led by MacroGenics include the following:

MGD007. The Company is completing a monotherapy study of MGD007, a DART molecule that recognizes gpA33 and CD3, and anticipates commencing a combination study with MGA012 in 2018.
MGD014. MacroGenics’ first DART molecule designed to target an infectious agent, MGD014 recognizes the envelope protein of HIV-infected cells (Env) and the T cells’ CD3 component, to redirect the immune system’s T cells to kill HIV-infected cells. The Company expects to commence the Phase 1 study in 2018.

Corporate Update

Incyte Collaboration. In October 2017, MacroGenics announced that it had entered into a global collaboration and license agreement with Incyte. The Company received an upfront payment of $150 million upon closing in December 2017 and is eligible to receive milestones and royalties on any future sales of MGA012. MacroGenics retains the right to develop its own pipeline assets in combination with MGA012, with Incyte commercializing MGA012 and MacroGenics commercializing its combinatorial asset(s), if any such potential combinations are approved. In addition, MacroGenics retains the right to manufacture a portion of both companies’ global clinical and commercial supply needs of MGA012.
Roche Collaboration. In January 2018, MacroGenics announced that it had entered into a research collaboration and license agreement with F. Hoffmann-La Roche Ltd and Hoffmann-La Roche Inc. ("Roche") to jointly discover and develop novel bispecific molecules to undisclosed targets. MacroGenics received an upfront payment of $10 million from Roche in January 2018 and is eligible to receive potential milestone payments and royalties on future sales.
GMP Manufacturing Suite Build-out: The Company began the expansion of its manufacturing capacity in early 2017 by commencing the build-out of a GMP suite in its headquarters building in Rockville, Maryland to support larger-scale clinical and commercial manufacturing. MacroGenics expects this manufacturing suite to be fully operational in 2018.
Dr. Jay Siegel Added to Board. In November 2017, MacroGenics announced the appointment of Jay Siegel, M.D., former Chief Biotechnology Officer and Head of Scientific Strategy and Policy at Johnson & Johnson, to its Board of Directors.

2017 Financial Results and Cash Runway Guidance

Cash Position: Cash, cash equivalents and marketable securities as of December 31, 2017, were $305.1 million, compared to $285.0 million as of December 31, 2016.
Revenue: Total revenue, consisting primarily of revenue from collaborative agreements, was $157.7 million for the year ended December 31, 2017, compared to $91.9 million for the year ended December 31, 2016. Revenue from collaborative agreements includes the recognition of deferred revenue from payments received in previous periods as well as payments received during the year.
R&D Expenses: Research and development expenses were $147.2 million for the year ended December 31, 2017, compared to $122.1 million for the year ended December 31, 2016. This increase was primarily due to continued or expanded enrollment across multiple clinical trials as well as IND-enabling activities related to two preclinical product candidates.
G&A Expenses: General and administrative expenses were $32.7 million for the year ended December 31, 2017, compared to $29.8 million for the year ended December 31, 2016. This increase was primarily due to labor-related costs, including stock-based compensation expense, and information technology-related expenses, partially offset by lower patent expenses.
Net Loss: Net loss was $19.6 million for the year ended December 31, 2017, compared to net loss of $58.5 million for the year ended December 31, 2016.
Shares Outstanding: Shares outstanding as of December 31, 2017 were 36,859,077.
Cash Runway Guidance: MacroGenics expects that its current cash, cash equivalents and marketable securities, combined with anticipated funding under its current strategic collaborations, should fund the Company’s operations for approximately two years.

LabCorp has filed a 10-K – Annual report [Section 13 and 15(d), not S-K Item 405] with the U.S. Securities and Exchange Commission (Filing, 10-K, LabCorp, 2018, FEB 27, 2018, View Source [SID1234524201]).

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On February 27, 2018 TESARO, Inc. (NASDAQ:TSRO), an oncology-focused biopharmaceutical company, reported operating results for fourth-quarter and full-year 2017, and provided an update on the Company’s commercial products and development programs (Press release, TESARO, FEB 27, 2018, View Source [SID1234524265]).

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"Following its April 2017 introduction in the U.S., ZEJULA quickly became the market-leading PARP inhibitor for women with ovarian cancer, and in the second half of 2017, six out of ten ovarian cancer patients who were treated with a PARP inhibitor received ZEJULA," said Lonnie Moulder, CEO of TESARO. "Additionally, we are expanding the ZEJULA franchise with our ongoing launches in Europe and a focused clinical development program that utilizes both monotherapy and combination approaches to potentially further lengthen the time women with ovarian cancer are free from disease progression. 2018 will be an exciting year for our immuno-oncology portfolio as we anticipate multiple data readouts, including response data for TSR-042, our anti-PD-1 antibody, in patients with lung cancer and MSI-high tumors, initial results from the combination of TSR-022, our anti-TIM-3 antibody and TSR-042, and initial data from TSR-033, our anti-LAG-3 antibody."

Recent Business Highlights

ZEJULA is the most utilized PARP inhibitor among patients with ovarian cancer in the U.S., with more than 4,000 patients treated in 2017.
Following European Commission (E.C.) approval in November 2017, ZEJULA now has marketing authorization in 32 countries and is the first and only PARP inhibitor authorized for marketing in Europe for the maintenance treatment of patients with recurrent ovarian cancer, regardless of BRCA mutation status. ZEJULA has been launched in Germany and is available in the UK for private pay patients.
TESARO has applied to include ZEJULA in the UK’s Cancer Drug Fund (CDF) and will continue to work closely with the National Institute for Health and Care Excellence (NICE) and the National Health Service (NHS) England on the ZEJULA CDF submission to make this important medicine available as quickly as possible for a broad population of women in the UK.
The unit demand for VARUBI oral tablets increased 43% for Q4 2017 vs. Q4 2016, as the brand continues to penetrate the U.S. oral NK-1 market.
In January 2018, the package insert for VARUBI IV was updated to include mention of new adverse events, including anaphylaxis, anaphylactic shock and other serious hypersensitivity reactions, which were reported in the post-marketing setting following its introduction in late November 2017. Given these dynamics, TESARO believes the market opportunity is more limited than previously anticipated, and will suspend distribution of VARUBI IV while continuing to support VARUBI oral tablets. The Company is considering strategic alternatives for the product, including out-licensing, and will re-direct Company resources in support of ZEJULA.
Clinical trials of niraparib are ongoing to evaluate safety and efficacy in monotherapy and combination therapy for patients with ovarian, breast, and lung cancer:
PRIMA: Phase 3 trial for patients with first-line ovarian cancer will complete enrollment in Q2 2018
QUADRA: Registrational trial for patients with ovarian cancer who have received three or more prior lines of chemotherapy; top-line data will be available in Q1 and an abstract has been submitted to ASCO (Free ASCO Whitepaper)
TOPACIO: Phase 2 trial in combination with anti-PD-1 for patients with platinum-resistant ovarian cancer (data to be presented at SGO) or triple negative breast cancer (abstracts submitted to ASCO (Free ASCO Whitepaper))
AVANOVA: Phase 2 trial in combination with bevacizumab for patients with recurrent ovarian cancer; data are anticipated to be available in 2H 2018 to support an abstract submission
Niraparib tablet: A study is ongoing to advance development of a tablet formulation of niraparib
OVARIO: Phase 2 assessing niraparib in combination with bevacizumab for patients with newly diagnosed ovarian cancer
Janssen continues to advance development of niraparib in prostate cancer in monotherapy and combination therapy.
Zai Lab is advancing the development of niraparib in patients with ovarian, breast and lung cancer in China, and Takeda has initiated development of niraparib in Japan.
TSR-042 is in a registration trial (GARNET) for MSI-high tumors.
An abstract has been submitted to AACR (Free AACR Whitepaper) that includes data from patients with lung and metastatic microsatellite instability-high (MSI-H) cancers
Data are being generated to support the use of TSR-042 in registration studies in multiple tumor types, including lung, breast and ovarian cancer
Clinical trials are ongoing to evaluate TSR-022 (anti-TIM-3 antibody) and TSR-033 (anti-LAG-3 antibody) in combination with TSR-042.
AMBER: Phase 1 trial of TSR-022 in combination with TSR-042 is enrolling three tumor specific cohorts
CITRINO: Phase 1 dose-escalation trial of TSR-033
A retrospective, exploratory analysis of the NOVA trial, presented as part of a Satellite Symposium at the International Meeting of the European Society of Gynaecological Oncology (ESGO) in November 2017 in Austria, identified body weight and baseline platelet counts as the two most significant predictors for grade 3/4 thrombocytopenia.
In November, preliminary Phase 1 data presented at the 2017 Annual Meeting of the Society for Immunotherapy of Cancer (SITC) (Free SITC Whitepaper) demonstrated TSR-022 is well tolerated across multiple dose levels, with a safety and efficacy profile expected for checkpoint inhibitors.
TESARO entered into a definitive term loan agreement for up to $500 million with Pharmakon Advisors, LP in November 2017, and drew $300 million in December 2017.

2017 Financial Results

TESARO reported total revenue for the fourth quarter of 2017 of $48.0 million, compared to $4.9 million for the same period in 2016. Revenue growth was primarily driven by the launch of ZEJULA in the U.S. in April 2017. Net loss for the fourth quarter of 2017 totaled $182.1 million, or ($3.35) per share, compared to $136.2 million, or ($2.59) per share for the same period in 2016.

Full year 2017 total revenues were $223.3 million, compared to $58.0 million for 2016. Revenue growth was primarily driven by the launch of ZEJULA in the U.S. and the upfront payment received as part of the license agreement with Takeda in the third quarter. Net loss for 2017 totaled $496.1 million, or ($9.17) per share, compared to a net loss of $374.2 million, or ($7.85) per share, for 2016.
(in thousands, except per share amounts) Three Months Ended
December 31, Twelve Months Ended
December 31,
2016
2017
2016
2017

Product revenue, net
ZEJULA - $ 43,436 - $ 108,756
VARUBI/VARUBY $ 2,330 $ 4,541 $ 5,174 $ 11,944
Total product revenue, net $ 2,330 $ 47,977 $ 5,174 $ 120,700
License, collaboration, and other revenue $ 2,591 $ 46 $ 52,844 $ 102,626
Total revenues $ 4,921 $ 48,023 $ 58,018 $ 223,326

Net loss $ (136,240 ) $ (182,065 ) $ (374,224 ) $ (496,126 )

Net loss per share, basic and diluted $ (2.59 ) $ (3.35 ) $ (7.85 ) $ (9.17 )

Product Revenue

Net product sales totaled $48.0 million for the fourth quarter of 2017, and included ZEJULA sales of $43.4 million and VARUBI/VARUBY sales of $4.5 million. This compares to net product sales of $2.3 million for the fourth quarter of 2016. The increase was primarily driven by the launch of ZEJULA in the U.S. in April 2017.

Net product sales for 2017 totaled $120.7 million and included ZEJULA sales of $108.8 million and VARUBI/Y sales of $11.9 million. For 2016, net product sales were $5.2 million.

Other Revenue

License, collaboration and other revenues for 2017 totaled $102.6 million and included the $100.0 million up-front payment received as part of the license agreement with Takeda in the third quarter. For 2016, license, collaboration, and other revenues were $52.8 million and included up-front payments received as part of the license agreements with Zai Lab and Janssen.

Operating Expenses
(in thousands) Three Months Ended
December 31, Twelve Months Ended
December 31,
2016 2017 2016 2017
Cost of sales – product $ 512 $ 30,857 $ 1,203 $ 41,137
Cost of sales – intangible asset amortization $ 464 $ 1,435 $ 1,855 $ 6,158
Research and development (R&D) $ 71,514 $ 97,832 $ 235,144 $ 308,742
Selling, general and administrative (SG&A) $ 54,526 $ 90,569 $ 158,578 $ 336,808
Acquired in-process R&D $ 9,000 $ 3,000 $ 18,940 $ 10,000

For the fourth quarter of 2017, compared to the same period in 2016:

Cost of sales associated with product sales increased to $30.9 million compared to $0.5 million, primarily due to the commercial launch of ZEJULA in the U.S., and inventory write-downs and other charges of $20.3 million related to revised expectations for future VARUBI IV revenue.

Cost of sales associated with intangible asset amortization increased to $1.4 million compared to $0.5 million primarily due to the amortization of milestones recorded upon FDA and European Commission approval of ZEJULA and first commercial sale of VARUBY in Europe.

R&D expenses increased to $97.8 million compared to $71.5 million primarily due to higher manufacturing costs associated with TSR-042 and TSR-022, the expansion of the niraparib, TSR-042 and TSR-022 clinical development programs, and increased headcount.

SG&A expenses increased to $90.6 million compared to $54.5 million primarily due to increased sales and marketing headcount, activities in support of the launches of ZEJULA and VARUBI/Y in the U.S. and Europe, and higher professional service fees.

Acquired in-process R&D expenses totaled $3.0 million compared to $9.0 million and included a milestone payment related to our immuno-oncology portfolio.

Operating expenses include total non-cash, stock-based compensation expense of $23.5 million, compared to $14.4 million.

For full-year 2017, compared to 2016:

Cost of sales associated with product sales increased to $41.1 million compared to $1.2 million primarily due to the commercial launch of ZEJULA in the U.S., and inventory write-downs and other charges related to revised expectations for future VARUBI IV revenue.

Cost of sales associated with intangible asset amortization increased to $6.2 million compared to $1.9 million primarily due to the amortization of milestones recorded upon FDA and E.C. approvals of ZEJULA and first commercial sale of VARUBY in Europe.

R&D expenses increased to $308.7 million compared to $235.1 million due to increased headcount, higher manufacturing costs associated with TSR-042 and TSR-022, the expansion of the niraparib, TSR-042 and TSR-022 clinical development programs, and the advancement of our earlier-stage immuno-oncology portfolio.

SG&A expenses increased to $336.8 million compared to $158.6 million due to increased sales and marketing headcount, activities in support of the launches of ZEJULA and VARUBI/Y in the U.S. and Europe, and higher professional service fees.

Acquired in-process R&D expenses totaled $10.0 million and included milestone payments related to our immuno-oncology portfolio, compared to $18.9 million, which included milestone payments related to ZEJULA and our immuno-oncology portfolio.

Operating expenses include total non-cash, stock-based compensation expense of $90.4 million compared to $48.5 million.

Cash and Cash Equivalents

As of December 31, 2017, TESARO had approximately $643.1 million in cash and cash equivalents and approximately 54.5 million outstanding shares of common stock.

2018 Financial Guidance

In 2018, TESARO expects:
Total Revenue, net, worldwide (FY) $310 to $345 million
ZEJULA (FY) $255 to $275 million
ZEJULA (Q1) $45 to $50 million
Other revenue, including licensing and VARUBI/Y oral (FY) $55 to $70 million
Interest expense (FY) $50 to $60 million, including non-cash interest expense of $14 million

In addition, TESARO anticipates its cash and cash equivalents balance to decline by $150 million during the first quarter. Quarterly declines in cash and cash equivalents are expected to moderate over the course of 2018, and in the fourth quarter of 2018, the decline in cash and cash equivalents balance is expected to be approximately $75 million. The Company plans to draw $200 million in 2018 from its available term loan facility. TESARO anticipates year-end 2018 cash and cash equivalents to be approximately $400 million.

Key Development Milestones

TESARO intends to achieve the following development milestones during 2018:

Ovarian Cancer Franchise:

Complete PRIMA enrollment in Q2 2018
Report TOPACIO platinum-resistant ovarian cancer data in 1H 2018
Initiate FIRST, a Phase 3 clinical trial of niraparib in combination with TSR-042 in first-line ovarian cancer, in 1H 2018
Report QUADRA data in 1H 2018 and submit sNDA in 2H 2018

Breast Cancer:

Report TOPACIO triple negative breast cancer data in 1H 2018
Publish BRAVO data in 2H 2018
Define registration path for niraparib in breast cancer in mid-2018

Lung Cancer:

Report initial data from lung cancer cohort of the GARNET trial of TSR-042 in NSCLC in 1H 2018
Initial data from Phase 2 JASPER study of niraparib in combination with an anti-PD-1 inhibitor to be available in 2H 2018

Prostate Cancer:

Janssen anticipates advancing trials of niraparib in prostate cancer to support U.S. and EU regulatory filings in 2019

Immuno-oncology Portfolio:

Complete enrollment in the MSI-high cohort of the GARNET trial to support a BLA submission to FDA in 2019
Report initial data for the AMBER trial of TSR-022 in combination with TSR-042 in 2H 2018 and define development strategy
Initiate assessment of the combination of TSR-033 plus TSR-042 in the CITRINO trial in Q2 2018 and report Phase 1 monotherapy dose-escalation data for TSR-033 in 2H 2018
Advance IND-enabling studies of PD-1/LAG-3 bi-specific (TSR-075)

Today’s Conference Call and Webcast
TESARO will host a conference call to discuss fourth quarter and full-year operating results and provide an update on its commercial products and development programs today at 4:15 P.M. Eastern time. The accompanying slide presentation and live webcast of the conference call can be accessed by visiting the TESARO website at www.tesarobio.com. The call can be accessed by dialing (877) 853-5334 (U.S. and Canada) or (970) 315-0307 (international). A replay of the webcast will be archived on the Company’s website for 30 days following the call.

About ZEJULA (Niraparib)
ZEJULA (niraparib) is a poly (ADP-ribose) polymerase (PARP) inhibitor indicated for the maintenance treatment of adult patients with recurrent epithelial ovarian, fallopian tube, or primary peritoneal cancer who are in a complete or partial response to platinum-based chemotherapy. In preclinical studies, ZEJULA concentrates in the tumor relative to plasma, delivering greater than 90% durable inhibition of PARP 1/2 and a persistent antitumor effect. Myelodysplastic Syndrome/Acute Myeloid Leukemia (MDS/AML), including some fatal cases, was reported in patients treated with ZEJULA. Discontinue ZEJULA if MDS/AML is confirmed. Hematologic adverse reactions (thrombocytopenia, anemia and neutropenia), as well as cardiovascular effects (hypertension and hypertensive crisis) have been reported in patients treated with ZEJULA. Monitor complete blood counts to detect hematologic adverse reactions, as well as to detect cardiovascular disorders, during treatment. ZEJULA can cause fetal harm and females of reproductive potential should use effective contraception. Please see full prescribing information, including additional important safety information, available at www.zejula.com.