On May 5, 2016 AMRI (NASDAQ: AMRI) reported that it has signed a definitive agreement to acquire all outstanding shares of Prime European Therapeuticals S.p.A., also known as "Euticals", in a transaction valued at approximately $358 million (EUR 315 million), consisting of shares of AMRI common stock, cash, and a seller note (Filing, 8-K, Albany Molecular Research, MAY 6, 2016, View Source [SID:1234512067]).

Euticals is a privately-held company headquartered in Lodi, Italy, specializing in custom synthesis and the manufacture of active pharmaceutical ingredients (APIs). It operates a network of API facilities primarily in Italy, Germany, U.S. and France.

"The acquisition of Euticals will provide us an established custom synthesis presence in Europe and will further build on our expertise in complex APIs, positioning AMRI as a preeminent provider of contract research, development and manufacturing services to the pharmaceutical industry," said William S. Marth, AMRI’s president and chief executive officer.

"Euticals’ expertise with niche and high barrier to entry technologies and products, including certain tetracyclines, monobactams, sterile and fermented APIs and controlled substances, will be a tremendous asset to us. Additionally, Euticals’ large base of over 400 customers will provide us with a number of new large pharma, biotech and generics partners, further extending our global reach and diversifying our revenue.

"Importantly, I am pleased that in connection with the closing of the transaction, Fernando Napolitano will be joining our Board of Directors on behalf of Lauro Cinquantesette, S.p.A (Lauro 57) and its majority investors, Clessidra Capital Partners II and Mandarin Capital Partner SCA SICAR. Clessidra’s and Mandarin’s combined expertise, deep contacts within the European pharmaceutical community and continued guidance will be invaluable to our efforts going forward. Margalit Fine, Euticals’ chief executive officer and former head of European API at Teva, will be leading Euticals’ operations as a senior executive for the combined company," Mr. Marth said.

"On behalf of Lauro 57 and its investors, we couldn’t be more pleased to be joining AMRI," said Clessidra Chief Executive Officer, Maurizio Bottinelli. "Its expertise in developing and manufacturing complex pharmaceutical products is well known and we look forward to joining forces to further expand our presence in the European community."

Strategic Benefits of the Transaction

· Significantly expands AMRI’s capabilities in custom and complex APIs

o Provides AMRI with an established European custom synthesis presence
o Expands expertise in multiple areas: sterile API, steroids, generics, fermentation, controlled substances and monobactams
o Provides an API portfolio that includes 50 active US Drug Master Files (DMFs), 17 EU Certificates of Suitability (COS) or Compliance with the European Pharmacopeia (CEP), 13 Japanese DMFs and 6 South Korean DMFs; with several APIs having filings in more than one of these areas and over two dozen other international filings

· Provides AMRI with global scale and a diverse customer and revenue base

o Euticals brings over 400 customers with no customer concentration
o With 75% of revenue outside North America, Euticals opens up many new markets for AMRI; more than half AMRI’s combined proforma revenue is expected to be ex U.S.
o Euticals brings additional portfolio diversification in generics; AMRI to leverage U.S. base to include Euticals’ strong generic portfolio

Euticals operates a highly regarded API, custom synthesis and fine chemical development and manufacturing business with 2015 revenue and EBITDA of approximately $245 million and $27 million respectively. On a stand-alone basis, Euticals’ full year 2016 revenue is forecast to be between $245 million and $255 million, with adjusted EBITDA1 of between $34 million and $38 million, implying a purchase price multiple, prior to anticipated synergies, of approximately 9.9 times 2016 adjusted EBITDA at the midpoint of the range and excluding deal related costs or purchase accounting impacts. The transaction is expected to be accretive to AMRI’s 2016 non-GAAP diluted earnings per share. AMRI expects to generate operational synergies of $13 to $15 million over the next three years. On a pro forma basis including synergies, AMRI’s full year 2017 revenue is forecast to exceed $750 million, with adjusted EBITDA margins of approximately 20%.

Transaction Details, Financing and Closing

AMRI expects to finance the transaction through the issuance of approximately 7 million shares of AMRI common stock (currently valued at $110 million, equal to approximately 19.75% of AMRI common stock); a seller note of $63 million; and the remainder in cash. Including Euticals, AMRI believes that it will have the financial strength to manage its increased debt and plans to de-lever based on a combination of EBITDA growth and/or principal re-payments.

AMRI has entered into debt financing commitments with JP Morgan and Barclays for amounts that are expected to be sufficient to provide funds necessary to consummate the transaction. In addition to the financing, the closing of the transaction is subject to customary closing conditions, including Hart-Scott-Rodino clearance in the U.S.

1EBITDA reflects IFRS with an adjustment to U.S. GAAP only for capitalization of R&D expenses

The 7 million shares of AMRI common stock (the "Shares") to be issued in connection with the transaction will be offered and sold outside the United States to Lauro 57, an eligible investor pursuant to Regulation S of the Securities Act of 1933, as amended (the "Securities Act").

The Shares have not been registered under the Securities Act, or the securities laws of any other jurisdiction, and may not be offered or sold in the United States absent registration under or an applicable exemption from such registration requirements. This press release does not constitute an offer to sell, or a solicitation of an offer to purchase, the Shares in any jurisdiction in which such offer or solicitation would be unlawful.

Nomura acted as exclusive financial advisor to AMRI in connection with this transaction and Goodwin Procter LLP and LCA Studio Legale acted as AMRI’s legal advisors. Lincoln International acted as sole financial advisor to Lauro 57, and Chiomenti Studio Legale and Debevoise & Plimpton LLP acted as Lauro 57’s legal advisors.

Use of Non-GAAP Financial Measures

This press release contains non-GAAP financial measures, such as EBITDA, which is adjusted to exclude, among other things, the impact of interest income and expense, depreciation and amortization expense, and income tax expense or benefit. We exclude these items from the non-GAAP financial measures because they are outside our normal operations. There are limitations in using non-GAAP financial measures, as they are not prepared in accordance with generally accepted accounting principles, and may be different than non-GAAP financial measures used by other companies. In particular, we believe that the inclusion of supplementary non-GAAP financial measures in this press release helps investors to gain a meaningful understanding of our core operating results and future prospects without the effect of these often-one-time charges, and is consistent with how management measures and forecasts the company’s performance, especially when comparing such results to prior periods or forecasts. Non-GAAP results also allow investors to compare the company’s operations against the financial results of other companies in the industry who similarly provide non-GAAP results. The non-GAAP financial measures included in this press release are not meant to be considered superior to or a substitute for results of operations prepared in accordance with GAAP. It is not feasible to provide reconciliation to the most comparable projected U.S. GAAP measure because the excluded items are difficult to predict and estimate and are primarily dependent on future events.

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On May 06, 2016 Myriad Genetics, Inc. (NASDAQ:MYGN), a leader in molecular diagnostics and personalized medicine, reported that results from three studies will be featured at the American Urological Association annual meeting, which will take place May 6-10 in San Diego, Calif (Press release, Myriad Genetics, MAY 6, 2016, View Source [SID:1234512009]). Poster discussions include new data for the Prolaris test in patients with low-risk prostate cancer, as well as investigational molecular diagnostic tests for renal and bladder cancer.

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"Prolaris is the leading prognostic genetic test for patients with prostate cancer and is the only such test that predicts the 10-year risk of real oncologic outcomes including death, metastases and recurrence. The evidence in favor of genetic testing is expanding, and we’re excited to present a new analysis at AUA that further confirms the strong prognostic power of Prolaris in men with low-risk localized prostate cancer," said Michael Brawer, senior vice president of Medical Affairs, Myriad Genetic Laboratories. "We also are presenting new data for our investigational renal and bladder cancer tests, which further underscore Myriad’s commitment to developing pioneering molecular diagnostic tests for other urologic diseases."

Results of the studies to be presented are described below and abstracts are now available at: www.aua2016.org/abstracts/. Follow Myriad on Twitter via @MyriadGenetics to stay informed about news and updates from the Company.

Highlighted Presentations

Title: The CCP score provides significant prognostic information in Gleason score <6 patients.
Date: Friday, May 6, 2016: 8:00—10:00 a.m. PT.
Location: Poster MP2.
Presenter: Jay Bishoff, M.D., Intermountain Urological Institute.
This meta-analysis of five studies evaluated the ability of the Prolaris test (CCP score) to predict oncologic outcomes (i.e., recurrence or death) in 440 patients with low-risk localized prostate cancer, which was defined as a Gleason score of 6 or less. The results showed that the Prolaris test is a significant predictor of oncologic outcomes in patients with low-risk disease (HR 1.5; p<0.009). Prolaris also was a better independent predictor of outcomes than traditional clinical features as measured by CAPRA (Cancer of the Prostate Risk Assessment; HR 1.27; p<0.03). When the Prolaris and CAPRA scores were assessed together, the combined clinical risk (CCR) score provided even greater predictive power (HR 1.83; p<0.0014). In this study, Prolaris was a strong predictor of the 10-year risk of oncologic outcomes in patients with localized prostate cancer and a Gleason score of 6 or less.

Title: A study to evaluate the prognostic and predictive utility of CCP and HRD assays and genetic sequencing in patients undergoing neoadjuvant chemotherapy in bladder cancer.
Date: Sunday, May 8, 2016: 1:00—3:00 p.m. PT.
Location: Poster MP49.
Presenter: Hristos Kaimakliotis, M.D., Indiana University.
This exploratory study evaluated three molecular assays to determine if they were able to predict response to neoadjuvant chemotherapy with cisplatin in patients with urothelial bladder cancer (UBC). The assays included 1) a cell cycle progression score, 2) the homologous recombination deficiency (HRD) score, and 3) genetic sequencing of a set of 80 genes associated with UBC. The results showed that RB1 mutations were associated with response to cisplatin neoadjuvant chemotherapy, and the predictive ability was improved by the addition of either the CCP or HRD scores. Additionally, HRD could be used to predict risk of disease recurrence in patients after neoadjuvant chemotherapy followed by cystectomy. If validated, these tests may help identify chemo-responsive patients.

Title: Prognostic utility of a multi-gene signature (the cell cycle proliferation score) in patients with renal cell carcinoma (RCC) after radical nephrectomy.
Date: Monday, May 9, 2016: 3:30—5:30 p.m. PT.
Location: Poster MP78.
Presenter: Adam Feldman, M.D., Massachusetts General Hospital.
The objective of this study was to assess the ability of the Myriad myPlan Renal Cancer cell cycle progression test to predict long-term oncologic outcomes in patients with surgically-resected renal cell carcinoma (RCC). Outcomes were defined as disease recurrence (local or metastatic) or disease-specific survival (DSS). Patient data were censored at five-years of follow-up. In the training cohort (N= 305), the myPlan Renal Cancer test was a significant prognostic predictor for recurrence (HR: 1.74; p = 0.02) and DSS (HR: 2.59; p< 0.001) after adjusting for clinical variables. The validation cohort (N=262) demonstrated a consistent and significant prediction of recurrence and DSS, with the strongest association being for DSS (HR: 2.2; p < 0.001) after adjusting for clinical variables. Based on these data, the myPlan Renal Cancer test appears to be a significant and independent predictor of key long-term oncologic outcomes in patients who have undergone nephrectomy for RCC, providing prognostic information beyond what is available from clinical parameters. Additional studies are underway to evaluate the utility of the score when derived from diagnostic biopsy.

About Prolaris
Prolaris is a novel 46-gene RNA-expression test that directly measures tumor cell growth characteristics for stratifying the risk of disease-specific mortality in patients with prostate cancer. Prolaris provides a quantitative measure of the RNA expression levels of genes involved in the progression of tumor growth. Low gene expression is associated with a low risk of disease-specific mortality in men who may be candidates for active surveillance and high gene expression is associated with a higher risk of disease-specific mortality in patients who may benefit from additional therapy. For more information visit: www.prolaris.com.

About myChoice HRD
Myriad’s myChoice HRD is the first homologous recombination deficiency test that can detect when a tumor has lost the ability to repair double-stranded DNA breaks, resulting in increased susceptibility to DNA-damaging drugs such as platinum drugs or PARP inhibitors. High myChoice HRD scores reflective of DNA repair deficiencies are prevalent in all breast cancer subtypes, ovarian and most other major cancers. In previously published data, Myriad showed that the myChoice HRD test predicted drug response to platinum therapy in certain patients with triple-negative breast and ovarian cancers. It is estimated that 1.8 million people in the United States and Europe who are diagnosed with cancers annually may be candidates for treatment with DNA-damaging agents. For more information visit: www.myriad.com.

About Myriad myPlan Renal Cancer
Myriad myPlan Renal Cancer is a molecular prognostic test that measures the expression levels of cell cycle progression genes to provide an accurate assessment of cancer aggressiveness in patients with renal cell carcinoma. For more information visit: View Source

On May 6, 2016 Mast Therapeutics, Inc. (NYSE MKT: MSTX), a biopharmaceutical company developing novel, clinical-stage therapies for sickle cell disease and heart failure, reported financial results for the first quarter ended March 31, 2016 (Filing, Q1, Mast Therapeutics, 2012, MAY 6, 2016, View Source [SID:1234512073]).

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"The first quarter of 2016 was a productive one for Mast. Not only did we complete enrollment in our Phase 3 EPIC study of vepoloxamer in sickle cell disease, but also we announced positive data from a Phase 2a study of AIR001 in patients with heart failure with preserved ejection fraction conducted at Mayo Clinic, and the selection of AIR001 for a double-blind, placebo-controlled Phase 2 study in approximately 100 patients with HFpEF to be conducted at premier U.S. clinical centers that make up the HFN," stated Brian M. Culley, Chief Executive Officer.

"With 388 patients, the EPIC study was the largest placebo-controlled study in sickle cell disease ever concluded and should provide many insights into the activity of vepoloxamer in this indication. Importantly, vepoloxamer has the potential to become the first and only approved therapy for shortening the duration of a sickle cell vaso-occlusive crisis and we are working diligently toward generating top-line results, which we expect to announce this quarter," continued Mr. Culley. "Meanwhile, we are advancing our two heart failure programs. Our 150-patient Phase 2 study of vepoloxamer in chronic heart failure is ongoing, with ten study sites now open, and the HFN’s 100-patient Phase 2 study of AIR001 in HFpEF is expected to begin in the third quarter of 2016."

First Quarter 2016 Operating Results

The Company’s net loss for the first quarter of 2016 was $11.2 million, or $0.06 per share (basic and diluted), compared to a net loss of $9.6 million, or $0.06 per share (basic and diluted), for the same period in 2015.

Research and development expenses for the first quarter of 2016 were $7.9 million, an increase of $1.9 million, or 30%, compared to $6.0 million for the same period in 2015. The increase was due mainly to increases of $0.9 million in external nonclinical study fees and expenses, $0.5 million in external clinical study fees and expenses, and $0.3 million in personnel expenses.

The increase in external nonclinical study fees and expenses was due primarily to increased costs related to preparation for a new drug application for vepoloxamer ($0.5 million) and research-related manufacturing for vepoloxamer ($0.5 million), offset by a decrease in research-related manufacturing for AIR001 ($0.1 million). The increase in external clinical study fees and expenses was due primarily to increased costs related to the Phase 2 study of vepoloxamer in heart failure ($0.5 million) and the EPIC study ($0.3 million), offset by a decrease

related to discontinuation of a Phase 2 study of vepoloxamer in acute limb ischemia, which the Company began to wind-down in the third quarter of 2015 ($0.3 million).

Selling, general and administrative (SG&A) expenses for the first quarter of 2016 were $2.8 million, a decrease of $0.8 million, or 21%, compared to $3.6 million for the same period in 2015. SG&A expenses for the first quarter of 2015 included $0.4 million of severance expenses and $0.3 million of share-based compensation resulting from the termination of employment of the Company’s former president and chief operating officer in February 2015 and the acceleration of stock option vesting pursuant to the terms of his option agreements.

Interest expense for the first quarter of 2016 was $0.5 million, which was related to the Company’s debt facility. There was no interest expense for the first quarter of 2015.

On May 5, 2016 Clovis Oncology, Inc. (NASDAQ:CLVS) reported financial results for its quarter ended March 31, 2016, and provided an update on the Company’s clinical development programs and regulatory outlook for the remainder of 2016 (Press release, Clovis Oncology, MAY 5, 2016, View Source;p=RssLanding&cat=news&id=2165717 [SID:1234511978]).

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"We are very disappointed in the outcome for rociletinib, as there is a need for additional options for this difficult to treat disease," said Patrick J. Mahaffy, President and CEO of Clovis Oncology. "Our focus moving forward is clear: prioritize rucaparib development activity and prepare for its potential U.S. launch, and manage our existing cash into 2018."

First Quarter 2016 Financial Results

Clovis had $445.5 million in cash, cash equivalents and available-for-sale securities as of March 31, 2016. Cash used in operating activities was $83.7 million for the first quarter of 2016, compared with $48.4 million in the first quarter of 2015. Clovis had approximately 38.4 million outstanding shares of common stock as of March 31, 2016.

Clovis reported a net loss for the first quarter of 2016 of $83.4 million, or ($2.17) per share, compared to a net loss of $63.1 million, or ($1.86) per share, for the first quarter of 2015. Net loss for the first quarter of 2016 included share-based compensation expense of $11.0 million compared to $8.7 million for the first quarter of 2015.

Research and development expenses totaled $74.6 million for the first quarter of 2016, compared to $56.8 million for the first quarter 2015. The year-over-year increase in expenses is due to the significantly expanded clinical development activities for rucaparib, increased commercial product planning costs and increased personnel-related expenses associated with the hiring of additional staff including the U.S. sales force to support the Company’s expanded activities, partially offset by lower expenses related to clinical development activities for rociletinib.

General and administrative expenses totaled $9.8 million for the first quarter of 2016, compared to $6.8 million for the first quarter 2015. The increase year over year is primarily due to higher legal expense, consulting fees and personnel costs for employees engaged in general and administrative activities.

The Company expects cash used in operating activities for 2016 will total approximately $294 – $309 million, and to end the year with approximately $220 – $235 million in cash, cash equivalents and available-for-sale securities. Clovis 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

Highlights of planned or completed objectives for each product follow:

Rucaparib

During the second quarter of 2016, Clovis commenced the submission of its rolling New Drug Application (NDA) regulatory filing to the U.S. Food and Drug Administration (FDA) for rucaparib for the monotherapy treatment of patients with advanced ovarian cancer with deleterious BRCA-mutated tumors (inclusive of both germline and somatic BRCA mutations) previously treated with multiple prior therapies. Rucaparib was granted Breakthrough Therapy designation by the FDA in April 2015. Clovis agreed with the FDA that the submission would be a rolling NDA and has filed the first component for potential accelerated approval of rucaparib in the U.S. The rolling NDA allows completed portions of an NDA to be submitted and reviewed by the FDA on an ongoing basis. The Company intends to complete the NDA submission by the end of the second quarter of 2016.

Foundation Medicine, Clovis’ companion diagnostic partner, intends to file a Premarket approval application (PMA) of its diagnostic assay designed to identify both germline and somatic BRCA 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 would be approved.

In addition, the Company intends to submit its Marketing Authorization Application (MAA) for rucaparib to the European Medicines Agency for a comparable ovarian cancer treatment indication in Q4 2016.

We have completed target enrollment in the ARIEL3 pivotal maintenance study, with data expected to be available in approximately 12 months. Pending positive data, Clovis intends to follow up with supplemental NDAs for maintenance indications in tumor BRCA mutant patients and BRCA-like patients.

Clovis recently entered into a clinical trial collaboration with Genentech, a member of the Roche Group, to evaluate a novel combination therapy of Genentech’s investigational cancer immunotherapy atezolizumab (MPDL3280A; anti-PDL1) and rucaparib for the treatment of gynecological cancers, with a focus on ovarian cancer. The Phase 1b trial is planned to begin enrolling patients during the second half of 2016.

Also during the second half of 2016, the Company intends to initiate a study of rucaparib in metastatic castrate-resistant BRCA mutant (inclusive of germline and somatic) prostate cancer patients, as well as the ARIEL4 confirmatory study in advanced ovarian cancer.

Rociletinib

In a recent meeting with the FDA, Clovis was notified that it could anticipate receiving a Complete Response Letter (CRL) for the rociletinib NDA on or before the PDUFA date of June 28, 2016. The FDA issues a CRL to indicate that their review of an application is complete and that the application is not ready for approval. In anticipation of receiving the CRL, Clovis has terminated enrollment in all ongoing sponsored clinical studies of rociletinib. Clovis will continue to provide drug to patients whose clinicians recommend continuing rociletinib therapy. In addition, Clovis has withdrawn its MAA for rociletinib previously filed with European regulatory authorities. Related to terminating enrollment in all ongoing sponsored clinical studies of rociletinib, Clovis is reducing its staff, eliminating contractor positions and delaying or eliminating planned new positions. This will result in the reduction of our staff and contractor positions by 35 percent by the end of 2016, compared to year-end 2015.

However, we intend to maintain the U.S. sales force in preparation for the potential U.S. launch of rucaparib. Clovis has determined there would be effectively no cost savings in eliminating the U.S. sales force and replacing it with a contract organization to support the potential U.S. launch of rucaparib in Q4 2016 or Q1 2017. In addition, a decision to use a contract sales organization could potentially delay the timing of the U.S. launch.

Lucitanib

Enrollment was completed during the first quarter in the ongoing Phase 2 study exploring lucitanib in patients with treatment-refractory breast cancer. In parallel with Clovis’ sponsored study, a Servier-sponsored Phase 2 study of lucitanib in patients with advanced breast cancer is underway to identify the population of patients most likely to benefit from lucitanib therapy. The Company expects to make a decision regarding the future development of lucitanib by the end of 2016.

About Rucaparib

Rucaparib is an oral, potent small molecule inhibitor of PARP1-3 being developed for the treatment of ovarian cancer, specifically in 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." Clovis is also exploring rucaparib in other solid tumor types with significant BRCA and BRCA-like populations, including prostate, breast and gastroesophageal cancers. Rucaparib was granted Breakthrough Therapy designation by the U.S. FDA in April 2015. Clovis holds worldwide rights for rucaparib.

About Rociletinib

Rociletinib is an oral, mutant-selective inhibitor of epidermal growth factor receptor (EGFR). Rociletinib targets the activating mutations of EGFR (L858R and Del19), while also inhibiting the dominant acquired resistance mutation, T790M. Clovis holds worldwide rights for rociletinib.

About Lucitanib

Lucitanib is an oral, potent inhibitor of the tyrosine kinase activity of vascular endothelial growth factor receptors 1 through 3 (VEGFR1-3), platelet-derived growth factor receptors alpha and beta (PDGFRα-β) and fibroblast growth factor receptors 1 through 3 (FGFR1-3). Clovis, which holds exclusive U.S. and Japanese rights, is collaborating with its development partner Les Laboratoires Servier (Servier) on the global clinical development of lucitanib outside of China, initially targeting advanced breast cancer.

On May 05, 2016 (QLT Inc. (NASDAQ:QLTI) (TSX:QLT) ("QLT" or the "Company") reported financial results today for the first quarter ended March 31, 2016 (Press release, QLT, MAY 5, 2016, View Source;p=RssLanding&cat=news&id=2165383 [SID:1234512045]). Unless otherwise specified, all amounts are reported in U.S. dollars and in accordance with U.S. GAAP.

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Synthetic Retinoid Program Update

On April 22, 2016, QLT announced that it had completed enrollment and collection of data from its retrospective, uncontrolled, multicenter Natural History Study in subjects with Inherited Retinal Disease (IRD) in Retinitis Pigmentosa and Leber Congenital Amaurosis patients due to underlying RPE65 or LRAT gene mutations. As QLT expected, the preliminary analysis of the study data suggests that IRD subjects, without therapeutic intervention, demonstrate a continuing decline in visual field and eventually visual acuity over time. Given these results, the Company is in the process of finalizing its data analysis and plans to hold discussions with select national European agencies in the second quarter of 2016. The results of this study are expected to provide important data to support the ongoing development of QLT091001 and planned future submissions for regulatory approval in Europe and the U.S., including the potential filing of a marketing authorization application (MAA) with the European Medicines Agency (EMA) for conditional approval in the second half of 2016.

QLT continues to advance toward initiating a pivotal Phase III, multi-center, placebo-controlled, double-masked clinical study for QLT091001 in this indication in the third quarter of 2016. The pivotal trial is expected to enroll 48 patients at approximately 12 sites in the EU, U.S. and Canada.

2016 FIRST QUARTER FINANCIAL RESULTS

Operating Expenses/Income

During the first quarter of 2016, research and development ("R&D") expenditures were $3.0 million compared to $2.2 million for the same quarter in 2015. The net $0.8 million (36%) increase was primarily due to higher costs incurred in 2016 related to our ongoing preparatory activities for our QLT091001 pivotal trial and our natural history study. These cost increases were partially offset by lower salary and overhead costs resulting from (i) the 2015 transfer and outsourcing of our bio-analytical functions and laboratories to an external contract research organization and (ii) the foreign exchange impact of the weakened Canadian dollar. In addition, no stock compensation expense was recorded during the period due to the accelerated vesting of all outstanding stock options in June 2015.

During the first quarter of 2016, selling, general and administrative ("SG&A"), expenditures were $6.0 million compared to $3.6 million for the same quarter in 2015. The $2.4 million (66%) increase in SG&A expense was primarily due to a $4.0 million advisory fee paid to our advisors, Greenhill & Co, LLC. ("Greenhill"), on February 5, 2016, which was partially offset by a $0.9 million decrease in general strategic consulting and advisory fees.

Excluding the impact of these consulting and advisory fees, SG&A expenses decreased by $0.7 million. The $0.7 million (41%) decrease in SG&A expense was primarily due to a decrease in directors’ fees, general operating costs that were affected by the foreign exchange impact of the weakened Canadian dollar, downsizing of our lease space, and the absence of stock compensation expense for the same reasons described above.

Other Expenses/Income

On February 5, 2016, QLT completed a $45.0 million investment in Aralez Pharmaceuticals, Inc. ("Aralez"). In exchange, QLT received 7,200,000 Aralez common shares at US $6.25 per common share.

On April 5, 2016, QLT completed a special distribution of these Aralez shares, which was payable, at the election of each shareholder, in either Aralez shares or cash, subject to proration (the "Aralez Distribution"). The cash portion of the Aralez Distribution was subject a maximum limit of $15.0 million, which was funded through the March 17, 2016 sale of 2,400,000 Aralez shares to certain third parties for US $6.25 per share under the terms of a share purchase agreement (the "Backstop Agreement"). On April 5, 2016, QLT distributed $15.0 million of cash and the remaining 4,799,619 Aralez shares to its shareholders, which had a fair market value of $19.3 million based on the NASDAQ quoted closing price of Aralez’s shares on April 5, 2016.

On March 31, 2016, QLT recognized a $13.0 million loss related to the 4,800,000 Aralez shares that were held by the Company at period end for the April 5, 2016 Aralez Distribution. The $13.0 million loss represents the change in value from the acquisition date to March 31, 2016.

Operating Loss and Net Loss per Share

The operating loss for the first quarter of 2016 was $8.9 million, compared to $6.0 million for the same period in 2015. The net $2.9 million increase in our operating loss was primarily due to the strategic consulting and advisory fees described above. Excluding the impact of these fees, the adjusted operating loss for the first quarter of 2016 was $4.1 million, which is consistent with the adjusted operating loss for the same quarter in 2015.

Net loss per common share was $0.41 in the first quarter of 2016, compared to $0.12 for the same quarter in 2015. The decrease in loss per share was primarily due to a $13.0 million fair value loss related to the 4,800,000 Aralez shares held at period end and the strategic consulting and advisory fees described above.

Cash and Cash Equivalents

As at March 31, 2016, the Company’s consolidated cash and cash equivalents were $102.9 million compared to $141.8 million at December 31, 2015. The $38.9 million decrease was primarily due to the $45.0 million Aralez Investment, $4.5 million of strategic consulting and advisory fees and cash used in operating activities during the period. These cash decreases were partially offset by the $15.0 million of cash received on March 17, 2016 pursuant to the terms of the Backstop Agreement to fund the Aralez Distribution on April 5, 2016.

Passive Foreign Investment Company

The Company believes that it was classified as a Passive Foreign Investment Company ("PFIC") for 2008 through 2015, and that it may be classified as a PFIC in 2016, which could have adverse tax consequences for U.S. shareholders. Please refer to our 2015 Annual Report on Form 10-K for additional information.

QLT Inc. – Financial Highlights
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
(In thousands of U.S. dollars except share and per share information)
Three months ended
March 31,
2016 2015

Expenses
Research and development $ 2,990 $ 2,208
Selling, general and administrative 5,898 3,619
Depreciation 38 188
8,926 6,015

Operating loss (8,926 ) (6,015 )
Other (expense) income
Net foreign exchange (losses) gains (77 ) 98
Interest income 75 32
Fair value loss on investment (12,960 ) -
Other - (2 )
(12,962 ) 128

Loss before income taxes (21,888 ) (5,887 )
Provision for income taxes (6 ) (9 )
Net loss and comprehensive loss $ (21,894 ) $ (5,896 )

Basic and diluted net loss per common share
Net loss per common share $ (0.41 ) $ (0.12 )

Weighted average number of common shares outstanding (thousands)
Basic and diluted 52,829 51,237

CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands of U.S. dollars) March 31, 2016 December 31, 2015
ASSETS
Current assets
Cash and cash equivalents (1) $ 102,856 $ 141,824
Investment (2) 17,040 -
Accounts receivable, net of allowances for doubtful accounts 321 287
Income taxes receivable 14 14
Prepaid and other 725 611
Total current assets 120,956 142,736

Accounts receivable 2,000 2,000
Property, plant and equipment 461 430
Total assets $ 123,417 $ 145,166

LIABILITIES
Current liabilities
Accounts payable $ 2,969 $ 1,656
Accrued liabilities 632 1,827
Total current liabilities 3,601 3,483
Uncertain tax position liabilities 369 342
Total liabilities 3,970 3,825

SHAREHOLDERS’ EQUITY
Share capital
Authorized
500,000,000 common shares without par value
5,000,000 first preference shares without par value, issuable in series
Issued and outstanding common shares $ 475,333 $ 475,333
March 31, 2016 – 52,829,398 shares
December 31, 2015 – 52,829,398 shares
Additional paid-in capital 97,377 97,377
Accumulated deficit (556,232 ) (534,338 )
Accumulated other comprehensive income 102,969 102,969
Total shareholders’ equity 119,447 141,341
Total shareholders’ equity and liabilities $ 123,417 $ 145,166

Footnotes:

1) Cash and cash equivalents as at March 31, 2016 includes $15.0 million of cash which was subsequently distributed to
QLT’s shareholders on April 5, 2016 as part of the Aralez Distribution.

2) Reflects the value of 4,800,000 Aralez shares based on the March 31, 2016 US $3.55 closing price of Aralez’s common
shares. These shares were held by QLT on March 31, 2016 and subsequently distributed to QLT’s shareholders on
April 5, 2016 as part of the Aralez Distribution.