On February 25, 2016 Medivation, Inc. (NASDAQ: MDVN) reported its financial results for the fourth quarter and year ended December 31, 2015 (Press release, Medivation, FEB 25, 2016, View Source [SID:1234509219]).

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"We are delighted with our substantial progress in 2015 on many fronts — marked by strong worldwide net sales of XTANDI (enzalutamide) capsules at the Astellas level, which grew 80 percent over 2014, as well as key developments that enhance the clinical understanding of enzalutamide, expand and diversify our late-stage pipeline, and help secure our plans to continue to meet the needs of underserved patient populations," said David Hung, M.D., founder, President and Chief Executive Officer of Medivation.

Dr. Hung added, "In 2015, several promising developments in the enzalutamide clinical development program, including positive results from two Phase 2 trials comparing enzalutamide to bicalutamide in castration-resistant prostate cancer and a Phase 2 trial in advanced triple-negative breast cancer, combined with the expansion of our clinical pipeline with our acquisition of talazoparib, provide Medivation with a platform from which to build a world-class global oncology franchise. We look forward to multiple milestones throughout 2016 as we report on our continued progress."

Key highlights in recent months:

Acquired worldwide rights to talazoparib (MDV3800), an orally-available poly ADP ribose polymerase (PARP) inhibitor, from BioMarin Pharmaceutical Inc., as announced in October 2015.

Completed collaboration to pursue the translation of a novel gene expression signature algorithm from Medivation into a companion diagnostic assay using NanoString’s nCounter Dx Analysis System, together with Astellas Pharma Inc., as announced in January 2016.

Named Marion McCourt to the role of Chief Operating Officer, whose responsibilities include oversight of several functions including commercial operations, medical affairs, manufacturing, quality and corporate efficiency, effective February 2016.
Results from Phase 2 TERRAIN trial of enzalutamide versus bicalutamide in metastatic castration-resistant prostate cancer published in Lancet Oncology.

Results from Phase 2 STRIVE trial of enzalutamide versus bicalutamide in castration-resistant prostate cancer published in the Journal of Clinical Oncology.

Supplemental New Drug Application for XTANDI in metastatic castration-resistant prostate cancer accepted for review by U.S. Food and Drug Administration (FDA).

Medivation’s non-GAAP collaboration revenue for the fourth quarter of 2015, which excludes collaboration revenue related to upfront and milestone payments, was $202.7 million compared with $133.3 million for the same period in 2014 (+52% vs. prior year) and $695.4 million for the full year 2015 compared with $389.4 million in 2014 (+79% vs. prior year).

Medivation’s non-GAAP collaboration revenue consists of two components: a) collaboration revenue related to U.S. XTANDI net sales and b) collaboration revenue related to ex-U.S. XTANDI net sales.

a) Medivation’s collaboration revenue related to U.S. net sales of XTANDI for the fourth quarter 2015 was $157.9 million compared with $115.1 million for the same period in 2014 (+37% vs. prior year) and $575.7 million for the full year 2015 compared with $339.9 million for 2014 (+69% vs. prior year).

b) Medivation’s collaboration revenue related to ex-U.S. net sales of XTANDI for the fourth quarter 2015 was $44.8 million compared with $18.2 million for the same period in 2014 (+146% vs. prior year) and $119.8 million for the full year 2015 compared with $49.5 million for 2014 (+142% vs. prior year).

Non-GAAP operating expenses were $127.1 million for the quarter ended December 31, 2015 compared with $109.3 million for the same period in 2014 and $430.0 million for the full year 2015 compared with $334.4 million for 2014.

Non-GAAP research and development (R&D) expenses for the fourth quarter of 2015 were $61.4 million, compared with $44.2 million for the same period in 2014 and $180.6 million for the full year 2015 compared with $134.0 million for 2014. The increase in non-GAAP R&D expenses for the fourth quarter of 2015 relates primarily to an increase in third-party clinical and preclinical development costs due to an increase of activities, which include those related to the acquisition of MDV3800 that was completed during the quarter. The increase in non-GAAP R&D expenses for the full year 2015 also relates primarily to an increase in third-party clinical and preclinical development costs and personnel costs resulting from higher staffing levels and in facilities and information technology costs.

Non-GAAP selling, general and administrative (SG&A) expenses for the fourth quarter of 2015 were $65.7 million, compared with $65.1 million for the same period in 2014 and $249.4 million for the full year 2015 compared with $200.4 million for 2014. The slight increase in non-GAAP SG&A expenses for the fourth quarter of 2015 relates primarily to higher administrative costs and royalties, which are partially offset by a decrease in XTANDI collaboration expenses. The increase in non-GAAP SG&A expenses for the full year 2015 relates primarily to higher collaboration expenses, as well as higher administrative and personnel-related costs, and royalties.

Non-GAAP net income for the fourth quarter of 2015 was $49.5 million, or $0.29 per diluted share, compared with non-GAAP net income of $18.0 million, or $0.11 per diluted share, for the same period in 2014. Medivation reported non-GAAP net income of $170.0 million, or $1.01 per diluted share, for the full year 2015, compared with non-GAAP net income of $34.6 million, or $0.22 per diluted share, in 2014.

On a GAAP basis, Medivation’s collaboration revenue for the fourth quarter of 2015 was $377.7 million compared with $274.7 million for the same period in 2014 (+37% vs. prior year) and $943.3 million for the full year 2015 compared with $710.5 million in 2014 (+33% vs. prior year). Medivation’s GAAP-basis collaboration revenue includes upfront and milestone payments for the fourth quarter of 2015 (not included in non-GAAP collaboration revenue), which totaled $175.0 million compared with $141.4 million for the same period in 2014 (+24% vs. prior year) and $247.8 million for the full year 2015 compared with $321.1 million in 2014 (-23% vs. prior year).

Operating expenses were $156.3 million for the quarter ended December 31, 2015 on a GAAP basis compared with $131.3 million for the same period in 2014 and $528.6 million for the full year 2015 compared with $428.6 million for 2014. Non-cash, stock-based compensation expense included in GAAP-basis operating expenses was $54.9 million in 2015 and $45.1 million in 2014.

R&D expenses for the fourth quarter of 2015 were $94.3 million on a GAAP basis compared with $57.9 million for the same period in 2014 and $232.1 million for the full year 2015 compared with $189.6 million for 2014. R&D expenses for the fourth quarter of 2015 include a $30.0 million non-cash charge related to partial impairment of an intangible in-process R&D asset pidilizumab (MDV9300). In the quarter, the Company determined the MDV9300 antibody does not bind to PD-1 and notified the Food and Drug Administration in January 2016, resulting in a partial clinical hold. In addition, the Company intends to submit an amendment to the Chemistry, Manufacturing and Controls, (CMC) section of its investigational new drug (IND) application for MDV9300 to incorporate certain manufacturing changes. These considerations gave rise to a change in clinical trial timelines and other significant inputs to the IPR&D asset valuation, leading to the partial impairment determination. Nevertheless, the Company believes MDV9300’s profile and clinical activity may differentiate it favorably among immuno-oncology agents. MDV9300 continues to show promise with activity and positive data observed in hematologic indications, including new data published in the fourth quarter in multiple myeloma. The non-cash impairment charge is excluded from non-GAAP results discussed above.

SG&A expenses for the fourth quarter of 2015 were $62.1 million on a GAAP basis compared with $73.4 million for the same period in 2014 and $296.5 million for the full year 2015 compared with $239.1 million for 2014.

Medivation reported GAAP-basis net income of $142.5 million, or $0.85 per diluted share, for the quarter ended December 31, 2015, compared with GAAP net income of $164.2 million, or $0.98 per diluted share, for the same period in 2014. Medivation reported GAAP net income of $244.7 million, or $1.47 per diluted share, for the full year 2015, compared to a GAAP net income of $276.5 million or $1.71 per diluted share in 2014. The comparison is affected, in part, by lower milestone-related revenue in 2015. As of the end of 2015, all development and sales milestones under the Astellas collaboration have now been earned. Worldwide sales eclipsed two milestone levels of $1.2 billion in the third quarter and $1.6 billion in the fourth quarter.

U.S. net sales of XTANDI, as reported by Astellas Pharma Inc, were $315.9 million for the quarter (+37% vs. prior year) and $1.15 billion for the full year 2015 (+69% vs. prior year). Net sales for the quarter ended December 31, 2015 included an unfavorable adjustment of $2.6 million related to changes in Astellas’ estimate of prior period gross-to-net deductions against gross sales and an increase in channel partner inventory of just over one-half week of supply. As seen in previous years, we anticipate U.S. net sales in the first quarter 2016 at the Astellas level may be below the level reported in the fourth quarter 2015, as a result of an expected higher gross-to-net rate (related to Part D coverage gap) and anticipated lower channel partner inventories (estimated at one-half week).

Ex-U.S. net sales of XTANDI, as reported by Astellas, were approximately $231 million for the quarter (approximately +83% vs. prior year) and approximately $757 million for the full year 2015 (nearly doubled vs. prior year). Fluctuating currency exchange rates reduced estimated 2015 ex-U.S. net sales at the Astellas level, as expressed in U.S. dollars, by approximately 10% for the quarter and 14% for the year compared with the comparable 2014 periods.

At December 31, 2015, cash and cash equivalents were $225.9 million, compared with $502.7 million at December 31, 2014. In the second and third quarters of 2015, the Company utilized $259.9 million in cash for the retirement of the convertible notes and, in October, utilized $410.0 million in cash to fund an upfront payment to BioMarin Pharmaceutical Inc., for the acquisition of MDV3800.

The Company has provided full-year 2016 financial guidance, as detailed below.

FULL-YEAR 2016 FINANCIAL GUIDANCE
Year Ending December 31, 2016
U.S. net sales of XTANDI $1.425 to $1.525 billion(1)
Non-GAAP collaboration revenue $900 to $970 million(2)
Non-GAAP operating expenses $555 to $600 million(3)
Non-GAAP R&D expenses $280 to $300 million(4)
Non-GAAP SG&A expenses $275 to $300 million(5)
Non-GAAP tax rate(6) 35.5% – 36%
Non-GAAP diluted earnings per share $1.30 – $1.40

(1) This represents Medivation’s projection of U.S. net sales at the Astellas level.

(2) This measure includes (i) Medivation’s collaboration revenue related to U.S. net sales of XTANDI and (ii) Medivation’s collaboration revenue related to ex-U.S. net sales of XTANDI, in the form of a royalty payment earned from Astellas.

(3) Non-GAAP operating expenses, net of cost-sharing payments to/from Astellas, are expected to range between $555 and $600 million. Non-GAAP operating expenses exclude non-cash, stock-based compensation expense, and any change in fair value of contingent purchase consideration or in-process research and development expenses.

(4) Non-GAAP R&D expenses excludes approximately $30 – $35 million of stock-based compensation expense and any change in acquisition related fair value re-measurements such as contingent consideration or in-process research and development expenses

(5) Non-GAAP SG&A expenses excludes approximately $38 – $42 million of stock-based compensation expense, and any change in fair value of contingent purchase consideration.

(6) The 2016 non-GAAP tax rate is expected to range between 35.5% – 36%.

MEDIVATION, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
(unaudited)
December 31, 2015 December 31, 2014
ASSETS
Current assets:
Cash and cash equivalents $ 225,853 $ 502,677
Receivable from collaboration partner 391,558 184,737
Deferred income tax assets - 21,987
Prepaid expenses and other current assets 15,877 12,264
Restricted cash 930 203
Total current assets 634,218 721,868
Property and equipment, net 58,142 41,161
Intangible assets 644,299 101,000
Deferred income tax assets, non-current 57,011 15,176
Restricted cash, net of current 12,206 11,562
Goodwill 18,643 10,000
Other non-current assets 7,072 10,852
Total assets $ 1,431,591 $ 911,619
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable, accrued expenses and other current liabilities $ 186,203 $ 106,128
Borrowings under Revolving Credit Facility 75,000 -
Contingent consideration 4,900 10,000
Deferred revenue - 2,822
Current portion of build-to-suit lease obligation - 698
Current portion of Convertible Notes, net of unamortized discount of $- and $1 at December 31, 2015 and 2014, respectively - 4
Total current liabilities 266,103 119,652
Convertible Notes, net of unamortized discount of $- and $36,598 at December 31, 2015 and 2014, respectively - 222,140
Contingent consideration 262,368 96,000
Build-to-suit lease obligation, excluding current portion 17,406 18,711
Other non-current liabilities 13,035 5,817
Total liabilities 558,912 462,320
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value per share; 1,000,000 shares authorized; no shares issued and outstanding - -
Common stock, $0.01 par value per share; 340,000,000 shares authorized; 163,905,342 and 156,234,454 shares issued and outstanding at December 31, 2015 and 2014, respectively 1,639 1,562
Additional paid-in capital 684,841 505,446
Retained earnings (accumulated deficit) 186,199 (57,709 )
Total stockholders’ equity 872,679 449,299
Total liabilities and stockholders’ equity $ 1,431,591 $ 911,619
MEDIVATION, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended
December 31, Years Ended
December 31,
2015 2014 2015 2014
Collaboration revenue $ 377,748 $ 274,730 $ 943,258 $ 710,487
Operating expenses:
Research and development expenses 94,259 57,877 232,100 189,570
Selling, general and administrative expenses 62,089 73,376 296,545 239,071
Total operating expenses 156,348 131,253 528,645 428,641
Income from operations 221,400 143,477 414,613 281,846
Other income (expense), net:
Loss on extinguishment of Convertible Notes - - (21,087 ) -
Interest expense (488 ) (5,589 ) (12,483 ) (21,690 )
Other, net 28 88 275 38
Total other income (expense), net (460 ) (5,501 ) (33,295 ) (21,652 )
Income before income tax (expense) benefit 220,940 137,976 381,318 260,194
Income tax (expense) benefit (78,433 ) 26,229 (136,593 ) 16,258
Net income $ 142,507 $ 164,205 $ 244,725 $ 276,452
Basic net income per common share $ 0.87 $ 1.06 $ 1.53 $ 1.80
Diluted net income per common share $ 0.85 $ 0.98 $ 1.47 $ 1.71
Weighted average common shares used in the calculation of basic net income per common share 163,746 155,644 160,345 153,859
Weighted average common shares used in the calculation of diluted net income per common share 168,368 171,513 169,324 170,001
MEDIVATION, INC.
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
(in thousands, except per share amounts)
(unaudited)
Three Months Ended Year Ended
December 31,
2015 December 31,
2014 December 31,
2015 December 31,
2014
Collaboration revenue reconciliation:
GAAP collaboration revenue $ 377,748 $ 274,730 $ 943,258 $ 710,487
Milestone-related payments from Astellas (a) (175,000 ) (141,411 ) (247,822 ) (321,109 )
Non-GAAP collaboration revenue $ 202,748 $ 133,319 $ 695,436 $ 389,378
Research and development expenses reconciliation:
GAAP research and development expenses $ 94,259 $ 57,877 $ 232,100 $ 189,570
Stock-based compensation expense (b) (6,775 ) (4,677 ) (24,368 ) (17,913 )
Contingent consideration (c) 3,949 - 2,833 -
Impairment of intangible asset (d) (30,000 ) - (30,000 ) -
Milestone-related payments to third party (e) - (9,000 ) - (25,700 )
License payments to third party (e) - - - (12,000 )
Non-GAAP research and development expenses $ 61,433 $ 44,200 $ 180,565 $ 133,957
Selling, general, and administrative expenses reconciliation:
GAAP selling, general, and administrative expenses $ 62,089 $ 73,376 $ 296,545 $ 239,071
Stock-based compensation expense (b) (7,245 ) (7,658 ) (30,494 ) (27,221 )
Contingent consideration (c) 13,524 - 7,841 -
Milestone-related payments to third party (e) (2,714 ) (638 ) (24,500 ) (5,000 )
U.S. Branded Prescription Drug Fee adjustment (e) - - - (6,441 )
Non-GAAP selling, general, and administrative expenses $ 65,654 $ 65,080 $ 249,392 $ 200,409
Other expense (income), net reconciliation:
GAAP other expense (income), net $ 460 $ 5,501 $ 33,295 $ 21,652
Non-cash interest expense (f) (65 ) (3,891 ) (10,299 ) (14,898 )
Loss on extinguishment of convertible notes (g) - - (21,087 ) -
Non-GAAP other expense (income), net $ 395 $ 1,610 $ 1,909 $ 6,754
Income tax expense reconciliation:
GAAP income tax expense (benefit) $ 78,433 $ (26,229 ) $ 136,593 $ (16,258 )
Income tax effect on non-GAAP adjustments (h) (52,655 ) (40,483 ) (43,023 ) (74,966 )
Change in valuation allowance (h) - 71,130 - 104,861
Non-GAAP income tax expense $ 25,778 $ 4,418 $ 93,570 $ 13,637
Net income reconciliation:
GAAP net income $ 142,507 $ 164,205 $ 244,725 $ 276,452
Milestone-related payments from Astellas (a) (175,000 ) (141,411 ) (247,822 ) (321,109 )
Stock-based compensation expense (b) 14,020 12,335 54,862 45,134
Contingent consideration (c) (17,473 ) - (10,674 ) -
Impairment of intangible asset (d) 30,000 - 30,000 -
Milestone-related payments to third party (e) 2,714 9,638 24,500 30,700
License payments to third party (e) - - - 12,000
U.S. Branded Prescription Drug Fee adjustment (e) - - - 6,441
Non-cash interest expense (f) 65 3,891 10,299 14,898
Loss on extinguishment of Convertible Notes (g) - - 21,087 -
Income tax adjustments (h) 52,655 (30,647 ) 43,023 (29,895 )
Non-GAAP net income $ 49,488 $ 18,011 $ 170,000 $ 34,621
Diluted net income per share reconciliation:
GAAP net income $ 142,507 $ 164,205 $ 244,725 $ 276,452
Interest expense related to convertible notes, net of taxes (i) - 3,616 3,629 14,030
GAAP diluted net income 142,507 167,821 248,354 290,482
Non-GAAP adjustments after-tax (93,019 ) (146,194 ) (74,725 ) (241,831 )
Interest expense related to Convertible Notes, net of taxes (i) - (3,616 ) (2,531 ) (14,030 )
Non-GAAP diluted net income $ 49,488 $ 18,011 $ 171,098 $ 34,621
Non-GAAP diluted net income per share $ 0.29 $ 0.11 $ 1.01 $ 0.22
Shares used in per share calculation (diluted):
GAAP shares used in per share calculation (diluted) (j) 168,368 171,513 169,324 170,001
Anti-dilutive effect of potential common shares for convertible notes - (10,100 ) - (10,100 )
Non-GAAP shares used in per share calculation (diluted) (j) 168,368 161,413 169,324 159,901
Non-GAAP adjustment summary:
Collaboration revenue $ (175,000 ) $ (141,411 ) $ (247,822 ) $ (321,109 )
Research and development expenses 32,826 13,677 51,535 55,613
Selling, general and administrative expenses (3,565 ) 8,296 47,153 38,662
Other expense (income), net 65 3,891 31,386 14,898
Total non-GAAP adjustments before tax (145,674 ) (115,547 ) (117,748 ) (211,936 )
Income tax effect 52,655 (30,647 ) 43,023 (29,895 )
Total non-GAAP adjustments after tax $ (93,019 ) $ (146,194 ) $ (74,725 ) $ (241,831 )
(a) Upfront and milestone payments from Astellas: Upfront and milestone payments are excluded from non-GAAP financial measures because they occur at irregular intervals and are not related to Medivation’s long term core business going forward; such exclusion allows for better representation of the ongoing economics of the business, facilitates period over period comparison and is reflective of how Medivation manages its business.

(b) Stock-based compensation expense: Stock-based compensation expense is excluded from non-GAAP financial measures because of the nature of this charge, varying available valuation methodologies, subjective assumptions and the variety of award types; such exclusion facilitates comparison of Medivation’s operating results to peer companies.

(c) Contingent consideration: The effects of contingent consideration valuation are excluded from non-GAAP financial measures because of the nature of this item, which is related to the change in fair value of the liability for contingent consideration related to Medivation’s License Agreement with CureTech, Inc. for MDV9300 and the acquisition of worldwide rights to MDV3800 from BioMarin; such exclusion facilitates comparisons of Medivation’s operating results to peer companies.

(d) Impairment of intangible asset: The effects of impairment of intangible asset are excluded from non-GAAP financial measures because of the nature of this item, which is related to impairment of our IPR&D asset related to MDV9300; such exclusion facilitates comparisons of Medivation’s operating results to peer companies.

(e) Milestone-related payments to third party and other adjustments: These payments and adjustments are excluded from non-GAAP financial measures because they occur at irregular intervals and are not related to Medivation’s long term core business going forward; such exclusion allows for better representation of the ongoing economics of the business, facilitates period over period comparison and is reflective of how Medivation manages its business.

(f) Non-cash interest expense related to the Convertible Notes and Revolving Credit Facility: The effects of non-cash interest expense related to the Convertible Notes and the Revolving Credit Facility are excluded from non-GAAP financial measures because these expenses are non-cash expenses; such exclusion facilitates comparison of Medivation’s cash operating results to peer companies and is reflective of how Medivation manages its business.

(g) Loss on extinguishment of Convertible Notes: The effects of loss on extinguishment of Convertible Notes are excluded from non-GAAP financial measures because this expense is a non-cash charge; such exclusion facilitates comparison of Medivation’s cash operating results to peer companies and is reflective of how Medivation manages its business.

(h) Income tax adjustments: Adjustments to income tax expense for non-GAAP financial measures consist of the income tax effect of the non-GAAP adjustments and changes in valuation allowance.

(i) Interest expense related to Convertible Notes: For the three and twelve months ended December 31, 2014 and the twelve months ended December 31, 2015, interest expense related to the Convertible Notes was included in the computation of diluted net income per share for GAAP purposes because the effect was dilutive. However, it was excluded from the computation of diluted net income per share for non-GAAP purposes because the effect was anti-dilutive. For the twelve months ended December 31, 2015, cash interest expense, net of tax, of $1.1 million is added back to non-GAAP net income for purposes of the non-GAAP diluted net income per share calculation.

(j) Shares used in per share calculation (diluted): In periods in which Medivation reports a GAAP or non-GAAP net loss, all common stock equivalents are deemed anti-dilutive and basic and diluted shares are equal. In periods in which Medivation reports a GAAP or non-GAAP net income, the dilutive effect of common stock equivalents related to common stock issuable under Medivation’s equity incentive plan is included in the GAAP and non-GAAP net income per share calculation for that period.

In periods in which Medivation reports GAAP or non-GAAP net income, the effect of contingently issuable shares is considered in the calculation of diluted net income per share. The Convertible Notes had no effect on the diluted net income per share calculation for the three months ended December 31, 2015 for both GAAP and non-GAAP purposes because Medivation completed the settlement of all of its Convertible Notes during the third quarter of 2015. For the twelve months ended December 31, 2015, Medivation included the effect of approximately 3.9 million contingently issuable shares related to the Convertible Notes in the diluted net income per share calculation for both GAAP and non-GAAP purposes. For the three and twelve months ended December 31, 2014, Medivation included the effect of approximately 10.1 million contingently issuable shares related to the Convertible Notes in the diluted net income per share calculation for GAAP purposes. The effect of the Convertible Notes is excluded from the diluted net income per share calculation for non-GAAP purposes for the three and twelve months ended December 31, 2014 because their effect is anti-dilutive.

Non-GAAP Financial Measures
To supplement Medivation’s financial results presented on a U.S. generally accepted accounting principles, or GAAP, basis, Medivation uses certain non-GAAP financial measures as shown in the tables above. Medivation believes that these non-GAAP financial measures are helpful in understanding Medivation’s past financial performance and potential future financial results. These non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable U.S. GAAP financial measures, and they should be read in conjunction with Medivation’s consolidated financial statements prepared in accordance with U.S. GAAP. Medivation’s management uses these non-GAAP financial measures for planning, budgeting, forecasting and performance measurement, to assess historical operating performance and make financial and operational business decisions, and also to provide forecasts and financial guidance to investors on this basis. In addition, Medivation believes that the presentation of these non-GAAP financial measures is useful to investors because it enhances the ability of investors to compare Medivation’s financial results period over period and allows for greater transparency with respect to key financial metrics Medivation uses in making operating decisions, and also because Medivation’s investors and analysts regularly use them to model or track Medivation’s financial performance. Medivation believes that the non-GAAP financial measures provide investors with a meaningful understanding of its historical and potential future financial results because they exclude certain non-cash charges such as stock-based compensation which is substantially dependent on changes in the market price of Medivation’s common stock and the timing of equity awards, impairment charges, contingent purchase consideration, revenues and expenses that occur at irregular intervals, such as milestone payments earned from collaboration partners and related payments to licensors of technology, and non-cash interest expense, and losses related to Convertible Notes. Investors should note that these non-GAAP financial measures are not prepared under any comprehensive set of accounting rules or principles and do not reflect all of the amounts associated with Medivation’s results of operations as determined in accordance with U.S. GAAP. Investors should also note that these non-GAAP financial measures have no standardized meaning prescribed by U.S. GAAP and, therefore, have limits in their usefulness to investors. In addition, from time-to-time in the future there may be other items that Medivation may exclude for the purposes of its non-GAAP financial measures; likewise, Medivation may in the future cease to exclude items that Medivation has historically excluded for the purpose of Medivation’s non-GAAP financial measures. Medivation’s non-GAAP financial measures may not be comparable with non-GAAP financial measures provided by other companies.

On February 25, 2016 Radius Health, Inc. ("Radius" or the "Company") (Nasdaq:RDUS), a science-driven biopharmaceutical company that is committed to developing innovative therapeutics in the areas of osteoporosis, oncology and endocrine diseases, reported its financial results for the fourth quarter and full year ended December 31, 2015, and provided recent corporate highlights (Filing, 8-K, Radius, FEB 25, 2016, View Source [SID:1234509187]). As of December 31, 2015, Radius had $473.3 million in cash, cash equivalents and marketable securities.

"Radius continues to make significant progress in advancing its pipeline, including the submission of our MAA in Europe for our investigational drug abaloparatide-SC for the treatment of women with postmenopausal osteoporosis who are at risk for a fracture, which is under regulatory review. We are on track to submit an NDA in the U.S. at the end of the first quarter of 2016," said Robert Ward, President and Chief Executive Officer of Radius. "We are continuing our productive partnering discussions and anticipate entering into an abaloparatide collaboration prior to a potential first commercial launch. We have continued to make progress across the portfolio with the abaloparatide transdermal patch program and RAD1901 trials in breast cancer and vasomotor symptoms."

Pipeline Updates

Abaloparatide-SC

In November 2015, Radius submitted a marketing authorization application ("MAA") to the European Medicines Agency ("EMA"), which subsequently was validated and is currently undergoing regulatory review. Radius plans to submit a new drug application ("NDA") in the United States at the end of the first quarter of 2016. Subject to regulatory review and a favorable regulatory outcome, Radius anticipates the first commercial sales of abaloparatide-SC will take place in 2016.

Abaloparatide-TD

Radius also is developing abaloparatide-transdermal, which it refers to as abaloparatide-TD, based on 3M’s patented Microstructured Transdermal System technology for potential use as a short wear-time transdermal patch. During 2014, Radius reported progress towards the development of an optimized transdermal patch that may be capable of demonstrating comparability to abaloparatide-SC. In preliminary, nonhuman primate pharmacokinetic studies, Radius achieved a desirable pharmacokinetic profile, with comparable AUC, Cmax, Tmax and T1/2 relative to abaloparatide-SC. Radius believes that these results support continued clinical development of abaloparatide-TD toward future global regulatory submissions as a potential post-approval line extension of the investigational drug abaloparatide-SC. Radius commenced a human replicative clinical evaluation of the optimized abaloparatide-TD patch in December 2015 with the goal of achieving comparability to abaloparatide-SC.

RAD1901

Radius continues to enroll and dose patients in the United States in its Phase 1 multicenter, open-label, two-part, dose-escalation study of RAD1901 in postmenopausal women with advanced estrogen receptor positive and HER2-negative breast cancer. The study is designed to determine the recommended dose for a Phase 2 clinical trial and includes a preliminary evaluation of the potential anti-tumor effect of RAD1901. In December 2015, Radius reported on the progress of this study at the San Antonio Breast Cancer Symposium in San Antonio, TX. In addition, in December 2015, Radius commenced a Phase 1 FES-PET study in patients with metastatic breast cancer in the European Union, which includes the use of FES-PET imaging to assess estrogen receptor occupancy in tumor lesions following RAD1901 treatment.

In January 2016, Radius entered into a worldwide clinical collaboration with Novartis Pharmaceuticals to evaluate the safety and efficacy of combining RAD1901 with Novartis’ investigational agent LEE011 (ribociclib), a cyclin-dependent kinase 4/6 inhibitor, and BYL719 (alpelisib), an investigational phosphoinositide 3-kinase inhibitor.

RAD1901 also is being evaluated at low doses as an estrogen receptor ligand for the potential relief of the frequency and severity of moderate to severe hot flashes in postmenopausal women with vasomotor symptoms. Radius commenced a Phase 2b clinical study of RAD1901 for the potential treatment of postmenopausal vasomotor symptoms in December 2015.

Radius Expects the Following Upcoming Milestones

· Abaloparatide-SC
· Submit an NDA in the United States for abaloparatide-SC at the end of the first quarter of 2016.
· Receive opinion from the Committee for Medicinal Products for Human Use regarding the EMA’s review of the abaloparatide-SC MAA.
· Enter into a collaboration for the potential commercialization of abaloparatide-SC prior to a commercial launch.
· Abaloparatide-TD
· Complete the clinical evaluation of the optimized abaloparatide-TD patch during 2016.
· RAD1901
· Complete the dose-escalation study for RAD1901 in metastatic breast cancer patients by the middle of 2016.
· Initiate the expansion cohorts in breast cancer during 2016.

Radius Expects To Make Presentations at the Following Upcoming Conferences

· Abstract Presentations at the Endocrine Society Annual Meeting, April 1-4, 2016, in Boston, MA. The titles of the presentations are as follows:

"Abaloparatide Significantly Reduces Vertebral and Non-vertebral Fractures and Increases BMD Regardless of Baseline Risk"

"RAD1901 a Novel Estrogen Receptor Ligand with a Unique Pharmacologic Profile for Potential Use in the Treatment of Postmenopausal Vasomotor Symptoms"

· Abstract Presentations at the World Congress of Osteoporosis, Osteoarthritis and Musculoskeletal Diseases, April 14-17, 2016, in Spain. The titles of the presentations are as follows:

"Effects of Abaloparatide on Vertebral, Non-vertebral, Major Osteoporotic and Clinical Fracture Incidence in Postmenopausal Women with Osteoporosis: Results of the Phase 3 Active Trial"

"Eighteen Months of Treatment with Abaloparatide Followed by Six Months of Treatment with Alendronate in Postmenopausal Women with Osteoporosis- Results of the ACTIVExtend Trial"

"Effect of Investigational Treatment Abaloparatide for Prevention of Major Osteoporotic Fracture or any Fracture is Not Altered by Baseline Fracture Probability"

· Abstract presentation at the American Association of Cancer Research Annual Meeting 2016, April 16-20, 2016, in New Orleans, LA.

"RAD1901, an orally available SERD, as an effective combination partner in ER+ breast cancer"

· IMPAKT 2016 Conference, May 12-14, 2016, in Brussels, Belgium.

"RAD1901, a novel oral, selective estrogen receptor degrader (SERD), for the treatment of advanced estrogen receptor (ER)+ breast cancer (BC)"

· Cowen and Company 36th Annual Healthcare Conference, March 7-9, 2016, in Boston, MA.
· Deutsche Bank 41st Annual Healthcare Conference, May 4-5, 2016, in Boston, MA.
· Bank of America Merrill Lynch 2016 Healthcare Conference, May 10-12, 2016, in Las Vegas, NV.

Recent Corporate Highlight

· On December 7, 2015, Radius announced the appointment of Jean-Pierre (JP) Garnier to its Board of Directors, and as Chair of the Compensation Committee. Mr. Garnier is currently Chairman of the Board of Actelion Ltd., and was previously Chief Executive Officer of GlaxoSmithKline plc.

Fourth Quarter 2015 Financial Results

For the three months ended December 31, 2015, Radius reported a net loss of $33.2 million, or $0.77 per share, as compared to a net loss of $18.0 million, or $0.55 per share for the three months ended December 31, 2014. The increase in net loss for the three months ended December 31, 2015 as compared to the three months ended December 31, 2014 was primarily due to an increase in research and development and general and administrative expenses, partially offset by a decrease in interest expense.

Research and development expenses for the three months ended December 31, 2015 were $22.2 million, compared to $11.6 million for the same period in 2014. The increase for the 2015 period as compared to the 2014 period was primarily attributable to an increase in contract service costs associated with the development of RAD1901, consulting costs incurred to support Radius’ MAA and planned NDA submissions for abaloparatide-SC and an increase in compensation expense, including an increase of $0.6 million of non-cash stock-based compensation expense, due to an increase in research and development headcount from December 31, 2014 to December 31, 2015.

General and administrative expenses for the three months ended December 31, 2015 were $11.6 million, compared to $5.6 million for the same period in 2014. The increase for the 2015 period as compared to the 2014 period was primarily attributable to an
increase in legal fees and professional support costs, including the costs associated with growing Radius’ headcount and preparing for the potential commercialization of abaloparatide-SC.

There was no interest expense for the three months ended December 31, 2015, compared to $0.8 million for the same period in 2014. The decrease was a result of the prepayment of all amounts owed under Radius’ loan and security agreement on August 4, 2015.

Full Year 2015 Financial Results

For the twelve months ended December 31, 2015, Radius reported a net loss of $101.5 million, or $2.56 per share, as compared to a net loss of $62.5 million, or $4.04 per share, for the twelve months ended December 31, 2014. The increase in net loss for 2015 was primarily due to an increase in research and development expenses, general and administrative expenses, and loss on retirement of note payable.

Research and development expenses for the twelve months ended December 31, 2015 were $68.3 million, compared to $45.7 million for 2014. The increase for 2015 was primarily attributable to an increase in compensation expense, including an increase of $5.9 million of non-cash stock-based compensation expense, due to an increase in research and development headcount from December 31, 2014 to December 31, 2015, an increase in consulting costs incurred to support Radius’ MAA and planned NDA submissions for abaloparatide-SC and an increase in contract service costs associated with the development of RAD1901. These increases were partially offset by a decrease in the costs associated with the abaloparatide-SC Phase 3 ACTIVE and ACTIVExtend clinical trials.

General and administrative expenses for the twelve months ended December 31, 2015 were $30.8 million, compared to $13.7 million for 2014. The increase for 2015 as compared to 2014 was primarily attributable to an increase in legal fees and professional support costs, including the costs associated with growing Radius’ headcount and preparing for the potential commercialization of abaloparatide-SC, subject to favorable regulatory review. This increase also was driven by an increase in compensation expense, including an increase of $1.8 million of non-cash stock-based compensation expense, due to an increase in general and administrative headcount from December 31, 2014 to December 31, 2015.

For the twelve months ended December 31, 2015, loss on retirement of note payable was $1.6 million, compared to $0.2 million for 2014. The loss on retirement of note payable for 2015 was a result of the prepayment of all amounts owed under Radius’ loan and security agreement on August 4, 2015.

As of December 31, 2015, Radius had $473.3 million in cash, cash equivalents and marketable securities. Based upon Radius’ cash, cash equivalents and marketable securities balance, it believes that, prior to the consideration of revenue from the

potential future sales, subject to favorable regulatory review, of any of its investigational products, it has sufficient capital to fund its development plans, U.S. commercial scale-up and other operational activities into 2018.

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About Abaloparatide

Abaloparatide is an investigational therapy for the potential treatment of women with postmenopausal osteoporosis who are at an increased risk for a fracture. Abaloparatide is a novel synthetic peptide that engages the parathyroid hormone receptor (PTH1 receptor) and was selected for clinical development based on its favorable bone building activity.

Abaloparatide has completed Phase 3 development for potential use as a daily self-administered injection (abaloparatide-SC). In the fourth quarter of 2015, Radius’ Marketing Authorisation Application (MAA) for abaloparatide-SC for the treatment of patients with postmenopausal osteoporosis was validated and is currently undergoing regulatory review by the European Medicines Agency (EMA). Radius plans to submit a New Drug Application (NDA) for abaloparatide-SC to the US Food and Drug Administration (FDA) at the end of the first quarter of 2016.

Radius also is developing abaloparatide-transdermal (abaloparatide-TD) based on 3M’s patented Microstructured Transdermal System technology for potential use as a short wear-time transdermal patch.

About RAD1901

RAD1901 is a selective estrogen receptor down-regulator/degrader (SERD), which at high doses is being evaluated for potential use as an oral non-steroidal treatment for hormone-driven, or hormone-resistant, breast cancer. RAD1901 is currently being investigated for potential use in postmenopausal women with advanced estrogen receptor positive (ER+), HER2-negative breast cancer, the most common form of the disease. Studies completed to date indicate that the compound has the potential for use as a single agent or in combination with other therapies to overcome endocrine resistance in breast cancer.

RAD1901 also is being evaluated in a Phase 2b study at low doses for potential relief of the frequency and severity of moderate to severe hot flashes in postmenopausal women with vasomotor symptoms. Additional information on the clinical trial program of RAD1901 is available on www.clinicaltrials.gov.

RAD140

RAD140 is a non-steroidal selective androgen receptor modulator (SARM) that is currently in preclinical development for potential use in multiple indications including cancer. RAD140 resulted from an internal drug discovery program focused on the androgen receptor pathway, which is highly expressed in many breast cancers. Due to its receptor and tissue selectivity, potent oral activity and long half-life, RAD140 could have clinical potential in the treatment of conditions where androgen modulation may play a role.

On February 25, 2016 TESARO, Inc. (NASDAQ:TSRO), an oncology-focused biopharmaceutical company, reported operating results for fourth-quarter 2015 and provided an update on the Company’s development programs (Press release, TESARO, FEB 25, 2016, View Source [SID:1234509222]).

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"2016 is poised to be another exciting year for TESARO as we continue to drive awareness of CINV and work to make VARUBI available to all eligible patients," said Lonnie Moulder, CEO of TESARO. "We have implemented a comprehensive, global development program for niraparib in ovarian cancer that spans the treatment and maintenance settings, several patient subgroups and multiple lines of therapy, and we are also exploring combination and monotherapy approaches for additional tumor types. We continue to anticipate that data from our NOVA and QUADRA registration trials of niraparib will become available during the second quarter. Our NOVA study results will be the first data from a prospectively designed, randomized Phase 3 trial for a PARP inhibitor, and the full data from this global trial are intended to support regulatory applications and submissions to payors and pricing authorities as part of our commercialization strategy for the U.S. and European markets. We are enthusiastic about the potential for our pipeline candidates to create significant value for shareholders, particularly by expanding our niraparib development program into additional tumor types and advancing our portfolio of immuno-oncology candidates into the clinic."

Recent Business Highlights

TESARO launched VARUBI (oral rolapitant) in November of 2015, following U.S. Food and Drug Administration (FDA) approval for use in combination with other antiemetic agents in adults, for the prevention of delayed nausea and vomiting associated with initial and repeat courses of emetogenic cancer chemotherapy, including, but not limited to, highly emetogenic chemotherapy.

The intravenous (IV) rolapitant development program is complete, and a New Drug Application (NDA) will be submitted to the FDA in the first quarter of 2016.

Patient treatment continues in the Phase 3 NOVA trial of niraparib in patients with ovarian cancer, and based upon the observed event rate, TESARO continues to expect data in the second quarter of 2016.

Enrollment continues in the QUADRA trial of niraparib for the treatment of patients with ovarian cancer who have received three or more prior lines of chemotherapy, and data from this trial is anticipated to become available in the second quarter.

Antibody drug candidates targeting PD-1, TIM-3, and LAG-3 continue to advance, and the Investigational New Drug (IND) application for TSR-042, our anti-PD-1 antibody candidate, has been cleared by the FDA.

Fourth Quarter 2015 Financial Results

TESARO reported a net loss of $75.8 million, or ($1.89) per share, for the fourth quarter of 2015, compared to a net loss of $47.9 million, or ($1.33) per share, for the fourth quarter of 2014.

Research and development expenses increased to $42.9 million for the fourth quarter of 2015, compared to $29.8 million for the fourth quarter of 2014, driven primarily by higher costs related to the ongoing registration trials of niraparib, development activities related to the rolapitant IV NDA submission, and advancement of our immuno-oncology portfolio, in addition to increased headcount.

Selling, general and administrative expenses increased to $27.9 million for the fourth quarter of 2015, compared to $7.4 million for the fourth quarter of 2014, primarily due to commercial activities in support of the launch of VARUBI, increased commercial headcount, and higher professional service fees.

Acquired in-process research and development expenses totaled $1.0 million for the fourth quarter of 2015 and included a milestone payment related to our immuno-oncology portfolio, compared to $7.0 million for the fourth quarter of 2014, which included development milestones for rolapitant and the immuno-oncology portfolio.

Operating expenses, as described above, include total non-cash, stock-based compensation expense of $8.4 million for the fourth quarter of 2015, compared to $3.1 million for the fourth quarter of 2014.

As of December 31, 2015, TESARO had approximately $230.1 million in cash and cash equivalents and approximately 40.3 million outstanding shares of common stock.

Today TESARO announced a definitive agreement for a private placement that would result in proceeds of $155 million. TESARO expects its cash utilization to be approximately $70 million on average, per quarter, during the first half of 2016.

Full-Year 2015 Financial Results

TESARO reported a net loss of $251.4 million, or ($6.38) per share, for 2015, compared to a net loss of $171.0 million, or ($4.79) per share, for 2014.

Research and development expenses increased to $155.4 million for 2015, compared to $118.4 million for 2014, driven primarily by three ongoing registration trials of niraparib, development activities related to the rolapitant IV NDA submission, and advancement of our immuno-oncology portfolio, in addition to increased headcount.

Acquired in-process research and development expenses totaled $2.0 million for 2015 and included milestone payments related our immuno-oncology portfolio, compared to $24.9 million for 2014, which was primarily due to up-front immuno-oncology license payments.

Selling, general and administrative expenses increased to $78.7 million for 2015, compared to $23.9 million for 2014, primarily due to commercial activities in support of the launch of VARUBI, increased commercial headcount, and higher professional service fees.

Operating expenses, as described above, include total non-cash, stock-based compensation expense of $25.9 million for 2015, compared to $11.7 million for 2014.

2016 Corporate Objectives

TESARO anticipates achieving the following key objectives:

Continue to execute on the VARUBI commercial launch in the United States;

Submit the NDA for IV rolapitant in Q1 2016;

Submit the oral rolapitant Marketing Authorization Application (MAA) to the European Medicines Agency (EMA) in Q2 2016;

Initiate patient enrollment in the Phase 3 clinical trial of niraparib in first-line ovarian cancer (PRIMA) in Q1 2016;

Initiate enrollment in the niraparib/KEYTRUDA (pembrolizumab) combination trial in Q1 2016;

Report data from the Phase 3 NOVA trial and from the QUADRA trial of niraparib in Q2 2016;

Submit the niraparib NDA and MAA in 2H 2016;

Continue to enroll the Phase 3 BRAVO trial of niraparib in breast cancer patients with germline BRCA mutations through 2016;

Initiate a Phase 1 clinical trial of TSR-042 (anti-PD-1 antibody) in Q1 2016;

Submit the IND for TSR-022 (anti-TIM-3 antibody) in Q2 2016;

Select a clinical antibody candidate targeting LAG-3 in 1H 2016;

Identify a dose and schedule for TSR-042 by the end of 2016; and

Select bispecific clinical candidates targeting PD-1/TIM-3 and PD-1/LAG-3 in 2016.

On February 25, 2016 Merrimack Pharmaceuticals, Inc. (Nasdaq: MACK) reported its fourth quarter and full year 2015 financial results (Press release, Merrimack, FEB 25, 2016, View Source [SID:1234509224]). Merrimack will host a live conference call and webcast today, Thursday, February 25 at 4:30 p.m., Eastern time, to provide an update on Merrimack’s progress as well as a summary of these results.

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Investors and the general public are invited to listen to the call by dialing (877) 564-1301 (domestic) or (224) 357-2394 (international) five minutes prior to the start of the call and providing the passcode 43765613. A listen-only webcast of the call can be accessed in the Investors section of Merrimack’s website, investors.merrimack.com, and a replay of the call will be archived there for six weeks following the call.

Key Recent Events

Merrimack’s key recent events include:

Presentation of an updated overall survival analysis of the Phase 3 NAPOLI-1 study of ONIVYDE (irinotecan liposome injection) in combination with fluorouracil (5-FU) and leucovorin that achieved a 63% improvement in 12-month overall survival in patients with post-gemcitabine metastatic pancreatic adenocarcinoma when compared to 5-FU and leucovorin alone at the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) Gastrointestinal Cancers Symposium in San Francisco;

Publication of the NAPOLI-1 results in The Lancet;

Amendment of the ongoing Phase 2 clinical study of MM-121 (seribantumab) in patients with heregulin-positive non-small cell lung cancer, including a change in the primary endpoint to overall survival to enable a potential registration opportunity for MM-121; and

Closing of a private placement of $175.0 million of senior secured notes, of which $41.2 million was used to repay all amounts outstanding under Merrimack’s private loan agreement.

Commercial Update

Merrimack received approval for ONIVYDE from the U.S. Food and Drug Administration on October 22, 2015 and launched ONIVYDE in the United States on October 26, 2015. Net product revenues from U.S. commercial sales of ONIVYDE for the fourth quarter of 2015 were $4.3 million.

Upcoming Milestones

Merrimack anticipates the following upcoming clinical milestones:

Results in the first half of 2017 from the Phase 2 clinical study of ONIVYDE in previously untreated front-line metastatic pancreatic cancer;

Results in 2017 from HERMIONE, the Phase 2 clinical study of MM-302 in patients with HER2-positive metastatic breast cancer that is designed to support a potential Accelerated Approval application to the FDA;

Results in 2017 from the Phase 2 clinical study of MM-141 in patients with front-line metastatic pancreatic cancer who have high serum levels of free IGF-1; and

Results in 2018 from the Phase 2 clinical study of MM-121 in patients with heregulin-positive, locally advanced or metastatic non-small cell lung cancer.

Fourth Quarter and Full Year 2015 Financial Results

The following summarizes Merrimack’s financial results from the quarter and year ended December 31, 2015:

Received $66.5 million of net milestone payments from collaborations in 2015, consistent with Merrimack’s previous financial guidance;

Cash, cash equivalents and marketable securities as of December 31, 2015 were $185.6 million, compared to $124.0 million as of December 31, 2014. The increase was driven by $168.5 million of net proceeds from the issuance of senior secured notes and $38.6 million of net proceeds from an "at the market offering" program, which were offset by $105.4 million of cash used to fund operating activities and the payoff of $41.2 million of previously-existing debt;

Product revenue from the commercial sale of ONIVYDE, net of discounts, allowances and reserves, was $4.3 million for the fourth quarter of 2015 and the year ended December 31, 2015;

License and collaboration revenue was $17.1 million for the fourth quarter of 2015 and $84.9 million for the year ended December 31, 2015, compared to $33.9 million and $102.8 million, respectively, in the comparable periods in 2014. 2015 license and collaboration revenue is comprised of $64.9 million of revenue under the Baxalta proportional performance model and $20.0 million of substantive milestone revenue under Merrimack’s agreement with Baxalta. 2014 license and collaboration revenue is comprised of $10.5 million of revenue recognized under the Baxalta proportional performance revenue recognition model and $92.3 million of revenue recognized under Merrimack’s now-terminated agreement with Sanofi;

Research and development expenses were $44.7 million in the fourth quarter of 2015 and $161.0 million for the year ended December 31, 2015, compared to $30.7 million and $138.5 million, respectively, in the comparable periods in 2014. The increase in 2015 research and development expenses was driven by increased costs as Merrimack prepared for or initiated Phase 2 studies for four of its most advanced product candidates as well as increased preclinical and general spending as Merrimack advanced and grew its preclinical pipeline;

Selling, general and administrative expenses were $19.3 million in the fourth quarter of 2015 and $57.8 million for the year ended December 31, 2015, compared to $8.3 million and $30.5 million, respectively, in the comparable periods in 2014. The increase in 2015 selling, general and administrative expenses was primarily due to incremental expenses incurred to prepare for and support the launch of ONIVYDE; and

Net loss attributable to Merrimack for the fourth quarter of 2015 was $47.8 million, or $0.41 per share, compared to a net loss attributable to Merrimack of $9.7 million, or $0.09 per share, for the fourth quarter of 2014. For the year ended December 31, 2015, net loss attributable to Merrimack was $148.0 million, or $1.33 per share, compared to a net loss attributable to Merrimack of $83.3 million, or $0.80 per share, for the year ended December 31, 2014.

2016 Financial Outlook

Merrimack anticipates the following for 2016:

Receipt of $46.5 million of net milestone payments related to ONIVYDE. This amount is made up of $36.5 million of net substantive milestones expected to increase net income in 2016 and $10.0 million of net non-substantive milestones expected to increase deferred revenues on Merrimack’s balance sheet, as they are included in the Baxalta proportional performance revenue recognition model; and

Aggregate research and development and selling, general and administrative expenses to be in the range of $225 million to $245 million, not including any one time payments to PharmaEngine.
Merrimack 2016 Analyst Day

Merrimack will host an Analyst Day on May 19, 2016 in New York for analysts and institutional investors. A live webcast of the event will be available in the Investors section of Merrimack’s website, investors.merrimack.com, and a replay of the webcast will be archived there for six weeks.

Upcoming Investor Conferences

Merrimack will attend the following investor conferences this spring:

Credit Suisse 2016 London Healthcare Conference on March 1 in London;

Cowen and Company 36th Annual Health Care Conference on March 9 in Boston;

Barclays Global Healthcare Conference on March 15 in Miami; and

Deutsche Bank Securities 41st Annual Healthcare Conference on May 4-5 in Boston.

Live webcasts of the presentations at the Cowen and Company 36th Annual Health Care Conference, the Barclays Global Healthcare Conference and the Deutsche Bank Securities 41st Annual Healthcare Conference can be accessed by visiting the Investors section of Merrimack’s website at investors.merrimack.com. A replay of the webcasts will be archived there for two weeks following each presentation.

On February 25, 2016 Acceleron Pharma Inc. (NASDAQ:XLRN), a clinical stage biopharmaceutical company focused on the discovery, development and commercialization of novel therapeutic candidates that regulate cellular growth and repair, reported a corporate update and reported financial results for the fourth quarter and year ended December 31, 2015 (Press release, Acceleron Pharma, FEB 25, 2016, View Source [SID:1234509189]).

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"We made significant progress over the past year in advancing our pipeline, as marked by successful clinical results across our programs and the recent launch of Phase 3 programs in MDS and beta-thalassemia with our partner Celgene," said John Knopf, Ph.D., Chief Executive Officer of Acceleron. "At the start of 2016, we raised $150 million in gross proceeds from an equity financing which will be used to fund our wholly owned programs, including our compounds for muscle diseases. Our locally acting muscle agent, ACE-083, showed unprecedented results in increasing muscle volume, and we plan to present new Phase 1 data later this year and initiate a Phase 2 trial in FSHD, a form of muscular dystrophy."

Added Dr. Knopf, "In late 2015, we introduced ACE-2494, a systemic muscle therapeutic created from our new IntelliTrap discovery platform. IntelliTrap is a powerful discovery engine, and we expect it to enable us to introduce a novel therapeutic into the clinic every 12 to 18 months."

2015 HIGHLIGHTS AND CURRENT UPDATES

DEVELOPMENT PROGRAMS

Hematology

Luspatercept in myelodysplastic syndromes (MDS)

Luspatercept is a protein therapeutic that increases hemoglobin levels and is being developed to help patients reduce or eliminate their need for red blood cell (RBC) transfusions

Initiated Phase 3 MEDALIST study in MDS with partner Celgene. MEDALIST is a 210-patient, global, double-blind, randomized, placebo-controlled, multicenter study to determine the efficacy and safety of luspatercept versus placebo in subjects with anemia due to very low, low, or intermediate-risk MDS with ring sideroblasts (≥ 15%) who require red blood cell transfusions.

Presented data at ASH (Free ASH Whitepaper) 2015 annual meeting from ongoing Phase 2 extension study showing that 50% of MDS patients achieved transfusion independence and 69% of patients achieved sustained increases in hemoglobin levels.

Expanded the Phase 2 MDS study with additional cohorts in lower risk MDS patients that are either erythropoietin-stimulating agent (ESA) treatment naïve or ring sideroblast negative.

Received FDA Fast Track Designation.

Luspatercept in beta-thalassemia

Initiated Phase 3 BELIEVE study in beta-thalassemia with partner Celgene. BELIEVE is a 300-patient, global, double-blind, randomized, placebo-controlled, multicenter study to determine the efficacy and safety of luspatercept versus placebo in adults who require regular red blood cell transfusions due to beta-thalassemia.

Presented data at ASH (Free ASH Whitepaper) 2015 annual meeting from ongoing Phase 2 studies showing luspatercept reduced transfusion burden, improved health-related quality of life measures, had beneficial effects on liver iron concentration and demonstrated a favorable safety profile.

Received FDA Fast Track Designation.

Muscle Diseases

ACE-083

Protein therapeutic designed to increase muscle mass and strength in the muscles in which it is administered

First-in-human Phase 1 study results showed an unprecedented 14.5% mean increase in muscle volume in the injected rectus femoris muscle of the quadriceps. The data were presented in the Late Breaking Clinical Trials Session of the 8th International Conference on Cachexia, Sarcopenia, and Muscle Wasting in December 2015.

Preclinical data in mice showed that ACE-083 produced significant increases in muscle mass in the injected muscle with no observed effect on either the uninjected contralateral muscle or on whole body mass. Increases in muscle mass were associated with a significant increase in muscle force and power. The data were presented at the 20th International Annual Congress of the World Muscle Society in October 2015.

ACE-2494

Systemic muscle therapeutic designed to increase muscle mass and strength in a range of muscle diseases

Introduced ACE-2494, Acceleron’s first IntelliTrap molecule. Preclinical data in mice presented at the 2015 World Muscle Society Congress showed that after 4 weeks of treatment, ACE-2494 generated substantial dose-dependent mean increases in muscle mass: 41% in rectus femoris, 53% in gastrocnemius, and 87% in pectoralis.
Oncology

Dalantercept in renal cell carcinoma (RCC)

Protein therapeutic that inhibits angiogenesis and is being developed in combination with approved VEGF-based anti-angiogenesis compounds to improve patient outcomes.

Enrollment is ongoing in Part 2 of the Phase 2 DART study, a randomized, double-blind study of dalantercept plus axitinib compared to placebo plus axitinib in patients with advanced renal cell carcinoma.

Results from Part 1 of the DART study with dalantercept plus axitinib demonstrated a median progression free survival of 8.3 months across all dose levels tested versus the historic control of 4.8 months for axitinib alone. The data were presented at the 2015 American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) Annual Meeting and ASCO (Free ASCO Whitepaper) 2015 Genitourinary Cancers Symposium.

Received FDA Fast Track Designation for dalantercept in combination with axitinib for the treatment of patients with advanced RCC following treatment with one anti-angiogenic agent.

Nephrology

Sotatercept in chronic kidney disease

Protein therapeutic that has effects on fibrosis, vascular calcification, bone mineral density and red blood cell (RBC) levels

Presented preliminary data from ongoing Phase 2a clinical studies of sotatercept in End-Stage Kidney Disease patients, including effects on hemoglobin, vascular calcification, bone mineral density and safety and tolerability at the American Society of Nephrology Kidney Week in October 2015.

Acceleron and Celgene assessing the opportunity for the development of sotatercept in the pre-dialysis chronic kidney disease (CKD) setting.

RESEARCH AND DEVELOPMENT

Introduced the Company’s IntelliTrap platform for discovery of selective and novel compounds targeting the transforming growth factor-beta superfamily of proteins.

Identified ACE-2494 as the first compound to be developed from the platform and is expected to be Acceleron’s fifth internally discovered therapeutic to enter the clinic.

Acceleron plans to have a new internally discovered compound enter the clinic every 12 to 18 months.

CORPORATE UPDATES

Raised $150 million in gross proceeds in an underwritten public offering of common stock in January 2016.

Hosted first Research & Development Day in October 2015. Company executives and a panel of outside experts briefed the investment community on Acceleron’s clinical programs in MDS, beta-thalassemia, cancer and muscular dystrophies.

UPCOMING 2016 PROGRAM MILESTONES AND EVENTS

We anticipate the following milestones and events in 2016:

Hematology

Luspatercept in MDS

Will update long-term treatment results at major medical conferences.

Initial data on ring sideroblast negative and ESA treatment naïve (front-line) patients (YE 2016).
Luspatercept in beta-thalassemia

Update long-term treatment results at major medical conferences.

Muscle Diseases

ACE-083

Present Phase 1 data from two new cohorts (Mid 2016).

Initiate Phase 2 trial in facioscapulohumeral muscular dystrophy (FSHD) patients (H2 2016).
ACE-2494

Submit IND for first-in-human study for ACE-2494 (YE 2016).
Oncology

Dalantercept in RCC

Present preliminary Part 2 DART study results (dalantercept in combination with axitinib) (YE 2016).
Nephrology

Sotatercept in CKD

Provide an update on development strategy (H2 2016).
Financial Results

Cash Position – Cash, cash equivalents and investments were $136.0 million as of December 31, 2015. Net cash used in operating activities in 2015 was $44.2 million. We believe that our existing cash, cash equivalents and investments, including the net proceeds of $140.4 million from our January 2016 offering, will be sufficient to fund our projected operating requirements into the second half of 2019.

Revenue – Collaboration revenue for the year was $18.1 million. This includes license and milestone amortization of $1.2 million and cost sharing reimbursement revenue from our Celgene partnership of $16.9 million related to expenses incurred by the Company in support of our partnered programs.

Costs and expenses – Total costs and expenses for the year were $79.0 million. This includes R&D expenses of $58.4 million and G&A expenses of $20.6 million.

Net Loss – The Company’s net loss for the year ended December 31, 2015 was $63.9 million.