On October 26, 2017 Cytokinetics, Incorporated (Nasdaq:CYTK) reported total revenues for the third quarter of 2017 were $6.2 million, compared to $59.0 million, during the same period in 2016. Net loss for the third quarter was $32.4 million, or $0.60 per basic and diluted share, respectively, compared to net income for the same period in 2016 of $33.4 million, or $0.84 and $0.77 per basic and diluted share, respectively (Press release, Cytokinetics, OCT 26, 2017, View Source [SID1234521210]). As of September 30, 2017, cash, cash equivalents and investments totaled $308.2 million.

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“We are proud of the key milestones we recently achieved in preparation for the planned release of results from VITALITY-ALS, and potential regulatory filings and commercialization of tirasemtiv in North America and Europe,” said Robert I. Blum, Cytokinetics’ President and Chief Executive Officer. “In the third quarter, we also advanced CK-2127107 into two additional mid-stage clinical trials, one in patients with ALS and another in elderly subjects with limited mobility; we look forward to data from four clinical trials in this program in 2018. Finally, we are pleased that patient enrollment in GALACTIC-HF continues on target and commenced in Japan triggering a $10 million milestone payment to Cytokinetics.”

Recent Highlights and Upcoming Milestones

Skeletal Muscle Program

tirasemtiv (fast skeletal muscle troponin activator)

Completed dosing of patients in VITALITY-ALS (Ventilatory Investigation of Tirasemtiv and Assessment of Longitudinal Indices after Treatment for a Year in ALS), our Phase 3 clinical trial of tirasemtiv in patients with ALS.

Continued enrollment in VIGOR-ALS (Ventilatory Investigations in Global Open-Label Research in ALS), an open-label clinical trial designed to assess the long-term safety and tolerability of tirasemtiv in patients with ALS who have completed participation in VITALITY-ALS.

Conducted clinical, regulatory, non-clinical and other activities intended to support potential regulatory filings and registration of tirasemtiv in North America and Europe.

Conducted manufacturing, logistical planning, market research, market access and other commercial readiness activities intended to support potential registration and commercialization of tirasemtiv in North America and Europe.

Proceeding to collection of final data from VITALITY-ALS and clinical trial database lock in Q4 2017. We plan to conduct analyses of data from VITALITY-ALS and present results from this clinical trial on December 8, 2017 at the 28th International Symposium on ALS/MND in Boston.

Expect to continue to enroll patients who complete VITALITY-ALS into VIGOR-ALS throughout 2017.

CK-2127107 (next-generation fast skeletal muscle troponin activator)

Announced the start of a Phase 1b, double-blind, randomized, placebo-controlled, multiple dose, two-period crossover study to assess the effect of CK-2127107 on measures of physical function in elderly adults with limited mobility. This study is being conducted by Astellas, in collaboration with Cytokinetics.
Announced the start of FORTITUDE-ALS (Functional Outcomes in a Randomized Trial of Investigational Treatment with CK-2127107 to Understand Decline in Endpoints – in ALS). This Phase 2 clinical trial is designed to assess the change from baseline in the percent predicted slow vital capacity (SVC) and other measures of skeletal muscle function after 12 weeks of treatment with CK-2127107 in patients with ALS. This trial is being conducted by Cytokinetics, in collaboration with Astellas.
“Reasons for Screen Failures and Baseline Characteristics of Randomized Patients from the First Cohort of the Phase 2 Clinical Trial of CK-2127107 in Patients with SMA,” presented by Stacy Rudnicki, M.D., Director, Clinical Research, Cytokinetics, at the Cure SMA 2017 Annual SMA Conference in Orlando, FL.
Expect to complete enrollment of Cohort 2 of the Phase 2 clinical trial of CK-2127107 in patients with SMA in 2017.
Expect data from the Phase 2 clinical trial of CK-2127107 in patients with SMA in Q1 2018.
Expect Astellas to continue enrollment in a Phase 2 clinical trial of CK-2127107 in patients with COPD in 2017.
Expect Astellas to continue enrollment in a Phase 1b clinical trial of CK-2127107 in adults with limited mobility in 2017.

Expect to continue enrollment in FORTITUDE-ALS, a Phase 2 clinical trial of CK-2127107 in patients with ALS in 2017.
Cardiac Muscle Program

omecamtiv mecarbil (cardiac muscle myosin activator)

Announced that the Phase 2 clinical trial of omecamtiv mecarbil in Japanese patients with heart failure met its pharmacokinetic primary endpoint and demonstrated statistically significant improvements in systolic ejection time (SET), a secondary endpoint.

Announced that the first patient has been dosed in Japan in GALACTIC-HF (Global Approach to Lowering Adverse Cardiac Outcomes Through Improving Contractility in Heart Failure), the Phase 3 cardiovascular outcomes clinical trial of omecamtiv mecarbil which is being conducted by Amgen, in collaboration with Cytokinetics. Coincident with patient dosing in Japan, Cytokinetics earned a $10 million milestone payment from Amgen.

Announced that additional results from COSMIC-HF (Chronic Oral Study of Myosin Activation to Increase Contractility in Heart Failure), a Phase 2 trial evaluating omecamtiv mecarbil in patients with chronic heart failure, were presented by John Teerlink, M.D., Professor of Clinical Medicine at the University of California San Francisco and Director of Heart Failure at the San Francisco Veterans Affairs Medical Centers in a Rapid Fire Abstracts Presentation at the 21st Annual Heart Failure Society of America Scientific Meeting in Dallas, TX. The results suggest that omecamtiv mecarbil may produce similar results with regard to cardiac function, heart rate, biomarkers and adverse events in patients with ischemic and non-ischemic heart failure due to left ventricular systolic dysfunction.

Continued to enroll patients in GALACTIC-HF, the Phase 3 cardiovascular outcomes clinical trial of omecamtiv mecarbil, conducted by Amgen, in collaboration with Cytokinetics.

Expect continued enrollment of patients with chronic heart failure in GALACTIC-HF throughout 2017.
Pre-Clinical Research

Continued research activities under our joint research program with Amgen directed to the discovery of next-generation cardiac muscle activators and under our joint research program with Astellas directed to the discovery of next-generation skeletal muscle activators. In addition, company scientists continued independent research activities directed to our other muscle biology programs.
Expect to nominate at least 2 compounds from ongoing Research programs (partnered and unpartnered) as potential drug candidates by the end of 2017.
Financials

Revenues for the three and nine months ended September 30, 2017 were $6.2 million and $13.4 million, respectively, compared to $59.0 million and $73.3 million for the corresponding periods in 2016. Revenues for the first nine months of 2017 included the $10 million milestone payment from Amgen as well as $8.8 million of research and development revenues and $6.7 million of license revenues from our collaboration with Astellas and $1.3 million of research and development revenues from our collaboration with Amgen. Revenues for the first nine months of 2017 were offset by $13.8 million (out of the total of $40 million) for payments to Amgen related to our option to co-fund the Phase 3 development program of omecamtiv mecarbil in exchange for an increased royalty upon potential commercialization. Revenues in 2016 were primarily due to license revenue from the September 2016 expansion of our collaboration with Astellas. Astellas paid us $65 million in connection with the expanded collaboration.

Total research and development expenses for the three and nine months ended September 30, 2017 increased to $24.9 million and $64.0 million, respectively, from $17.9 million and $41.1 million for the same periods in 2016, primarily due to increased clinical activity, including activity for VITALITY-ALS and other activities intended to support potential regulatory filings and registration of tirasemtiv in North America and Europe, increased CK-2127107 clinical trials activity, as well as increased personnel.

General and administrative expenses for the three and nine months ended September 30, 2017 increased to $9.7 million and $26.2 million from $7.2 million and $21.1 million for the same periods in 2016, primarily due to increased personnel, non-cash stock compensation expense and commercial readiness activities.

Financial Guidance

The Company also announced updated financial guidance for 2017. The Company anticipates cash research and development expenses will be in the range of $103 to $107 million, cash revenue will be in the range of $16 to $18 million, and cash general and administrative expenses will remain in the range of $30 million to $32 million.

Conference Call and Webcast Information

Members of Cytokinetics’ senior management team will review the company’s third quarter results via a webcast and conference call today at 4:30 PM Eastern Time. The webcast can be accessed through the Investors & Media section of the Cytokinetics website at www.cytokinetics.com. The live audio of the conference call can also be accessed by telephone by dialing either (866) 999-CYTK (2985) (United States and Canada) or (706) 679-3078 (international) and typing in the passcode 46689063.

An archived replay of the webcast will be available via Cytokinetics’ website until November 2, 2017. The replay will also be available via telephone by dialing (855) 859-2056 (United States and Canada) or (404) 537-3406 (international) and typing in the passcode 46689063 from October 26, 2017 at 7:30 PM Eastern Time until November 2, 2017.

On October 26, 2017 argenx (Euronext Brussels & Nasdaq: ARGX), a clinical-stage biotechnology company developing a deep pipeline of differentiated antibody-based therapies for the treatment of severe autoimmune diseases and cancer, reported financial results and provided a business update for the third quarter ended September 30, 2017 (Press release, argenx, OCT 26, 2017, View Source [SID1234521183]).

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"We made strong progress during the third quarter launching the Phase 2 study of ARGX-113 in pemphigus vulgaris (PV) and delivering on our promise to expand the ARGX-113 program into new, carefully selected indications. With data readouts expected in 2018 from the Phase 2 studies in myasthenia gravis (MG), immune thrombocytopenia (ITP) and now PV, we will evaluate ARGX-113 in indications where disease progression is driven by pathogenic autoantibodies of the Immunoglobulin G (IgG) type," commented Tim Van Hauwermeiren, CEO of argenx. "We are also progressing well with our lead oncology candidate, ARGX-110, and expect interim data from both our Phase 1/2 trial in acute myeloid leukemia (AML) and Phase 2 trial in cutaneous T-cell lymphoma (CTCL) by the 2017 American Society of Hematology (ASH) (Free ASH Whitepaper) Annual Meeting (December, 2017). Between our wholly-owned pipeline and our programs partnered with AbbVie, Leo Pharma and through our Innovative Access Program, we believe we are very well-positioned for a catalyst-rich 2018."

THIRD QUARTER 2017 AND RECENT HIGHLIGHTS

Products in clinical development:

ARGX-113

Completed enrollment for Phase 2 clinical trial of MG.

Announced orphan drug designation by U.S. Food and Drug Administration for ARGX-113 for the treatment of MG.

Reached 50% enrollment in Phase 2 proof-of-concept clinical trial of ARGX-113 in ITP.

Launched Phase 2 proof-of-concept clinical trial of ARGX-113 for the treatment of PV.

ARGX-111

Met safety endpoints in the Phase 1 clinical trial in treatment-refractory patients with advanced cancers whose tumors overexpress the MET protein. Complete data set from ARGX-111 Phase 1b clinical trial presented at Best of ASCO (Free ASCO Whitepaper) Asia 2017 (Singapore).

Collaborations:

ARGX-116

< >nnounced publication of new preclinical data in ‘Nature Medicine’ on ARGX-116 inhibiting ApoC3, a metabolic target correlated with blood lipid levels that provide further rationale for the development of ARGX-116 for the treatment of dyslipidemia.
Established argenx US, Inc., a U.S. subsidiary located in Boston.

UPCOMING CLINICAL MILESTONES

ARGX-113

< >line data from Phase 2 clinical trials in MG expected in 1Q 2018 at the latest and ITP expected in 2H 2018. Interim data from Phase 2 clinical trial in PV expected in 2H 2018.
Initiation of Phase 1 clinical trial of subcutaneous dosing in healthy volunteers expected in Q4 2017.

ARGX-110

Interim data from Phase 1/2 clinical trial in AML and Phase 2 clinical trial in CTCL each expected by ASH (Free ASH Whitepaper) (December 11, 2017).

FINANCIAL HIGHLIGHTS (as of September 30, 2017) (compared to financial highlights as of September 30, 2016)

Operating income of €30.5 million (September 30, 2016: €12.5 million).

Total comprehensive loss of €16.5 million (September 30, 2016: €12.6 million).

Cash position of €161.7 million (cash, cash-equivalents and current financial assets) allowing argenx to pursue development of its pipeline as planned.

On October 25, 2017 Baxter International Inc. (NYSE:BAX) reported results for the third quarter of 2017 and updated its financial outlook for full-year 2017.
"Baxter’s solid performance in the third quarter reflects our continued focus on disciplined execution," said José (Joe) E. Almeida, chairman and chief executive officer. "We are advancing innovation and operational excellence across the organization to deliver positive results for our stakeholders — even as we respond to extraordinary challenges like the recent natural disasters across the Americas and the Caribbean. I’m proud of how our employees continuously step up to make a difference for our patients, healthcare providers, global communities and fellow colleagues."

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BAXTER REPORTS THIRD-QUARTER 2017 RESULTS AND UPDATES FINANCIAL OUTLOOK FOR FULL-YEAR 2017 — PAGE 2

Third-Quarter Financial Results
In the third quarter, worldwide sales totaled $2.7 billion, an increase of 6 percent on a reported, constant currency and operational basis as compared to the prior-year period. Operational sales adjust for the impact of foreign exchange, generic competition for U.S. cyclophosphamide, the Claris Injectables (Claris) acquisition and the previously communicated select strategic product exits the company is undertaking.
Sales within the U.S. were approximately $1.1 billion, advancing 8 percent. International sales totaled approximately $1.6 billion, representing a 5 percent increase on a reported basis and a 4 percent increase on a constant currency basis. Baxter’s operational sales rose 7 percent in the U.S. and 6 percent internationally.
Global sales for Hospital Products totaled $1.7 billion in the third quarter, advancing 7 percent on both a reported basis and constant currency basis and 6 percent operationally as compared to the prior-year period. Performance in the quarter benefited from continued strength in our U.S. fluid systems business as well as favorable demand for injectable pharmaceuticals reflecting a contribution of approximately $27 million of sales from the July 27 acquisition of Claris. Sales in the quarter also benefited from increased sales of anesthesia and critical care products as well as hospital pharmacy compounding services.
Baxter’s third quarter Renal sales were approximately $1 billion, representing an increase of 3 percent on both a reported basis and constant currency basis. Operationally, Renal sales advanced 6 percent in the quarter driven by improved performance across all major product lines and therapies globally.

– more –
BAXTER REPORTS THIRD-QUARTER 2017 RESULTS AND UPDATES FINANCIAL OUTLOOK FOR FULL-YEAR 2017 — PAGE 3

Baxter reported income from continuing operations of $248 million, or $0.45 per diluted share, on a GAAP (Generally Accepted Accounting Principles) basis for the third quarter. These results included special items totaling $149 million ($108 million net after-tax), primarily related to business optimization, intangible asset amortization, product-related reserves, Claris integration expenses and Puerto Rico-related expenses post Hurricane Maria.
On an adjusted basis, excluding special items, Baxter’s third quarter income from continuing operations totaled $356 million, or $0.64 per diluted share, exceeding the company’s previously issued guidance of $0.58 to $0.60 per diluted share.
Business Highlights
In support of its strategy to accelerate profitable growth and deliver meaningful innovation for patients and healthcare professionals around the world, Baxter has achieved a number of recent operational, pipeline and commercial milestones.

•
Completed the acquisition of Claris Injectables Limited, a global generic injectables pharmaceutical company. The transaction significantly broadens Baxter’s presence in the generic pharmaceuticals space. Baxter is in the process of fully integrating Claris into its systems.

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– more –
BAXTER REPORTS THIRD-QUARTER 2017 RESULTS AND UPDATES FINANCIAL OUTLOOK FOR FULL-YEAR 2017 — PAGE 4

•
Enrolled the first patients in two new clinical trials for a unique expanded hemodialysis (HDx) therapy enabled by THERANOVA. HDx therapy extends the range of molecules that can be cleared from the blood during hemodialysis (HD), resulting in a clearance profile that more closely mimics the natural kidney.1 The U.S. trial will support submission for marketing authorization from FDA. THERANOVA is currently available in several markets worldwide, including Colombia, where the company also launched a second multi-center, prospective trial of the technology. These efforts are part of Baxter’s growing investment in generating compelling scientific evidence supporting the approval of and access to innovative therapies.

•
Launched the first 3-in-1 set for use in continuous renal replacement therapy (CRRT) and sepsis management protocols in select markets across Europe, Middle East and Africa. With this new indication, the oXIRIS set, which is used on the company’s leading PRISMAFLEX system, can now be employed to help remove excessive levels of cytokines, endotoxin and other inflammatory mediators from a patient’s blood.

Puerto Rico Update
In follow up to the company’s Oct. 12 press release, Baxter remains in limited production across all three manufacturing sites in Puerto Rico and is continuing to work with infrastructure providers to advance reliable restoration activities for power, communications and transportation.

– more –
BAXTER REPORTS THIRD-QUARTER 2017 RESULTS AND UPDATES FINANCIAL OUTLOOK FOR FULL-YEAR 2017 — PAGE 5

The company remains focused on helping ensure patients have continued access to the products and therapies they need. To this end, Baxter has been working with FDA and has recently been granted regulatory discretion for temporary special importation of certain products from Baxter facilities in Ireland, Australia, Canada and Mexico to help support product supply for the U.S. market. While these actions will help mitigate some of the projected shortfall in supply, they will not be adequate to fully bridge the gap in the fourth quarter.
2017 Financial Outlook
Baxter currently projects fourth quarter revenues to be negatively impacted by approximately $70 million due to the temporary manufacturing disruptions resulting from Hurricane Maria.
For full-year 2017: Baxter now expects sales growth of approximately 4 percent on a reported basis, approximately 4 percent on a constant currency basis, and approximately 4 to 5 percent operationally. Earnings from continuing operations, before special items, are now expected to be $2.40 to $2.43 per diluted share.
For the fourth quarter: The company expects sales growth of 4 to 5 percent on a reported basis, approximately 2 percent on a constant currency basis and 1 to 2 percent operationally. The company expects earnings from continuing operations, before special items, of $0.56 to $0.59 per diluted share.
Please see the schedules accompanying this press release for reconciliations between the projected 2017 operational sales and adjusted earnings per diluted share to the projected GAAP sales and earnings per diluted share.

On October 25, 2017 United Therapeutics Corporation (NASDAQ: UTHR) reported its financial results for the third quarter ended September 30, 2017 (Press release, United Therapeutics, OCT 25, 2017, View Source [SID1234521167]).

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“Our third quarter net revenues totaled $446 million,” said Martine Rothblatt, Ph.D., United Therapeutics Chairman and Chief Executive Officer. “In addition, Orenitram’s third quarter net revenues grew 29%, as compared to the same period in the prior year, resulting in two consecutive quarters of greater than 20% net revenue growth for this product. This further confirms our belief in the organic growth opportunity of Orenitram, which is the only true oral prostacyclin analog therapy for the large and increasing number of pulmonary arterial hypertension (PAH) patients. We also continued to invest in our growing pipeline of late stage programs in cardiopulmonary diseases and oncology, including the initial enrollment of patients into our phase III DISTINCT study of dinutuximab in small cell lung cancer, and our SOUTHPAW study of Orenitram in patients with WHO Group 2 pulmonary hypertension associated with left heart failure. Finally, we have continued to invest in our regenerative medicine and organ manufacturing programs to ultimately find a cure for PAH and other end-stage organ diseases.”

Key financial highlights include (dollars in millions, except per share data):

Three Months Ended
September 30,

Percentage



2017

2016

Changes









Revenues

$
445.5

$
408.2

9
%
Net income

$
276.3

$
161.8

71
%
Non-GAAP earnings(1)

$
206.9

$
195.6

6
%
Net income, per diluted share

$
6.27

$
3.50

79
%
Non-GAAP earnings, per diluted share(1)

$
4.69

$
4.23

11
%










(1)
See definition of non-GAAP earnings, a non-GAAP financial measure, and a reconciliation of net income to non-GAAP earnings below.
Financial Results for the Three Months Ended September 30, 2017 compared to the Three Months Ended September 30, 2016

Revenues

The following table presents the components of total revenues (dollars in millions):



Three Months Ended
September 30,

Percentage



2017

2016

Change

Net product sales:







Remodulin


$
187.3

$
152.4

23
%
Tyvaso


88.9

101.8

(13)
%
Adcirca


99.8

96.0

4
%
Orenitram


52.5

40.7

29
%
Unituxin


17.0

17.3

(2)
%
Total revenues


$
445.5

$
408.2

9
%
Revenues for the three months ended September 30, 2017 increased by $37.3 million as compared to the same period in 2016. The growth in revenues resulted from the following: (1) a $34.9 million increase in Remodulin net product sales; (2) an $11.8 million increase in Orenitram net product sales; and (3) a $3.8 million increase in Adcirca net product sales. During the three months ended September 30, 2017, an international distributor made a one-time purchase of Remodulin inventory of $47.4 million due to an expansion of the distributor’s commercial responsibilities. Because the payment terms span two quarters, this purchase increased our net revenues by $23.7 million during the three months ended September 30, 2017, with an additional increase of $23.7 million expected in the fourth quarter. These increases were partially offset by a $12.9 million decrease in Tyvaso net product sales and a $0.3 million decrease in Unituxin net product sales. $12.2 million of the decrease in Tyvaso net product sales was due to an additional one-time $12.2 million liability for estimated Medicaid rebates relating to Tyvaso sales prior to July 1, 2017 that we recorded during the three months ended September 30, 2017.

Expenses

Cost of product sales. The following table summarizes cost of product sales by major category (dollars in millions):



Three Months Ended
September 30,

Percentage



2017

2016

Change

Category:







Cost of product sales, excluding share-based compensation


$
21.3

$
20.0

7
%
Share-based compensation (benefit) expense(1)


(1.8)

3.6

(150)
%
Total cost of product sales


$
19.5

$
23.6

(17)
%










(1)
Refer to Share-based compensation (benefit) expense below for discussion.
Research and development expense. The following table summarizes research and development expense by major category (dollars in millions):



Three Months Ended
September 30,

Percentage



2017

2016

Change

Category:







Research and development, excluding share-based compensation


$
62.0

$
37.2

67
%
Share-based compensation (benefit) expense(1)


(7.0)

8.7

(180)
%
Total research and development expense


$
55.0

$
45.9

20
%










(1)
Refer to Share-based compensation (benefit) expense below for discussion.
Research and development, excluding share-based compensation. The increase in research and development expense of $24.8 million for the three months ended September 30, 2017, as compared to the same period in 2016, was driven by the expansion of our pipeline programs to treat cardiopulmonary diseases and cancer and to develop technologies in organ manufacturing. Research and development expense for the treatment of cardiopulmonary diseases increased by $14.3 million for the three months ended September 30, 2017, as compared to the same period in 2016, due to increased spending on several clinical and non-clinical studies, including FREEDOM-EV, INCREASE and SOUTHPAW, and on the development of new drug products, including RemoPro, and drug delivery devices, including the RemoSynch and RemUnity systems. Research and development expenses for cancer-related projects increased by $5.9 million for the three months ended September 30, 2017, as compared to the same period in 2016, driven by an increase in spending on the DISTINCT study. Research and development expenses for our organ manufacturing projects increased by $4.1 million for the three months ended September 30, 2017, as compared to the same period in 2016, due to increased preclinical work on technologies designed to increase the supply and distribution of transplantable organs and tissues.

Selling, general and administrative expense. The following table summarizes selling, general and administrative expense by major category (dollars in millions):



Three Months Ended
September 30,

Percentage



2017

2016

Change

Category:







General and administrative, excluding share-based compensation


$
46.6

$
42.4

10
%
Sales and marketing, excluding share-based compensation


15.8

20.1

(21)
%
Share-based compensation (benefit) expense(1)


(15.2)

37.6

(140)
%
Total selling, general and administrative expense


$
47.2

$
100.1

(53)
%










(1)
Refer to Share-based compensation (benefit) expense below for discussion.
General and administrative, excluding share-based compensation. The increase in general and administrative expense of $4.2 million for the three months ended September 30, 2017, as compared to the same period in 2016, was driven by a $2.7 million increase in legal fees incurred in connection with intellectual property litigation and the U.S. Department of Justice (DOJ) investigation of our support of 501(c)(3) organizations that provide financial assistance to patients.

Sales and marketing, excluding share-based compensation. The decrease in sales and marketing expense of $4.3 million for the three months ended September 30, 2017, as compared to the same period in 2016, was driven by a $3.7 million decrease in compensation and related costs associated with the 2016 consolidation of our sales and marketing staff.

Share-based compensation (benefit) expense. The following table summarizes share-based compensation (benefit) expense by major category (dollars in millions):



Three Months Ended
September 30,

Percentage



2017

2016

Change

Category:







Share tracking awards plan


$
(38.0)

$
45.8

(183)
%
Stock options


13.1

3.3

297
%
Other(1)


0.9

0.8

13
%
Total share-based compensation (benefit) expense


$
(24.0)

$
49.9

(148)
%










(1)
Includes expense related to restricted stock units and employee stock purchase plan.
Share tracking awards plan. We re-measure the fair value of share tracking awards at the end of each financial reporting period. Changes in the share tracking award liability resulting from such re-measurements are recorded as adjustments to share-based compensation (benefit) expense. Decreases in our stock price will generally result in a reduction in the share tracking award liability.

Income Tax Expense

The provision for income taxes was $44.4 million for the three months ended September 30, 2017, as compared to $77.3 million for the same period in 2016. The provision for income taxes is based on an estimated annual effective tax rate for the entire year. The estimated annual effective tax rate is subject to adjustment in subsequent quarterly periods if components used to estimate the annual effective tax rate are updated or revised. Our effective tax rate as of September 30, 2017 and September 30, 2016, was approximately 37 percent and approximately 32 percent, respectively. Our 2017 effective tax rate increased compared to 2016 primarily due to expenses that do not meet the criteria for tax deductibility.

Share Repurchase

In April 2017, our Board of Directors approved a share repurchase program, authorizing up to $250.0 million in aggregate repurchases of our common stock. Pursuant to this authorization, in May 2017 we paid $250.0 million to enter into an accelerated share repurchase agreement (ASR) with Citibank, N.A. (Citibank). Pursuant to the terms of the ASR, in June 2017 Citibank delivered to us approximately 1.7 million shares of our common stock, representing the minimum number of shares we were entitled to receive under the ASR. The ASR was originally scheduled to terminate during the fourth quarter of 2017; however, in September 2017 Citibank notified us of its election to accelerate the termination date of the contract to September 8, 2017. Upon termination of the ASR, Citibank delivered to us approximately 0.3 million additional shares of our common stock.

Non-GAAP Earnings

Non-GAAP earnings is defined as net income, adjusted for: (1) share-based compensation (benefit) expense, net (including expenses relating to stock options, share tracking awards, restricted stock units and our employee stock purchase plan); (2) extraordinary, non-recurring and unusual items; and (3) tax impact on non-GAAP earnings adjustments.

A reconciliation of net income to non-GAAP earnings is presented in the following table (in millions, except per share data):



Three Months Ended
September 30,



2017

2016

Net income, as reported

$
276.3

$
161.8

Adjusted for:





Share-based compensation (benefit) expense, net(1)


(24.0)

49.9

Estimated loss contingency(1)


0.9

—

Impairment of cost method investments(2)


3.1

—

Tax benefit (expense)(1)(3)


(49.4)

(16.1)

Non-GAAP earnings

$
206.9

$
195.6

Non-GAAP earnings per share:





Basic


$
4.77

$
4.53

Diluted


$
4.69

$
4.23

Weighted average number of common shares outstanding:





Basic


43.4

43.2

Diluted


44.1

46.2









(1)
We calculated the total tax impact of non-discrete quarterly non-GAAP earnings adjustments based on our estimated annual effective tax rates, before considering discrete items, of approximately 33 percent and approximately 32 percent for each of the quarters ended September 30, 2017 and 2016, respectively.
(2)
This non-GAAP earnings adjustment is currently not considered tax deductible.
(3)
The tax benefit (expense) for the three months ended September 30, 2017 includes $57.0 million of benefit for the estimated loss contingency recognized during the second quarter of 2017 relating to the DOJ investigation of our support of 501(c)(3) organizations that provide financial assistance to patients.

On October 25, 2017 Swedish Orphan Biovitrum AB (publ) (Sobi) reported its results for the third quarter 2017 (Press release, Swedish Orphan Biovitrum, OCT 25, 2017, View Source;Media/News/RSS/?RSS=View Source [SID1234521139]). Total revenues amounted to SEK 1,601 M, an increase of 37 per cent. Product sales amounted to SEK 1,459 M, an increase of 45 per cent. Elocta sales were SEK 417 M and Alprolix sales were SEK 98 M.

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Business highlights Q3 2017

Focus on future growth
37 per cent sales growth in the quarter
601 per cent product sales growth in Haemophilia
Solid development for Orfadin 20 mg and oral suspension in the US
Financial summary Q3 2017 (Q3 2016)

Total revenue was SEK 1,601 M (1,171), an increase of 37 per cent (41 per cent at CER)
Product revenue was SEK 1,459 M (1,009), an increase of 45 per cent (48 per cent at CER)
Gross margin was 70 per cent (67)
EBITA was SEK 536 M (282)
Cash position SEK 1,758 M (SEK 786 M as of 31 December 2016)
Earnings per share 1.20 SEK (0.50)
Financial summary Jan-Sep 2017 (Jan-Sep 2016)

Total revenue was SEK 4,636 M (3,913), an increase of 18 per cent (16 per cent at CER)
Product revenue was SEK 4,171 M (3,404), an increase of 23 per cent (20 per cent at CER)
Gross margin was 72 per cent (71)
EBITA was SEK 1,434 M (1,333)
Earnings per share 2.94 SEK (2.71)
Outlook 2017(1,2) – updated
Sobi now expects total revenues for the full year to be in the range of SEK 6,300 to 6,400 M (6,100-6,200).
Gross margin is expected to be around 70 per cent, unchanged.
Sobi now expects EBITA for the full year to be in the range of SEK 1,900 to 2,000 M (1,700-1,800).

(1) At current exchange rates.

(2) The latest outlook was published on 19 July 2017.

Guido Oelkers, CEO:
"A strong business performance was shown across the portfolio in the third quarter, with the main contributors being Elocta and Alprolix. Elocta sales increased more than 600 per cent compared to the same period last year and Alprolix sales increased with approximately 500 per cent. This strong growth momentum encourages us to be confident around the prospects of our Haemophilia franchise.

Our growth strategy has been designed to capitalise on the substantial potential in Haemophilia. Based on this solid platform we will further balance the business with a broader Specialty Care portfolio to ensure a sustainable company in both the short and long-term".

Financial summary
Q3 Q3 Jan-Sep Jan-Sep Full year
Amounts in SEK M 2017 2016 Change 2017 2016 Change 2016
Total revenues1 1,601 1,171 37% 4,636 3,913 18% 5,204
Gross profit2 1,129 782 44% 3,320 2,791 19% 3,651
Gross margin 70% 67% 72% 71% 70%
EBITA 536 282 90% 1,434 1,333 8% 1,543
EBIT (Operating profit/loss) 426 171 149% 1,092 1,033 6% 1,133
Profit for the period 324 135 141% 791 728 9% 801
(1)Jan-Sep 2016 revenues include a one-time credit received in Q1 of SEK 322 M relating to the first commercial sales of Elocta, and a one-time credit received in Q2 of SEK 386 M relating to first commercial sales of Alprolix.
(2)Jan-Sep 2017 includes a one-time inventory adjustment of SEK 59 M in Q1 due to delayed release of Kineret drug substance manufactured in 2016.
Telephone conference

Financial analysts and media are invited to participate in a telephone conference, which will include a presentation of the results, today at 14:00 CET. The event will be hosted by Sobi’s CEO and President, Guido Oelkers, and the presentation will be held in English.

The presentation can be followed live, or afterwards on www.sobi.com. Slides used in the presentation will be made available on Sobi’s website prior to the telephone conference.

To participate in the telephone conference, please call:

UK: +44 203 008 9809
SE: +46 8 566 426 94
US: +1 855 831 5948

Live audience URL:
View Source

(The recording will be made available via the audience URL within three hours after the live broadcast.)

Sobi’s report for the third quarter 2017 can be found on View Source;Media/Financial-Reports/