On August 9, 2016 Mast Therapeutics, Inc. (NYSE MKT: MSTX), a biopharmaceutical company developing novel, clinical-stage therapies for sickle cell disease and heart failure, reported financial results for the quarter ended June 30, 2016.
"We continued to advance our assets toward valuable inflection points during the second quarter. Announcing top-line data from the EPIC study continues to be our top priority. With 388 subjects randomized at study sites around the globe, EPIC was the largest placebo-controlled study in sickle cell disease ever concluded and we look forward to announcing results next month. To support our NDA for vepoloxamer, we also continue to enroll patients in EPIC-E, our repeat exposure study for EPIC patients, and in a clinical pharmacokinetics study of vepoloxamer in individuals with varying degrees of renal insufficiency," stated Brian M. Culley, Chief Executive Officer.

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"In addition, clinical development of AIR001 in heart failure with preserved ejection fraction is progressing through multiple Phase 2 studies. In particular, we are pleased that the first patient was dosed in the 100-patient Phase 2 study being conducted by the Heart Failure Clinical Research Network," continued Mr. Culley.

Second Quarter 2016 Operating Results

The Company’s net loss for the second quarter of 2016 was $10.7 million, or $0.05 per share (basic and diluted), compared to a net loss of $10.2 million, or $0.06 per share (basic and diluted), for the same period in 2015.

Research and development (R&D) expenses for the second quarter of 2016 were $7.8 million, compared to $7.7 million for the same period in 2015. Increases of $0.5 million in external clinical study fees and expenses and $0.1 million in share-based compensation expense were offset by a $0.5 million decrease in external nonclinical study fees and expenses.

The increase in external clinical study fees and expenses was due primarily to increased costs related to the Company’s Phase 2 study of vepoloxamer in heart failure ($0.7 million) and the Phase 2 studies of AIR001 in HFpEF ($0.4 million), offset by decreases in costs for the EPIC study ($0.4 million) and the Phase 2 study of vepoloxamer in acute limb ischemia, which the Company began to wind-down in the third quarter of 2015 ($0.2 million). The decrease in external nonclinical study fees and expenses was due primarily to decreases in research-related manufacturing costs for vepoloxamer ($1.2 million) and nonclinical studies of vepoloxamer ($0.4 million), offset by increased costs related to preparing a new drug application for vepoloxamer ($0.9 million) and research-related manufacturing for AIR001 ($0.2 million).

Selling, general and administrative (SG&A) expenses were $2.4 million in each of the second quarter of 2016 and the second quarter of 2015.

Interest expense for the second quarter of 2016 was $512,000, $511,000 of which was related to the Company’s debt facility. There was interest expense of $1,000 for the second quarter of 2015.

Year-to-Date Financial Results

The Company’s net loss for the six months ended June 30, 2016 was $21.9 million, or $0.12 per share (basic and diluted), compared to a net loss of $19.8 million, or $0.12 per share (basic and diluted), for the same period in 2015.

R&D expenses for the six months ended June 30, 2016 were $15.6 million, an increase of $1.8 million, or 13%, compared to $13.8 million for the same period in 2015. The increase was due primarily to increases of $1.0 million in external clinical study fees and expenses, $0.4 million in external nonclinical study fees and expenses, $0.2 million in personnel expenses and $0.2 million in share-based compensation.

The $1.0 million increase in external clinical study fees and expenses was due primarily to increases in costs for our Phase 2 study of vepoloxamer in heart failure ($1.2 million) and the Phase 2 studies of AIR001 in HFpEF ($0.4 million), offset by a decrease in costs for the Phase 2 study of vepoloxamer in ALI ($0.5 million). The $0.4 million increase in external nonclinical study fees and expenses was due primarily to increases in costs related to preparing a new drug application for vepoloxamer ($1.4 million) and research-related manufacturing for AIR001 ($0.2 million), offset by decreases in research-related manufacturing costs for vepoloxamer ($0.8 million) and costs for nonclinical studies of vepoloxamer ($0.3 million).

SG&A expenses for the six months ended June 30, 2016 were $5.3 million, a decrease of $0.7 million, or 12%, compared to $6.0 million for the same period in 2015. SG&A expenses for the first six months of 2015 included $0.4 million of severance expenses and $0.3 million of share-based compensation resulting from the termination of employment of the Company’s former president and chief operating officer in February 2015 and the acceleration of stock option vesting pursuant to the terms of his option agreements.

Interest expense for the six months ended June 30, 2016 was $1,031,000, $1,029,000 of which was related to the Company’s debt facility. There was interest expense of $1,000 for the same period of 2015.

On August 9, 2016 Jazz Pharmaceuticals plc (Nasdaq: JAZZ) reported financial results for the second quarter of 2016 and updated financial guidance for 2016 (Press release, Jazz Pharmaceuticals, AUG 9, 2016, View Source;p=RssLanding&cat=news&id=2194317 [SID:1234514477]).

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"We have made significant progress in 2016, as we continue to build the foundation for future growth by further diversifying and strengthening our hematology/oncology portfolio with the addition of Vyxeos, a late-stage product candidate for the treatment of acute myeloid leukemia, through the acquisition of Celator Pharmaceuticals," said Bruce Cozadd, chairman and chief executive officer of Jazz Pharmaceuticals. "We achieved strong organic sales growth of our key products, including a significant contribution from the U.S. launch of Defitelio, received FDA approval of our manufacturing facility in Athlone, Ireland and entered into additional corporate development transactions with the potential to bring innovative treatment options to patients."

GAAP net income attributable to Jazz Pharmaceuticals plc for the second quarter of 2016 was $111.3 million, or $1.80 per diluted share, compared to $88.1 million, or $1.40 per diluted share, for the second quarter of 2015.

The company has modified the calculation of its non-GAAP income tax provision and has reflected this modification in its 2015 and 2016 non-GAAP interim period results and full-year 2016 financial guidance in connection with the Securities and Exchange Commission’s May 2016 guidance pertaining to non-GAAP financial measures. The company’s modified calculation no longer includes the cash tax benefits the company realizes during the year from net operating losses and credits and deductible share-based compensation and now includes other deferred taxes and changes in unrecognized tax benefits. This modification does not change the amount of cash taxes that the company expects to pay in 2016 or in the future, and therefore has no impact on the company’s future expected cash flows. This modification does not reflect a change in the amount of cash taxes that the company expects to pay in 2016, or in the future, or a change to the company’s expected future cash flows.

Adjusted net income attributable to Jazz Pharmaceuticals plc for the second quarter of 2016 was $162.6 million, or $2.63 per diluted share. Without giving effect to the modification described above, adjusted net income attributable to Jazz Pharmaceuticals plc for the second quarter of 2016 would have been $174.3 million, or $2.82 per diluted share. Adjusted net income attributable to Jazz Pharmaceuticals plc for the second quarter of 2015 was $144.2 million, or $2.28 per diluted share. Without giving effect to the modification described above, adjusted net income attributable to Jazz Pharmaceuticals plc for the second quarter of 2015 was previously reported as $152.2 million, or $2.41 per diluted share. Reconciliations of applicable GAAP reported to non-GAAP adjusted information are included in this press release.

Financial Highlights

Three Months Ended
June 30,

Six Months Ended
June 30,

(In thousands, except per share amounts and percentages)
2016

2015

Change

2016

2015

Change
Total revenues
$
381,161

$
333,747

14.2
%

$
717,171

$
643,050

11.5
%
GAAP net income attributable to Jazz Pharmaceuticals plc
$
111,282

$
88,114

26.3
%

$
185,403

$
158,814

16.7
%
Adjusted net income attributable to Jazz Pharmaceuticals plc1
$
162,584

$
144,151

12.8
%

$
295,461

$
259,666

13.8
%
GAAP EPS attributable to Jazz Pharmaceuticals plc
$
1.80

$
1.40

28.6
%

$
2.98

$
2.52

18.3
%
Adjusted EPS attributable to Jazz Pharmaceuticals plc1
$
2.63

$
2.28

15.4
%

$
4.75

$
4.12

15.3
%
____________________________

1.
Without giving effect to the modification of the calculation of non-GAAP income tax provision described above, adjusted net income attributable to Jazz Pharmaceuticals plc would have been $174.3 million, or $2.82 per diluted share, and was previously reported as $152.2 million, or $2.41 per diluted share, for the three months ended June 30, 2016 and 2015, respectively. Without giving effect to the modification described above, adjusted net income attributable to Jazz Pharmaceuticals plc would have been $315.3 million, or $5.07 per diluted share, and was previously reported as $277.2 million, or $4.40 per diluted share, for the six months ended June 30, 2016 and 2015, respectively.

Total Revenues

Three Months Ended
June 30,

Six Months Ended
June 30,
(In thousands)
2016

2015

2016

2015
Xyrem (sodium oxybate) oral solution
$
280,968

$
247,846

$
530,505

$
460,536

Erwinaze / Erwinase (asparaginase Erwinia chrysanthemi)
49,748

46,151

100,921

96,504

Defitelio (defibrotide sodium) / defibrotide
33,246

15,257

51,143

32,620

Prialt (ziconotide) intrathecal infusion
8,073

7,138

14,282

13,902

Psychiatry
3,867

9,372

10,869

18,465

Other
3,208

6,342

5,306

17,114

Product sales, net
379,110

332,106

713,026

639,141

Royalties and contract revenues
2,051

1,641

4,145

3,909

Total revenues
$
381,161

$
333,747

$
717,171

$
643,050

Net product sales increased 14% in the second quarter of 2016 compared to the same period in 2015 due to higher net product sales of Xyrem, Erwinaze and Defitelio.

Xyrem net product sales increased 13% in the second quarter of 2016 compared to the same period in 2015.

Erwinaze/Erwinase net product sales increased 8% in the second quarter of 2016 compared to the same period in 2015. While Erwinaze net product sales increased, the company expects to continue to experience inventory and supply challenges, which may result in temporary disruptions in the company’s ability to supply certain markets, including the U.S., from time to time. The company continues to work with distributors to prioritize delivery of drug to institutions for the treatment of patients who have been prescribed Erwinaze.

Defitelio/defibrotide net product sales increased $18.0 million in the second quarter of 2016 compared to the same period in 2015. The increase in net product sales was due to net sales of $9.5 million following the April 2016 launch of Defitelio in the U.S. and a significant increase in net product sales outside of the U.S.

Operating Expenses

Three Months Ended
June 30,

Six Months Ended
June 30,
(In thousands, except percentages)
2016

2015

2016

2015
GAAP:

Cost of product sales
$
23,980

$
21,813

$
47,419

$
50,111

Gross margin
93.7
%

93.4
%

93.3
%

92.2
%
Selling, general and administrative
$
122,618

$
107,132

$
251,383

$
219,520

% of total revenues
32.2
%

32.1
%

35.1
%

34.1
%
Research and development
$
39,091

$
27,833

$
70,343

$
55,014

% of total revenues
10.3
%

8.3
%

9.8
%

8.6
%
Acquired in-process research and development
$
—

$
—

$
8,750

$
—

Non-GAAP adjusted:

Cost of product sales
$
23,017

$
21,041

$
45,657

$
48,644

Gross margin
93.9
%

93.7
%

93.6
%

92.4
%
Selling, general and administrative
$
99,488

$
88,470

$
202,099

$
183,511

% of total revenues
26.1
%

26.5
%

28.2
%

28.5
%
Research and development
$
35,562

$
23,967

$
63,524

$
47,663

% of total revenues
9.3
%

7.2
%

8.9
%

7.4
%

Operating expenses changed over the prior year period primarily due to the following:

Selling, general and administrative (SG&A) expenses increased in the second quarter of 2016 compared to the same period in 2015, on a GAAP and on a non-GAAP adjusted basis, primarily due to higher headcount and other expenses resulting from the expansion of the company’s business.
Research and development (R&D) expenses increased in the second quarter of 2016 compared to the same period in 2015, on a GAAP and on a non-GAAP adjusted basis, primarily due to higher costs for clinical studies and outside services for the development of JZP-110 and line extensions for the company’s existing products.
Cash Flow and Balance Sheet

As of June 30, 2016, cash, cash equivalents and investments were $916.4 million, and the outstanding principal balance of the company’s long-term debt was $1.3 billion. Cash, cash equivalents and investments decreased from December 31, 2015 primarily due to repurchases under the company’s share repurchase program and a $150.0 million milestone payment triggered by the U.S. Food and Drug Administration (FDA) approval of Defitelio on March 30, 2016, partially offset by cash generated by the business. During the six months ended June 30, 2016, the company repurchased 1.3 million ordinary shares for $163.2 million, at an average cost of $126.74 per ordinary share.

Recent Developments

In June 2016, the company received FDA approval for its manufacturing facility in Athlone, Ireland. Xyrem and certain development product candidates will be manufactured in this facility.

On July 12, 2016, the company completed its acquisition of Celator Pharmaceuticals, Inc. for approximately $1.5 billion.

On July 12, 2016, the company amended its existing credit agreement by increasing the revolving credit facility to $1.25 billion from $750 million and extending the maturity date of the term loan facility and revolving credit facility to July 2021 from June 2020. The company used borrowings of $1.0 billion under the company’s revolving credit facility, together with cash on hand, to fund the Celator acquisition, resulting in an increase of the outstanding principal balance of long-term debt to approximately $2.3 billion.

On August 2, 2016, the U.S. Centers for Medicare and Medicaid Services approved a New Technology Add-on Payment (NTAP) for Defitelio after determining that Defitelio met the NTAP criteria for newness, substantial clinical improvement relative to existing therapies and specific cost thresholds. Beginning October 1, 2016, NTAP will provide incremental reimbursement to the standard diagnosis-related group based reimbursement for Defitelio, which should support Medicare beneficiaries’ access to Defitelio when treated in certain inpatient hospital settings.

2016 Financial Guidance*

Jazz Pharmaceuticals is updating its full year 2016 financial guidance primarily due to the acquisition of Celator Pharmaceuticals and modification of the calculation of non-GAAP income tax provision, as follows (in millions, except per share amounts and percentage):

Revenues
$1,485-$1,530
Total net product sales
$1,477-$1,522
-Xyrem net sales
$1,095-$1,130
-Erwinaze/Erwinase net sales
$190-$215
-Defitelio/defibrotide net sales
$105-$125
GAAP gross margin %
93%
Non-GAAP adjusted gross margin %1,4
93%
GAAP SG&A expenses
$499-$529
Non-GAAP adjusted SG&A expenses2,4
$400-$415
GAAP R&D expenses
$149-$161
Non-GAAP adjusted R&D expenses3,4
$135-$145
GAAP net income per diluted share
$5.66-$6.56
Non-GAAP adjusted net income per diluted share4
$9.90-$10.30
____________________________

*
Updated August 9, 2016. The company’s 2016 financial guidance remains subject to final acquisition accounting adjustments for the acquisition of Celator Pharmaceuticals.

1.
Excludes $5 million of share-based compensation expense from estimated GAAP gross margin.
2.
Excludes $78-$86 million of share-based compensation expense, $15-$22 million of transaction and integration related costs and $6 million of expenses related to certain legal proceedings and restructuring from estimated GAAP SG&A expenses.
3.
Excludes $14-$16 million of share-based compensation expense from estimated GAAP R&D expenses.
4.
See "Non-GAAP Financial Measures" below. Reconciliations of non-GAAP adjusted guidance measures are included above and in the table titled "Reconciliation of GAAP to Non-GAAP Adjusted 2016 Net Income Guidance" provided on the last page of this press release.

On August 9, 2016 Mylan N.V. (NASDAQ, TASE: MYL) reported its financial results for the quarter and six months ended June 30, 2016 (Press release, Mylan, AUG 9, 2016, View Source [SID:1234514570]).

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Second Quarter 2016 Financial Highlights
Total revenues of $2.56 billion, up 8% compared to the prior year period

Generics segment third party net sales of $2.14 billion, up 4% compared to the prior year period

Specialty segment third party net sales of $402.5 million, up 33% compared to the prior year period

Current quarter total revenues were not significantly impacted by the effect of foreign currency translation

U.S. GAAP diluted earnings per ordinary share ("EPS") of $0.33, up 3% compared to the prior year period primarily due to higher sales and gross margins, partially offset by increased non-operating expenses driven mainly by certain Meda transaction related acquisition and financing costs

Adjusted diluted earnings per ordinary share ("adjusted EPS") of $1.16, up 28% compared to the prior year period

Six Months Ended June 30, 2016 Financial Highlights
Total revenues of $4.75 billion, up 12% compared to the prior year period

Generics segment third party net sales of $4.07 billion, up 10% compared to the prior year period

Specialty segment third party net sales of $650.4 million, up 27% compared to the prior year period

The unfavorable impact of foreign currency translation on current year total revenues was approximately $33 million, or 1%

U.S. GAAP diluted EPS of $0.36, down 22% compared to the prior year period primarily due to higher operating expenses, driven mainly by certain Meda transaction related acquisition and financing costs

Adjusted EPS of $1.92, up 19% compared to the prior year period

Mylan CEO Heather Bresch commented, "Our strong second quarter results delivered year-over-year total revenue growth of 8% and adjusted EPS growth of 28%. This solid performance, which included continued strength in our generics business and double digit revenue growth in our Specialty business, yet again underscores the strategic value of Mylan’s diversification and scale as well as our differentiation within our industry. Given our performance to date this year and our current trajectory, we are committed to our 2016 adjusted EPS guidance range of $4.85 to $5.15.

"We also are very excited about the completion of our Meda transaction, as well as the Renaissance topicals transaction that we completed in June, which continue to build on our unique global platform to create even greater scale, breadth, diversity and access across products, geographies and sales channels. These transactions also further strengthen our already very strong cash flows. We see significant opportunities to further differentiate Mylan for our customers, patients and other stakeholders as we bring these assets together."

Total Revenues

View News Release Full Screen

Three Months Ended

Six Months Ended

June 30,

June 30,
(Unaudited; in millions)
2016

2015

Percent
Change

2016

2015

Percent
Change
Total Revenues
$
2,560.7

$
2,371.7

8%

$
4,752.0

$
4,243.4

12%
Generics Third Party Net Sales
2,137.4

2,055.1

4%

4,065.6

3,698.7

10%
North America*
1,010.0

948.5

6%

1,929.7

1,803.5

7%
Europe
604.2

571.0

6%

1,191.9

977.3

22%
Rest of World*
523.2

535.6

(2)%

944.0

917.9

3%
Specialty Third Party Net Sales
402.5

301.9

33%

650.4

512.9

27%
Other Revenues
20.8

14.7

41%

36.0

31.8

13%
*Beginning in the first quarter of 2016, the Company reclassified sales from its Brazilian operation from Rest of World to North America. The amount reclassified for the three and six months ended June 30, 2015 was approximately $11.1 million and $21.3 million, respectively.
Second Quarter 2016 Financial Results
Total Revenue
Generics segment third party net sales were $2.14 billion for the quarter, an increase of 4% when compared to the prior year period. Generics third party net sales were not significantly impacted by the effect of foreign currency translation in the second quarter of 2016.
Third party net sales from North America were $1.01 billion for the quarter, an increase of 6% when compared to the prior year period. This increase was principally due to net sales from significant new products launched since July 1, 2015 ("new products") as a result of leveraging our strong global platform, partially offset by lower pricing and volumes on existing products. The unfavorable impact of foreign currency translation on current period third party net sales was approximately $4.8 million, or 1% within North America.
Third party net sales from Europe were $604.2 million for the quarter, an increase of 6% when compared to the prior year period. This increase was primarily the result of net sales from new products combined with higher volumes on existing products, while pricing was essentially flat in the current period as a result of our diversified product portfolio. The favorable impact of foreign currency translation on current period third party net sales was approximately $5.6 million, or 1% within Europe.
Third party net sales from Rest of World were $523.2 million for the quarter, a decrease of 2% when compared to the prior year period. New product introductions across the region and higher sales in Japan and emerging markets positively impacted sales in the quarter. Lower pricing and sales volumes in the region, including the anti-retroviral ("ARV") franchise, unfavorably impacted third party net sales. However, sales within our ARV franchise progressively improved throughout the quarter as HIV tender volumes increased, resulting in sales growth on a sequential basis of more than 30% compared to the first quarter of 2016. Third party net sales from Rest of World were not significantly impacted by the effect of foreign currency translation during the second quarter of 2016.
Specialty segment third party net sales were $402.5 million for the quarter, an increase of 33% when compared to the prior year period. This increase was primarily the result of higher unit volumes and the realization of the benefits of customer contract negotiations over the last several quarters related to the EpiPen Auto-Injector, and higher sales of the Perforomist Inhalation Solution and ULTIVA.
Total Gross Profit
Gross profit was $1.17 billion and $1.01 billion for the second quarter of 2016 and 2015, respectively. Gross margins were 46% and 43% in the second quarter of 2016 and 2015, respectively. Adjusted gross profit was $1.45 billion and adjusted gross margins were 56% for the quarter compared to adjusted gross profit of $1.28 billion and adjusted gross margins of 54% in the prior year period. Gross margins and adjusted gross margins were both positively impacted primarily by new product introductions and favorable Specialty sales in the second quarter of 2016.
Total Profitability
Earnings from operations were $410.9 million for the quarter, an increase of 49% from the comparable prior year period. This increase was primarily due to higher revenues and higher gross profit.
R&D expense increased from the comparable prior year period due to the continued development of our respiratory, insulin and biologics programs and expenses incurred during the current quarter related to the Company’s collaboration with Momenta Pharmaceuticals, Inc. ("Momenta"). SG&A expense increased from the comparable prior year period as we invested in our continued growth. These increases were partially offset by decreases in consulting and professional services expense and legal expense due to higher acquisition related costs incurred in the prior year period.
U.S. GAAP net earnings attributable to Mylan N.V. ordinary shareholders ("net earnings") increased by $0.6 million to $168.4 million for the quarter ended June 30, 2016, as compared to $167.8 million for the prior year period. Second quarter 2016 net earnings were negatively impacted by increased non-operating expenses including unrealized mark-to-market losses on the Company’s SEK denominated foreign currency contracts and the write off of financing fees related to the termination of the Bridge Credit Agreement originally entered into on February 10, 2016 (the "2016 Bridge Credit Agreement") in connection with Mylan’s public offer to the shareholders of Meda to acquire all of the outstanding shares of Meda (the "Offer"). U.S. GAAP diluted EPS increased from $0.32 to $0.33 as a result of higher earnings from operations and a lower average share count, partially offset by higher non-operating expenses. Adjusted net earnings increased by $118.1 million to $592.4 million compared to $474.3 million for the prior year period. Adjusted EPS increased 28% to $1.16 compared to $0.91 in the prior year period.
EBITDA, which is defined as net earnings (excluding the non-controlling interest and losses from equity method investees) plus income taxes, interest expense, depreciation and amortization, was $621.7 million for the quarter ended June 30, 2016, and $558.3 million for the comparable prior year quarter. After adjusting for certain items as further detailed in the reconciliation below, adjusted EBITDA was $821.4 million for the quarter ended June 30, 2016 and $693.5 million for the comparable prior year quarter.
Six Months Ended June 30, 2016 Financial Results
Total Revenue
Generics segment third party net sales were $4.07 billion for the six months ended June 30, 2016, an increase of 10% when compared to the prior year period. The unfavorable impact of foreign currency translation on Generics third party net sales was approximately $32.7 million, or 1% for the six months ended June 30, 2016.
Third party net sales from North America were $1.93 billion for the six months ended June 30, 2016, an increase of 7% when compared to the prior year period. This increase was principally due to net sales from significant new product introductions as a result of our strong global platform, and to a lesser extent, the two additional months of net sales from our established products ("incremental established products sales") when compared to the six months ended June 30, 2015. This increase was partially offset by lower pricing and volumes on existing products. The unfavorable impact of foreign currency translation on the current period third party net sales was approximately $12.0 million or 1% within North America.
Third party net sales from Europe were $1.19 billion for the six months ended June 30, 2016, an increase of 22% when compared to the prior year period. This increase was primarily the result of the incremental established products sales, and to a lesser extent, net sales from new products. In addition, there were higher volumes on existing products, while pricing was essentially flat in the first half of 2016 as a result of our diversified product portfolio. Third party net sales from Europe were not significantly impacted by the effect of foreign currency translation during the six months ended June 30, 2016.
Third party net sales from Rest of World were $944.0 million for the six months ended June 30, 2016, an increase of 3% when compared to the prior year period. This increase was primarily driven by the incremental established products sales, and to a lesser extent, new product introductions, as well as higher sales in Japan and emerging markets. These increases were partially offset by lower pricing and sales volumes in the region, including the ARV franchise. However, sales within our ARV franchise progressively grew throughout the first half of the year, and on a sequential basis second quarter sales increased over 30% from the first quarter of 2016. The unfavorable impact of foreign currency translation on current year third party net sales was approximately $18.4 million, or 2% within Rest of World.
Specialty segment third party net sales were $650.4 million for the six months ended June 30, 2016, an increase of 27% when compared to the prior year period. This increase was primarily the result of higher unit volumes and the realization of the benefits of customer contract negotiations over the last several quarters related to the EpiPen Auto-Injector, and higher sales of the Perforomist Inhalation Solution and ULTIVA.

Total Gross Profit
Gross profit was $2.08 billion and $1.84 billion for the six months ended June 30, 2016 and 2015, respectively. Gross margins were 44% and 43% for the six months ended June 30, 2016 and 2015, respectively. Gross margins were positively impacted primarily by new product introductions and favorable Specialty sales, partially offset by higher amortization expense due to acquisitions completed in 2015. Adjusted gross profit was $2.63 billion and adjusted gross margins were 55% for the six months ended June 30, 2016 compared to adjusted gross profit of $2.27 billion and adjusted gross margins of 54% in the prior year period. Adjusted gross margins were positively impacted primarily by new product introductions and favorable Specialty sales in the first half of 2016.

Total Profitability
Earnings from operations were $516.5 million for the six months ended June 30, 2016, an increase of 18% from the comparable prior year period. This increase was primarily due to higher revenue, including third party net sales growth of 10% and 27% in the Generics and Specialty segments from the comparable prior year period, respectively, and higher gross profit.

R&D expense for the six months ended June 30, 2016 increased from the comparable prior year period due to an upfront payment to Momenta for $45.0 million and additional expenses incurred in the current period related to the Company’s collaboration agreement. In addition, R&D expense increased due to the two additional months of expense related to our established products in the current year and our continued investment in the development of our respiratory, insulin and biologics programs. SG&A expense increased from the comparable prior year period principally due to the two additional months of expense related to our established products in the current year. These increases were partially offset by decreases in consulting and professional services expense and legal expense due to higher acquisition related costs incurred in the prior year period.

U.S. GAAP net earnings decreased by $42.1 million to $182.3 million for the six months ended June 30, 2016, compared to $224.4 million for the prior year period. U.S. GAAP diluted EPS decreased from $0.46 to $0.36 as a result of higher operating expenses, including higher amortization expense related to acquisitions completed during 2015, unrealized mark-to-market losses related to the Company’s SEK denominated foreign currency contracts, the write off of financing fees related to the termination of the 2016 Bridge Credit Agreement and a higher average share count due to the impact of ordinary shares issued in the prior year in the transaction in which Mylan N.V. acquired Mylan Inc. and Abbott Laboratories’ non-U.S. developed markets specialty and branded generics business (the "EPD Transaction"). Adjusted net earnings increased by $195.3 million to $978.7 million for the six months ended June 30, 2016 compared to $783.4 million for the prior year period. Adjusted EPS increased 19% to $1.92 for the six months ended June 30, 2016 compared to $1.62 in the prior year period.

EBITDA was $1.04 billion for the six months ended June 30, 2016, and $898.8 million for the comparable prior year period. After adjusting for certain items as further detailed in the reconciliation below, adjusted EBITDA was $1.41 billion for the six months ended June 30, 2016 and $1.20 billion for the comparable prior year period.

Cash Flow
Net cash provided by operating activities was $497.1 million for the six months ended June 30, 2016 compared to $381.7 million for the prior year period. The increase in net cash provided by operating activities was primarily the result of higher earnings from operations. Capital expenditures were approximately $121 million for the six months ended June 30, 2016 compared to approximately $122 million for the comparable prior year period. Adjusted cash provided by operating activities was $686.5 million for the six months ended June 30, 2016 compared to $489.9 million for the prior year period. Adjusted free cash flow, defined as adjusted cash provided by operating activities less capital expenditures, was $565.5 million for the six months ended June 30, 2016, compared to $367.9 million in the prior year period.

On August 9, 2016 NantHealth, Inc. (NASDAQ-GS: NH), a next-generation, evidence-based, personalized healthcare company, reported financial results for its 2016 second quarter ended June 30, 2016 (Press release, NantHealth, AUG 9, 2016, View Source;p=IROL-news&nyo=0 [SID:1234514450]). The company completed its initial public offering (IPO) in early June 2016, raising net proceeds of approximately $83.2 million.

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For the 2016 second quarter, total net revenues increased 167% to $31.5 million from $11.8 million in last year’s second quarter. Gross profit grew 69% to $9.3 million, from $5.5 million, for the 2015 second quarter. Selling, general and administrative (SG&A) expenses were $47.2 million, including stock compensation expense related to the company’s IPO, compared with $17.8 million for the prior year second quarter. Research and development (R&D) expenses, including stock compensation expense related to the company’s IPO, increased to $24.3 million from $5.0 million in the comparable quarter of last year.

With the inclusion of stock based compensation expense related to the IPO, equal to $0.42 per share, net loss was $54.1 million, or $0.52 per share, compared with $17.2 million, or $0.21 per share, for the 2015 second quarter. Financial results for the 2016 second quarter included approximately $43.7 million in stock based compensation, equal to $0.42 per share, related to the vesting of equity tied to the company’s Initial public offering. On a non-GAAP basis, for the 2016 second quarter, adjusted net loss was $16.5 million, or $0.15 per share, compared with adjusted net loss of $14.3 million, or $0.15 per share, in the prior year second quarter.

"We achieved stellar topline results across all of our revenue lines, reflecting how strongly customers have responded to NantHealth’s innovative offerings," said Patrick Soon-Shiong, M.D., chief executive officer and chairman of NantHealth. "Our strong second-quarter financial performance included revenues recognized from several large implementations and service contracts for our technology offerings, which were completed and delivered earlier than anticipated. As a result, we recognized certain revenues in our second quarter that we previously projected to be recorded in the second half of 2016.

"Looking ahead, we are focused on adding customers and executing on our opportunities across the spectrum of our offerings. In addition, the acquisitions we completed in the last year are paying dividends and our GPS Cancer product continues to gain traction and acceptance among insurers. Combined, these efforts and initiatives will drive our growth in the near term and beyond."

GPS Cancer – Highlights
Number of covered cancer lives: at June 30, the number of patients with cancer covered by a payer for GPS testing was approximately 180,000. Subsequent to the quarter through August 9, the company added approximately 20,000 covered cancer lives, bringing the total number of cancer patients covered by GPS Cancer to approximately 200,000.
Number of GPS Cancer payers: at June 30, the number of payers covering GPS Cancer was three. Subsequent to the end of the quarter through August 9, the company added three new payers, bringing the total number of payers covering GPS Cancer to six, resulting in 200,000 covered cancer lives.
Number of international GPS Cancer payers: During the second quarter, the company added an international reseller.
NantOS – Highlights
During the second quarter:
The company executed five-year contractual arrangements with two significant, large healthcare system clients.
More than 25 current clients renewed or expanded their contractual commitments.
Eight clients achieved go-live status.
Other Corporate Highlights
In July, announced a partnership with the University of Utah to analyze the entire genomic profiles of at least 1,000 individuals who have a history of rare and life-threatening diseases and conditions in their respective families. The landmark project will focus on researching the genetic causes of 25 conditions, including, breast, colon, ovarian, and prostate cancers, amyotrophic lateral sclerosis (ALS), chronic lymphocytic leukemia, autism, preterm birth, epilepsy, and other hereditary conditions. Genomic sequencing will be conducted with unique, comprehensive molecular tests offered by NantHealth, which will enable the development of a rare disease and inherited genomic risk product, GPS Heritage.
In June, jointly announced with Cancer MoonShot 2020, the nation’s most comprehensive cancer collaborative initiative, the formation of the Melanoma and Sarcoma Working Group to accelerate molecular-informed immunotherapy trials. The team consists of physicians, researchers and oncology professors who have come together to focus their collective wisdom and expertise on identifying and developing the most effective, cancer-directed immunotherapy treatments for patients with melanoma and sarcoma, utilizing GPS Cancer to guide therapy.
In June, announced the commercial availability of Genomic Proteomic Spectrometry Cancer, or GPS CancerTM, a unique, comprehensive molecular test and decision support solution that measures the proteins present in the patient’s tumor tissue, combined with whole genomic and transcriptomic sequencing of tumor and normal samples.
In June, raised net proceeds of approximately $83.2 million from its IPO of 6,900,000 shares of its common stock, which includes the exercise of 400,000 shares of the underwriters’ overallotment option. On June 2, 2016, NantHealth’s shares began trading on the NASDAQ Global Select Market under the symbol "NH."
In May, launched NaviNet Open Claims Management, a powerful new suite of payer-sponsored claims applications available to providers through the NaviNet Open multi-payer provider portal.
In May, expanded adoption of its GPS Cancer product, by partnering with major self-insurers that have agreed to cover the costs for their employees requiring this test.

On August 9, 2016 Omeros Corporation (NASDAQ: OMER), a biopharmaceutical company committed to discovering, developing and commercializing both small-molecule and protein therapeutics for large-market as well as orphan indications targeting inflammation, coagulopathies and disorders of the central nervous system, reported recent highlights and developments as well as financial results for the second quarter of 2016, which include:

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2Q 2016 total and OMIDRIA revenues were $10.0 million. Revenues from OMIDRIA sales rose 220% from the prior year quarter and 38% from 1Q 2016 (Press release, Omeros, AUG 9, 2016, View Source;p=RssLanding&cat=news&id=2194294 [SID:1234514571]).

Net loss in 2Q 2016 was $12.6 million, or $0.32 per share, which included $3.2 million ($0.08 per share) of non-cash expenses. Net loss in the prior year quarter was $16.7 million or $0.44 per share, which included $2.7 million ($0.07 per share) of non-cash expenses.

Completed enrollment in a U.S. Food and Drug Administration (FDA) required post-marketing OMIDRIA pediatric clinical study; the
product is eligible for an additional six months of U.S. marketing exclusivity upon successful completion of the study.

Completed successful meeting with European Medicines Agency (EMA) regarding requirements for OMS721 Phase 3 program for the treatment of atypical hemolytic uremic syndrome (aHUS); the same single-arm Phase 3 clinical trial will support the submission package for marketing approvals in the U.S. and Europe.

Initiated dosing in a Phase 2 clinical trial evaluating OMS721 in patients with complement-related renal disorders.
"OMIDRIA generated solid sales growth in the second quarter," said Gregory A. Demopulos, M.D., chairman and chief executive officer of Omeros. "That growth was broad based; not only did we add a significant number of new accounts, but existing customers continued to increase their level of utilization – it clearly appears that we have turned the corner with respect to the recognition of the clinical benefits of OMIDRIA. The revenues from OMIDRIA are increasingly defraying the costs of our development pipeline, which continues to deliver on that investment. OMS721, our MASP-2 inhibitor program, is in a Phase 3 clinical program in aHUS and in two Phase 2 programs, one for patients with microangiopathies and the other for those with complement-related renal disease. Our PDE10 inhibitor is in a Phase 2 program in Huntington’s disease, we expect OMS405 – our PPAR-gamma agonist program for addiction – to yield additional data this year, our PDE7 inhibitor program for addiction is slated to enter the clinic next year and our MASP-3 and GPCR programs are making good progress. We look forward to building on the commercial and clinical momentum generated in the first half of 2016 and expect to continue that momentum through the remainder of the year."

Second Quarter and Recent Highlights and Developments

Highlights and developments regarding OMIDRIA include:
In June 2016, Omeros announced the completion of enrollment in an FDA required post-marketing OMIDRIA pediatric clinical trial which, if completed in compliance with FDA clinical trial regulations and pre-specified timelines, results in eligibility for an additional six months of marketing exclusivity for OMIDRIA. The trial is being conducted in compliance with FDA regulations and within the specified timelines. OMIDRIA is not yet approved for use in patients less than 18 years of age, and the trial is expected to provide clinical information on the use of OMIDRIA in the pediatric population.
As previously announced, Omeros and ITROM Trading Drug Store (ITROM) entered into an exclusive supply and distribution agreement for the sale of OMIDRIA in the Kingdom of Saudi Arabia, the United Arab Emirates and certain other countries in the Middle East. Under the agreement, ITROM will be responsible for obtaining marketing authorizations for OMIDRIA within the licensed territories in addition to marketing and distributing OMIDRIA supplied by Omeros. Omeros expects ITROM to begin selling OMIDRIA later this year on a limited basis assuming submission of appropriate regulatory applications.
Highlights and developments regarding OMS721, Omeros’ lead human monoclonal antibody in its mannan-binding lectin-associated serine protease-2 (MASP-2) program for the treatment of thrombotic microangiopathies (TMAs), including aHUS and hematopoietic stem cell transplant-related (HSCT) TMAs, and for the treatment of complement-related renal diseases, include:
In the company’s Phase 2 clinical program evaluating OMS721 in patients with complement-related renal disorders, Omeros initiated dosing in a Phase 2 clinical trial that includes patients with IgA nephropathy, membranous nephropathy, C3 glomerulopathy and lupus nephritis.
Omeros received scientific advice from the EMA directed to its OMS721 Phase 3 program for the treatment of aHUS. The advice received is generally consistent with that from the FDA earlier this year and will allow Omeros to submit applications for approval in the U.S. and in the European Union (EU) based on a single data set, which includes the results from one pivotal clinical trial – a single-arm (i.e., no control arm), open-label study in patients with newly diagnosed or ongoing aHUS. Based on this EMA advice, the company plans to run the same, single Phase 3 clinical program to support OMS721 marketing approval applications in both the U.S. and in the EU for the treatment of aHUS.
In August 2016, the company announced results from its OMS906 complement program showing that OMS906 reduced both the incidence and severity of disease in a well-established animal model of arthritis mediated by the alternative pathway of complement (APC). OMS906 is Omeros’ lead antibody targeting mannan-binding lectin-associated serine protease-3 (MASP-3), a protein essential for the activation of the APC. Omeros exclusively controls the use of MASP-3 inhibitors for the treatment of APC-related diseases and disorders. The company is initiating the process of manufacturing scale-up of OMS906 in preparation for clinical trials.
In May 2016, Omeros amended its existing credit facility with Oxford Finance LLC and East West Bank to provide the company with an additional $20 million in unrestricted cash by funding the remaining tranches of the facility. Omeros issued warrants to the lenders, exercisable for seven years for up to 100,602 shares of the company’s common stock at an exercise price per share of $9.94, which was the closing price of the company’s stock on the funding date. The final payment fee rate on the $20 million borrowed increased from 5.25% to 6.25%, reflecting the accelerated draw-down of these additional funds. All loan payments are interest-only until August 1, 2017.
Financial Results

For the quarter ended June 30, 2016, total revenues were $10.0 million, all relating to sales of OMIDRIA. This compares to OMIDRIA revenues of $3.1 million and grant revenue of $62,000 for the same period in 2015. On a sequential quarter basis, OMIDRIA revenue grew $2.8 million or 38% from 1Q to 2Q 2016. The quarter-over-quarter increase in OMIDRIA revenue was due to continued acceptance of and increased demand for OMIDRIA in the ophthalmic surgery community.

Total costs and expenses for the three months ended June 30, 2016 were $20.9 million ($3.2 million of which were non-cash expenses) compared to $19.2 million ($2.7 million of noncash expenses) for the same period in 2015. The increase in the current year quarter was primarily due to increased legal costs associated with the Par lawsuit and increased sales and marketing costs, partially offset by a decrease in research and development costs.

For the three months ended June 30, 2016, Omeros reported a net loss of $12.6 million, or $0.32 per share, which included noncash expenses of $3.2 million ($0.08 per share). This compares to the prior year quarter where Omeros reported a net loss of $16.7 million, or $0.44 per share, which included noncash expenses of $2.7 million ($0.07 per share).

For the six months ended June 30, 2016, total revenues were $17.4 million, consisting of $17.3 million of sales of OMIDRIA and $173,000 of grant revenue. This compares to OMIDRIA revenues of $3.4 million and grant revenue of $212,000 for the same period in 2015. This increase in sales of OMIDRIA is due to the continued acceptance of and increased demand for OMIDRIA in the ophthalmic surgery community.

Total costs and expenses for the six months ended June 30, 2016 were $47.8 million compared to $37.5 million for the same period in 2015. The increase in the current year compared to the prior year was primarily due to increases in OMS721 research and development costs, legal costs associated with the Par lawsuit, sales and marketing costs and stock-based compensation expense.

For the six months ended June 30, 2016, Omeros reported a net loss of $33.2 million, or $0.86 per share, which included noncash expenses of $7.9 million ($0.20 per share). This compares to a net loss of $35.3 million, or $0.95 per share for the six months ended June 30, 2015, which included noncash expenses of $5.5 million ($0.15 per share).

At June 30, 2016, the company had cash, cash equivalents and short-term investments of $21.2 million. In addition, the company had $10.7 million of restricted cash on hand to satisfy covenants under its loan agreement with Oxford Finance and East West Bank and its lease for the Omeros Building.