On August 8, 2017 Ignyta, Inc. (Nasdaq: RXDX), a biotechnology company focused on precision medicine in oncology, reported company highlights and financial results for the second quarter ended June 30, 2017 (Press release, Ignyta, AUG 8, 2017, View Source [SID1234520175]). The company is issuing this press release in lieu of conducting a conference call.

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"During the second quarter, we provided substantial development, regulatory, and commercial strategy updates for our lead product candidate, entrectinib, a novel, investigational, orally available, CNS-active tyrosine kinase inhibitor targeting tumors that harbor TRK, ROS1, or ALK fusions," said Jonathan Lim, M.D., Chairman and CEO of Ignyta. "In addition, we received breakthrough therapy designation for entrectinib, presented exciting preclinical immunomodulation data for RXDX-106, and strengthened our balance sheet via an equity offering, providing us with the resources to continue developing meaningful new therapies for patients with cancer."

Company Highlights

Updated Progress Towards Entrectinib Dual TRK and ROS1 NDA and PMA Submissions

In April 2017, we announced a comprehensive program update on entrectinib and the STARTRK-2 trial. As of that update:

More than 50 patients with ROS1 fusion-positive non-small cell lung cancer (NSCLC) were enrolled; interim data from 32 of these patients (as assessed by investigator) demonstrated 75% confirmed RECIST objective response rate (ORR) (24 partial or complete responses out of 32) and 17.2 months median duration of response (DOR)
Entrectinib demonstrated confirmed RECIST Intracranial ORR (IC-ORR) of 83% (5 partial responses out of 6) in ROS1 NSCLC patients with measurable central nervous system (CNS) metastases
The entrectinib program was more than 85% enrolled to goal for the primary efficacy analysis to potentially support a TRK tissue agnostic NDA submission
The program is tracking towards dual NDA submissions in TRK and ROS1 in 2018, if supported by clinical data, with anticipated U.S. commercial launch in both indications in 2019.

Breakthrough Therapy Designation and Orphan Drug Designation for Entrectinib

In May 2017, the company announced that the U.S. Food and Drug Administration (FDA) granted a Breakthrough Therapy Designation (BTD) to entrectinib "for the treatment of NTRK fusion-positive, locally advanced or metastatic solid tumors in adult and pediatric patients who have either progressed following prior therapies or who have no acceptable standard therapies."

In July 2017, the company announced that FDA granted orphan drug designation to entrectinib for "treatment of NTRK fusion-positive solid tumors."

RXDX-106 AACR (Free AACR Whitepaper) Presentations

In April 2017, we presented preclinical data at the Annual Meeting of the American Association for Cancer Research (AACR) (Free AACR Whitepaper) in Washington D.C. suggesting that RXDX-106 can act as both an anti-tumor immuno-modulator and TYRO3, AXL and MER (or TAM) oncodriver inhibitor, potentially supporting clinical development of RXDX-106 in a wide variety of cancers. RXDX-106 represents a novel class of immunomodulatory agents that appears to restore innate immunity in preclinical models via potent inhibition of the TAM family of receptors.

Financing Transaction

In May 2017, the company issued an aggregate of 14.375 million shares of its common stock in an underwritten public offering at a price to the public of $6.15 per share, which resulted in aggregate gross proceeds of $88.4 million.

Second Quarter 2017 Financial Results

For the second quarter of 2017, net loss was $28.3 million, or $0.56 per share, compared with $26.7 million, or $0.70 per share, for the second quarter of 2016.

Ignyta did not record any revenue for the second quarter of 2017, or for the second quarter of 2016.

Research and development expenses for the second quarter of 2017 were $22.2 million, compared with $20.0 million for the second quarter of 2016. This increase was due to an increase in external clinical development costs and the chemistry, manufacturing and control costs associated with entrectinib and our other product candidates, and increased facilities costs of $1.2 million due to the expansion of our leased facilities space. We also incurred additional stock compensation costs of $0.8 million due in part to the increase in the number of outstanding stock options.

General and administrative expenses were $5.5 million for the second quarter of each of 2017 and 2016, respectively. There was no measurable change in our general and administrative expenses between the two periods, as the increases in facilities costs and outside services expenses were offset by a reduction in our personnel related expenditures.

At June 30, 2017, we had cash, cash equivalents and available-for-sale securities totaling $169.4 million and current and long-term debt of $32.0 million. At December 31, 2016, we had cash, cash equivalents and available-for-sale securities totaling $133.0 million and current and long-term debt of $32.0 million.

Akebia has filed a 10-Q – Quarterly report [Sections 13 or 15(d)] with the U.S. Securities and Exchange Commission (Filing, 10-Q, Akebia, 2017, AUG 8, 2017, View Source [SID1234521565]).

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On August 8, 2017 Inovio Pharmaceuticals, Inc. (NASDAQ:INO) reported financial results for the quarter ended June 30, 2017 (Press release, Inovio, AUG 8, 2017, View Source [SID1234520178]).

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Total revenue was $20.4 million for the three months ended June 30, 2017, compared to $6.2 million for the same period in 2016. Total operating expenses were $30.0 million for the current year quarter compared to $24.4 million for the prior year quarter.

The net loss attributable to common stockholders for the quarter ended June 30, 2017 was $9.5 million, or $0.13 per share, compared to $18.7 million, or $0.26 per share, for the quarter ended June 30, 2016. The decrease in net loss for the quarter resulted primarily from higher revenue recognized related to Inovio’s license and collaboration agreement with MedImmune entered into in 2015.

Revenue

The increase in revenue was primarily due to $13.8 million in revenue recognized from MedImmune, as the previously deferred revenue from the up-front payment received in September 2015 for MEDI0457 (INO-3112) was recognized during the three months ended June 30, 2017. This revenue recognition occurred upon MedImmune’s definitive selection of a new cancer product candidate to be tested in clinical trials against an undisclosed cancer target from our on-going research collaboration. The successful advancement of this new product candidate by MedImmune could also trigger future milestone payments and sales-based royalties payable to Inovio.

Operating Expenses

Research and development expenses for the second quarter of 2017 were $23.9 million compared to $19.6 million for the second quarter of 2016. The increase in R&D expenses was related to increased investment in all of Inovio’s product development programs, including its recently commenced phase 3 trial for VGX-3100. General and administrative expenses were $6.2 million for the second quarter of 2017 versus $5.8 million for the second quarter of 2016. The increase in G&A expenses primarily related to an increase in non-cash stock based compensation.

Capital Resources

As of June 30, 2017, cash and cash equivalents and short-term investments were $92.0 million compared with $104.8 million as of December 31, 2016. At quarter end the company had 77.6 million shares outstanding and 87.2 million shares outstanding on a fully diluted basis. During the three months ended June 30, 2017, Inovio sold 2,917,725 shares of common stock under its ATM common stock sales agreement for net proceeds of $24.1 million, with an average sale price of $8.41 per share.

On July 25, 2017, the company closed an underwritten public offering of 12,500,000 shares of common stock at a public offering price of $6.00 per share, for gross proceeds of $75.0 million. The net proceeds, after deducting the underwriters’ discounts and commissions and other estimated offering expenses payable by Inovio, were approximately $70.2 million. Inovio has granted the underwriters an option until August 18, 2017 to purchase up to 1,875,000 additional shares of its common stock on the same terms and conditions.

Inovio’s balance sheet and statement of operations are provided below. The Form 10-Q providing the complete 2017 second quarter financial report can be found at: View Source

Corporate Update

Clinical Developments

VGX-3100: Cervical Pre-Cancer (Phase 3)

In June, Inovio commenced its phase 3 clinical program to evaluate the efficacy of Inovio’s DNA-based immunotherapy, VGX-3100, to treat cervical dysplasia caused by human papillomavirus (HPV). Initiating Inovio’s first phase 3 program marks a significant milestone for the company, for the next generation of DNA-based immunotherapies, and for women’s health. In the phase 3 trial, Inovio will assess the efficacy of VGX-3100 in regressing cervical HSIL (high-grade squamous intraepithelial lesions; also called CIN2 or CIN3), a direct precursor to cervical cancer, and in eliminating the HPV infection that causes these lesions. The pivotal data from this program, if positive, could support the licensure of VGX-3100 as the first immunotherapy for this disease. HPV is the most common sexually transmitted infection, with over 14 million new infections annually.
Inovio satisfied the FDA’s request for information relating to its CELLECTRA 5PSP delivery device, resulting in the FDA removing a previously imposed clinical hold on this program. During the hold period, Inovio prepared investigational sites for the phase 3 study, resulting in the company opening 27 sites in just over the first month since the hold was removed. Inovio is on track to open at least 50 sites by the end of the year.
VGX-3100: Vulvar Pre-Cancer (Phase 2)

In April, Inovio commenced a randomized, open-label phase 2 trial to evaluate the efficacy of VGX-3100 in 36 women with high-grade HPV-related pre-cancerous lesions of the vulva, or vulvar intraepithelial neoplasia, a disease with a high unmet medical need. This is a new therapeutic indication for VGX-3100. The primary endpoint of the study is histologic clearance of high-grade lesions and virologic clearance of the HPV virus in vulvar tissue samples. The study will also evaluate safety and tolerability.
MEDI0457: HPV-Related Head & Neck Cancer (Phase 1/2)

In May, Inovio announced that MedImmune, AstraZeneca’s global biologics research and development arm, commenced a new clinical trial investigating the combination of MEDI0457 (formerly INO-3112) in-licensed from Inovio, an immunotherapy designed to generate antigen-specific killer T cell responses targeting HPV-associated tumors, and durvalumab, MedImmune’s PD-L1 checkpoint inhibitor. The combination trial will enroll patients with metastatic HPV-associated squamous cell carcinoma of the head & neck (SCCHN) with persistent or recurrent disease after chemotherapy treatment. This study marks a significant moment for Inovio as it transitions into a late-stage biotechnology company. MedImmune is investigating the possibility of elevating the response rate of checkpoint inhibitors by using durvalumab in combination with a DNA plasmid vaccine originally licensed from Inovio, which has shown the ability to generate killer T cells.
Combining the company’s first phase 3 program with the previously announced phase 2 clinical trial of VGX-3100 for treating HPV-related vulvar neoplasia, and the MEDI0457 checkpoint inhibitor-based combination study with MedImmune/AstraZeneca targeting HPV-associated, metastatic head and neck cancers, Inovio is well positioned to comprehensively treat HPV-associated diseases across the continuum of HPV infection through to cancer in both women and men.
Infectious Disease Studies

Inovio reported that its HIV vaccine, PENNVAX-GP, produced amongst the highest overall levels of immune response rates (cellular and humoral) ever observed in a human study by an HIV vaccine. The vaccine candidate, PENNVAX-GP, consists of a combination of four HIV antigens designed to cover multiple global HIV strains and generate both an antibody (humoral) immune response as well as a T cell (cellular) immune response to both potentially prevent and treat HIV. These significant results are consistent with Inovio’s recent data reported from its Ebola, Zika and MERS clinical trials in terms of achieving nearly 100% vaccine response rates with favorable safety profiles. Furthermore, Inovio’s newer and more tolerable intradermal vaccine delivery device showed that Inovio can elicit very high immune responses at a much lower dose.
Inovio and its academic and industry collaborators received a multi-year $6.95 million grant in March from the NIH’s National Institute of Allergy and Infectious Diseases to develop a single or combination therapy using Inovio’s PENNVAX-GP, with the goal of attaining long-term HIV remission in the absence of antiviral drugs. Development of Inovio’s PENNVAX-GP immunotherapy, which widely targets multiple major clades of HIV — providing global coverage — has been funded through a $25 million NIAID contract awarded to Inovio and its collaborators. In addition, Inovio and its collaborators were awarded a five-year $16 million Integrated Preclinical/Clinical AIDS Vaccine Development (IPCAVD) grant in 2015 from NIAID. PENNVAX-GP is currently being studied in a phase 1 clinical trial (HVTN-098) to evaluate its safety and immunogenicity in 94 healthy volunteers as a preventive vaccine (see above). The newly funded study will assess the impact of this vaccine approach in a therapeutic setting.
In preliminary results from the expanded stage of Inovio’s phase 1 clinical trial, EBOV-001, 95% (170 of 179) of evaluable subjects generated an Ebola-specific antibody immune response, with the mean antibody titer comparable or superior to those reported from viral vector-based Ebola vaccines, along with a more safety profile than those vaccines. This study was funded by a $45 million contract from DARPA.

Corporate Developments

In May, Inovio and Regeneron entered into an immuno-oncology clinical study agreement for glioblastoma (GBM) combination therapy. The planned Phase 1b/2a clinical trial will combine Regeneron’s PD-1 inhibitor REGN2810 and Inovio’s T cell activator INO-5401 and immune activator INO-9012 for the potential treatment of brain cancer. INO-5401 includes Inovio’s SynCon antigens for WT1, hTERT and PSMA and has the potential to be a powerful cancer immunotherapy in combination with checkpoint inhibitors. The National Cancer Institute previously highlighted WT1, hTERT and PSMA among a list of attractive cancer antigens, designating them as high priorities for cancer immunotherapy development, and placing WT1 at the top of the antigen list. The hTERT antigen is expressed in 85% of cancers; the WT1 and PSMA antigens are also widely prevalent in many cancers. The open-label trial, which is expected to begin later this year, is designed to evaluate the safety and efficacy of the combination therapy in approximately 50 patients. GBM is the most aggressive form of brain cancer, and its prognosis is extremely poor, despite a limited number of new therapies approved over the last ten years. Under the terms of the agreement, the trial will be solely conducted and funded by Inovio, based upon a mutually agreed upon study design, and Regeneron will supply REGN2810. Inovio and Regeneron will jointly conduct immunological analyses in support of the study. Regeneron, in collaboration with Sanofi, is developing REGN2810 both alone and in combination with other therapies for the treatment of various cancers.
In June, Inovio entered into a collaboration agreement with Genentech to commence a clinical trial to evaluate the combination of Inovio’s T cell immunotherapy INO-5401 and Genentech’s PD-L1 checkpoint inhibitor atezolizumab in patients with advanced bladder cancer. The phase 1b/2 immuno-oncology trial will evaluate Genentech’s atezolizumab (TECENTRIQ) in combination with Inovio’s INO-5401, a T cell activating immunotherapy encoding multiple antigens, and INO-9012, an immune activator encoding IL-12. The planned clinical trial is anticipated to start later this year, and is designed to evaluate the safety, immune response and clinical efficacy of the combination therapy in approximately 80 patients with advanced bladder cancer. Combining INO-5401/INO-9012 with atezolizumab may provide a synergistic therapeutic effect as a result of generating higher levels of activated T cells and simultaneously inhibiting PD-L1.
In July, Inovio completed an underwritten public offering of common stock, raising net proceeds of $70.2 million after underwriters’ discounts and commissions and estimated offering expenses. Inovio expects that with the net proceeds of the offering it will be able to advance its ongoing REVEAL 1 and 2 phase 3 trials and four phase 2 immuno-oncology trials and to fund other pipeline advancements. The financing also added new institutional investors to Inovio’s shareholder base.

The recent financing transaction will also support the following expected near-term events:
VGX-3100 phase 3 (cervical pre-cancer) trial – initiated
MEDI0457 phase 1/2 combination (head & neck cancer) study – initiated
INO-5401 Glioblastoma multiforme (brain cancer) phase 1/2 combination study with Regeneron — initiate 2H 2017
INO-5401 Bladder cancer phase 1/2 combination study with Genentech — initiate 2H 2017
INO-5150 Prostate cancer study (phase 1) report data – 3Q 2017
INO-1800 Hepatitis B therapy study (phase 1) report data — 4Q 2017
INO-1400 (hTERT) report interim immune response and safety data — 4Q2017
Vaccine clinical study publications (Zika, Ebola and MERS) – 4Q 2017

As previously announced in February, Inovio entered into a collaboration and license agreement with ApolloBio Corporation. If the agreement receives the requisite approvals from ApolloBio’s stock exchange, its board and its shareholders, the agreement will become effective, at which time Inovio expects to receive up to $50 million in payments from Apollo — $15 million in an upfront cash payment for the license of VGX-3100 in greater China and up to $35 million in the form of an equity investment in Inovio’s common stock.
Preclinical Developments

Nature Communications published a paper entitled "DNA Vaccination Protects Mice Against Zika Virus-Induced Damage to the Testes," reporting the results of a preclinical study in which Inovio’s Zika vaccine prevented the persistence of virus and damage in the male reproductive tract. This published data suggests another avenue of potential protection against the Zika virus. While detrimental effects on sperm and fertility have not yet been reported in Zika-infected human males, persistence of Zika in semen and sperm and sexual transmission by males has been documented. This new preclinical data suggests that our Zika vaccine may represent an opportunity to limit the potential for sexual transmission of the virus. In addition to our ongoing ZIKA-001 and 002 clinical studies, we are planning for a larger phase 2 study in our efforts to bring our Zika vaccine to patients.
Npj Vaccines published a paper entitled "DNA Inoculation of Synthetic Cross-Reactive Antibodies Protects Against Lethal Influenza A and B Infections," co-authored by Inovio scientists and collaborators from the Wistar Institute and MedImmune. The paper reported the results of a preclinical study in which Inovio’s DNA-based monoclonal antibody product candidate for the treatment of influenza produced broadly cross-reactive antibodies that provided complete protection from a lethal challenge with multiple viruses of both influenza A and B types. Following previously reported similar data from Inovio’s dMAb candidates for HIV, dengue, and Chikungunya, this study further validates the potential for Inovio’s dMAb technology platform to be able to use encoded DNA plasmids for in vivo production of monoclonal antibodies and to induce protective immune responses. The goal for this platform is to rapidly generate therapeutic monoclonal antibodies directly in the recipients. Such benefits are complementary to Inovio’s antigen-generating platform in terms of immune mechanism and short response times, and advantages that overcome conventional monoclonal antibodies’ long development lead times and complex manufacturing processes and costs.

On August 8, 2017 Jazz Pharmaceuticals plc (Nasdaq: JAZZ) reported financial results for the second quarter of 2017 and affirmed financial guidance for 2017 (Press release, Jazz Pharmaceuticals, AUG 8, 2017, View Source;p=RssLanding&cat=news&id=2292679 [SID1234520180]).

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"Thus far, 2017 has been a highly productive year. We have executed on and delivered results of key clinical development programs, advanced multiple global regulatory efforts and received U.S. approval of Vyxeos for the treatment of adults with newly-diagnosed therapy-related AML or AML with myelodysplasia-related changes," said Bruce Cozadd, chairman and chief executive officer of Jazz Pharmaceuticals. "We continue to invest in our key products, product launches, R&D and corporate development activities to fuel our future growth and create long-term value."

GAAP net income for the second quarter of 2017 was $105.6 million, or $1.72 per diluted share, compared to $114.5 million, or $1.85 per diluted share, for the second quarter of 2016.

Adjusted net income for the second quarter of 2017 was $157.4 million, or $2.56 per diluted share, compared to $165.8 million, or $2.67 per diluted share, for the second quarter of 2016. Reconciliations of applicable GAAP reported to non-GAAP adjusted information are included at the end of this press release.

Financial Highlights

Three Months Ended
June 30,

Six Months Ended
June 30,

(In thousands, except per share amounts and percentages)
2017

2016

Change

2017

2016

Change
Total revenues
$
394,386

$
381,161

3%

$
770,439

$
717,171

7%

GAAP net income
$
105,604

$
114,502

(8)%

$
192,115

$
190,314

1%

Adjusted net income
$
157,354

$
165,804

(5)%

$
298,576

$
300,372

(1)%

GAAP EPS
$
1.72

$
1.85

(7)%

$
3.13

$
3.05

3%

Adjusted EPS
$
2.56

$
2.67

(4)%

$
4.87

$
4.82

1%

Total Revenues

Three Months Ended
June 30,

Six Months Ended
June 30,
(In thousands)
2017

2016

2017

2016
Xyrem (sodium oxybate) oral solution
$
298,026

$
280,968

$
570,352

$
530,505

Erwinaze / Erwinase (asparaginase Erwinia chrysanthemi)
49,024

49,748

100,412

100,921

Defitelio (defibrotide sodium) / defibrotide
30,238

33,246

66,138

51,143

Prialt (ziconotide) intrathecal infusion
5,656

8,073

13,373

14,282

Other
6,711

7,075

13,058

16,175

Product sales, net
389,655

379,110

763,333

713,026

Royalties and contract revenues
4,731

2,051

7,106

4,145

Total revenues
$
394,386

$
381,161

$
770,439

$
717,171

Net product sales increased 3% in the second quarter of 2017 compared to the same period in 2016 due to higher net product sales of Xyrem.

Xyrem net product sales increased 6% in the second quarter of 2017 compared to the same period in 2016.

Erwinaze/Erwinase net product sales in the second quarter of 2017 were consistent with net product sales in the same period in 2016. During the 2017 quarter, the company continued to experience supply challenges that resulted in temporary supply disruptions in certain markets, which the company expects will continue for the remainder of 2017.

Defitelio/defibrotide net product sales decreased 9% in the second quarter of 2017 compared to the same period in 2016 primarily due to inventory stocking in the second quarter of 2016, following the U.S. launch in that quarter, and the impact of unfavorable foreign exchange rates. The company continues to expect inter-quarter variability in Defitelio net sales given that veno-occlusive disease is an ultra-rare disease.

Operating Expenses

Three Months Ended
June 30,

Six Months Ended
June 30,
(In thousands, except percentages)
2017

2016

2017

2016
GAAP:

Cost of product sales
$
28,672

$
23,980

$
53,737

$
47,419

Gross margin
92.6%

93.7%

93.0%

93.3%

Selling, general and administrative
$
132,328

$
122,618

$
276,583

$
251,383

% of total revenues
33.6%

32.2%

35.9%

35.1%

Research and development
$
40,157

$
39,091

$
85,085

$
70,343

% of total revenues
10.2%

10.3%

11.0%

9.8%

Three Months Ended
June 30,

Six Months Ended
June 30,
(In thousands, except percentages)
2017

2016

2017

2016
Non-GAAP adjusted:

Cost of product sales
$
27,145

$
23,017

$
50,964

$
45,657

Gross margin
93.0%

93.9%

93.3%

93.6%

Selling, general and administrative
$
111,454

$
99,488

$
229,904

$
202,099

% of total revenues
28.3%

26.1%

29.8%

28.2%

Research and development
$
35,298

$
35,562

$
76,084

$
63,524

% of total revenues
9.0%

9.3%

9.9%

8.9%

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 2017 compared to the same period in 2016 on a GAAP and on a non-GAAP adjusted basis due to higher headcount and other expenses resulting from the expansion of the company’s business, the company’s narcolepsy disease awareness campaign and pre-launch activities related to the U.S. launch of VyxeosTM (daunorubicin and cytarabine) liposome for injection.
Research and development (R&D) expenses were consistent on a GAAP and on a non-GAAP adjusted basis in the second quarter of 2017 compared to the same period in 2016. The 2017 quarter included expenses related to regulatory activities for Vyxeos, increased expenses for continued investments in sleep-related R&D programs, an increase in headcount to support these activities and a decrease in costs related to JZP-110 studies for excessive sleepiness associated with obstructive sleep apnea and with narcolepsy due to the completion of three Phase 3 studies.
Cash Flow and Balance Sheet

As of June 30, 2017, cash, cash equivalents and investments were $319.2 million, and the outstanding principal balance of the company’s long-term debt was $1.8 billion. During the six months ended June 30, 2017, the company repaid $350.0 million of borrowings under the company’s revolving credit facility and used $30.9 million to repurchase approximately 230,000 ordinary shares under the company’s share repurchase program at an average cost of $134.10 per ordinary share.

Recent Developments

In June 2017, the company presented positive efficacy results from its global multi-center studies evaluating Xyrem for the treatment of cataplexy in pediatric patients with narcolepsy and JZP-110 in adult patients with excessive sleepiness associated with obstructive sleep apnea and with narcolepsy.

In July 2017, the company entered into a license agreement with XL-protein GmbH (XLp) for the rights to develop, manufacture and commercialize products using XLp’s PASylation technology to extend the plasma half-life of selected asparaginase product candidates.

On August 3, 2017, the U.S. Food and Drug Administration (FDA) approved Vyxeos for the treatment of adults with newly-diagnosed therapy-related AML or AML with myelodysplasia-related changes.

2017 Financial Guidance

Jazz Pharmaceuticals is affirming its full year 2017 financial guidance as follows (in millions, except per share amounts and percentages):

Revenues
$1,625-$1,700
Total net product sales
$1,617-$1,692
-Xyrem net sales
$1,200-$1,230
-Erwinaze/Erwinase net sales
$205-$225
-Defitelio/defibrotide net sales
$130-$150
-Vyxeos net sales
$10-$20
GAAP gross margin %
93%
Non-GAAP adjusted gross margin %1,4
93%
GAAP SG&A expenses
$521-$556
Non-GAAP adjusted SG&A expenses2,4
$440-$460
GAAP R&D expenses
$185-$216
Non-GAAP adjusted R&D expenses3,4
$165-$180
GAAP net income per diluted share
$6.55-$7.55
Non-GAAP adjusted net income per diluted share4
$10.70-$11.30

1.
Excludes $5 million of share-based compensation expense from estimated GAAP gross margin.
2.
Excludes $75-$90 million of share-based compensation expense and $6 million of expenses related to certain legal proceedings and restructuring from estimated GAAP SG&A expenses.
3.
Excludes $20-$25 million of share-based compensation expense and $0-$11 million of milestone payments 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 2017 Net Income Guidance" at the end of this press release.
Conference Call Details

On August 8, 2017 Valeant Pharmaceuticals International, Inc. (NYSE: VRX) (TSX: VRX) ("Valeant" or the "Company" or "we") reported its second-quarter 2017 financial results (Press release, Valeant, AUG 8, 2017, http://ir.valeant.com/news-releases/2017/08-08-2017-120421466 [SID1234520078]).

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"The investments we are making in our core business are delivering results," said Joseph C. Papa, chairman and chief executive officer, Valeant. "The Bausch + Lomb/International segment and Salix business, which together represented 73 percent of our revenue in the quarter, delivered strong organic growth1, and we are continuing to reduce debt and resolve legacy issues."

"Additionally, we confirm that we are maintaining our 2017 full-year Adjusted EBITDA guidance range despite the impact of divestitures we’ve made this year," added Mr. Papa.

Company Highlights

Strengthening the Balance Sheet

Completed sale of Dendreon Pharmaceuticals LLC and used net proceeds to pay down $811 million of senior secured term loans

Announced that Valeant will redeem the remaining $500 million aggregate principal amount of our outstanding 6.75% Senior Notes due 2018, using cash on hand, on Aug. 15, 2017. Upon redemption, the Company expects to:

Have reduced total debt by more than $4.8 billion since the end of the first quarter of 2016

Have no debt maturities and no mandatory amortization requirements until 2020

Announced agreements to sell iNova Pharmaceuticals and Obagi Medical Products businesses for $930 million and
$190 million in cash, respectively; both remain on track to close in the second half of 2017

Generated $268 million and $1.222 billion in cash flow from operations in the second quarter and for the six months that ended June 30, 2017, respectively

Delivered GAAP net loss of $38 million and Adjusted EBITDA (non-GAAP) of $951 million

Achieving positive outcomes in resolving and managing litigation and investigations, including settling the Salix
securities class action litigation

Expects to exceed commitment to pay down $5 billion in debt from divestiture proceeds and free cash flow before February 2018

Executing on Core Businesses

Grew revenue in the Salix business by 13% compared to the second quarter of 2016 and organically grew1 revenue in the Salix business by 16% compared to the second quarter of 2016

XIFAXAN (rifaximin) revenues rose by 16% compared to the second quarter of 2016

Strong XIFAXAN growth, with prescriptions up 6% sequentially and 2% versus the second quarter of 2016, and extended Rx unit volume up 4% versus second quarter of 2016

APRISO (mesalamine) prescriptions grew by 7% compared to the second quarter of 2016

RELISTOR (methylnaltrexone bromide) prescriptions grew by 33% compared to the second quarter of 2016

Revenue of the Bausch + Lomb/International segment decreased by 3% compared to the second quarter of 2016; however, the segment revenue increased organically1 by approximately 6% compared to the second quarter of 2016

Grew revenue in the Bausch + Lomb business in China by 4% compared to the second quarter of 2016 despite currency headwinds and organically grew1 revenue in this business by 9%, compared to the second quarter of 2016, driven by volume

Advanced Bausch + Lomb business

Introduced Bausch + Lomb AQUALOX bi-weekly contact lenses in Japan in June

Introduced Bausch + Lomb renu Advanced Formula multi-purpose contact lens solution

Received filing acceptance from the U.S. Food and Drug Administration (FDA) for the New Drug Application (NDA) for Luminesse2 (brimonidine tartrate ophthalmic solution, 0.025%) with a PDUFA action date of Dec. 27, 2017

Received FDA 510(k) clearances for Vitesse and Stellaris Elite Vision Enhancement System

Continued to focus on stabilizing the dermatology business

Launched SILIQ (brodalumab) injection in July as the lowest-priced injectable biologic for moderate-to-severe plaque psoriasis in the United States

Rebranded the business as Ortho Dermatologics in July

Received FDA filing acceptance for the NDA for PLENVU2 (NER1006), a novel, low volume polyethylene glycol-based bowel preparation for colonoscopies

Second-Quarter Revenue Performance
Total revenues were $2.233 billion for the second quarter of 2017, as compared to $2.420 billion in the second quarter of 2016, a decrease of $187 million, or 8%. The decrease was primarily driven by decreases in volume and price in our U.S. Diversified Products segment, attributed to the previously reported loss of exclusivity for a basket of products, and the dermatology business. The decline also reflects the unfavorable impact of divestitures and discontinuations, primarily the skincare divestiture within the Bausch + Lomb/International segment.3

Revenues by segment for the second quarter of 2017 were as follows:
$ in millions
2017
2016
Reported
Change
Reported
Change
Change at
Constant
Currency4
Organic
Growth1
Segment

Bausch + Lomb/International
$1,241
$1,277
$(36)
(3%)
1%
6%
Branded Rx
$636
$653
$(17)
(3%)
(3%)
0%
U.S. Diversified Products
$356
$490
$(134)
(27%)
(27%)
(27%)
Total Revenues
$2,233
$2,420
$(187)
(8%)
(5%)
(3%)

Bausch + Lomb/International Segment
The Bausch + Lomb/International segment revenues were $1.241 billion for the second quarter of 2017, as compared to $1.277 billion for second quarter of 2016, a decrease of $36 million, or 3%. Excluding the impact of the skincare divestiture and foreign exchange, the Bausch + Lomb/International segment organically grew1 by approximately 6% compared to the second quarter of 2016, driven by performance in China, Europe and Africa/Middle East and the Global Ophthalmology business.

Branded Rx Segment
The Branded Rx segment revenues were $636 million for the second quarter of 2017, as compared to $653 million for second quarter of 2016, a decrease of $17 million, or 3%. The decrease in sales primarily was due to lower volumes in the dermatology business and the impact of divestitures and discontinuations in the Salix business. The decline was largely offset by 13% revenue growth in the Salix business compared to the second quarter of 2016, despite the impact of the divestiture of Ruconest, and organic growth1 in the Salix business of 16% compared to the second quarter of 2016.

U.S. Diversified Products Segment
The U.S. Diversified Products segment revenues were $356 million for the second quarter of 2017, as compared to $490 million for second quarter of 2016, a decrease of $134 million, or 27%. The decline was primarily driven by decreases in volume and price attributed to the previously reported loss of exclusivity for a basket of products.

Operating Income
Operating income was $175 million for the second quarter of 2017 as compared to $81 million for the second quarter of 2016, an increase of $94 million. The increase in operating income primarily reflects lower asset impairments and amortization charges partially offset by a decrease in contribution margin as a result of the decline in product sales from existing businesses.

Net loss for the three months ended June 30, 2017 was $38 million, as compared to $302 million for the same period in 2016, an improvement of $264 million. The decrease in net loss primarily reflects the increase in recovery for income taxes, increase in operating income and the net change in foreign exchange.

Cash provided by operating activities was $268 million for the second quarter of 2017. Cash flows from operations were negatively affected by $190 million of net payments made in resolution of the Salix securities class action litigation.5 Excluding these payments, the Company generated a normalized cash flow of $458 million.
GAAP Earnings Per Share (EPS) Diluted – for the second quarter of 2017 came in at $(0.11) as compared to $(0.88) in the second quarter of 2016.

Adjusted EBITDA(non-GAAP)
Adjusted EBITDA (non-GAAP) was $951 million for the second quarter of 2017, as compared to $1.087 billion for the second quarter of 2016, a decrease of $136 million, primarily due to lower revenues attributed to the previously reported loss of exclusivity for a basket of products, divestitures and discontinuations, and declines in our dermatology business, partially offset by strong organic growth1 in the Bausch + Lomb/International segment and the Salix business. Adjusted EBITDA grew by 10% sequentially versus the prior quarter.

2017 Guidance
Valeant has updated guidance for 2017, as follows:
Full-Year Revenues in the range of $8.70 – $8.90 billion from $8.90 – $9.10 billion
The Company confirms we will maintain our full-year Adjusted EBITDA (non-GAAP) guidance range of $3.60 – $3.75 billion despite the impact of divestitures that have closed in 2017.

This updated guidance reflects the impact of the sale of the CeraVe, AcneFree and AMBI skincare brands and the sale of Dendreon Pharmaceuticals LLC. This guidance does not reflect the impact of the sales of the iNova Pharmaceuticals and Obagi Medical Products businesses, which are both expected to close in the second half of the year.

Other than with respect to GAAP Revenues, the Company only provides guidance on a non-GAAP basis. The Company does not provide a reconciliation of forward-looking Adjusted EBITDA (non-GAAP) to GAAP net income (loss), due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation. In periods where significant acquisitions or divestitures are not expected, the Company believes it might have a basis for forecasting the GAAP equivalent for certain costs, such as amortization, which would otherwise be treated as non-GAAP to calculate projected GAAP net income (loss). However, because other deductions (such as restructuring, gain or loss on extinguishment of debt and litigation and other matters) used to calculate projected net income (loss) vary dramatically based on actual events, the Company is not able to forecast on a GAAP basis with reasonable certainty all deductions needed in order to provide a GAAP calculation of projected net income (loss) at this time. The amount of these deductions may be material and, therefore, could result in projected GAAP net income (loss) being materially less than projected Adjusted EBITDA (non-GAAP).

Additional Highlights
Valeant’s cash, cash equivalents and restricted cash were $2.025 billion at June 30, 2017
The Company’s availability under the Revolving Credit Facility was approximately $930 million at June 30, 2017
Valeant’s corporate credit ratings remained unchanged during the second quarter of 2017
John Paulson, president of Paulson & Co., Inc., a New York-based investment firm, joined the Company’s Board of Directors