On May 3, 2016 Array BioPharma Inc. (NASDAQ: ARRY), a biopharmaceutical company focused on the discovery, development and commercialization of targeted small molecule cancer therapies, reported results for its fiscal year third quarter ending March 31, 2016 and provided an update on the progress of its key clinical development programs (Press release, Array BioPharma, MAY 3, 2016, View Source;p=RssLanding&cat=news&id=2164230 [SID:1234511799]).

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"We have a number of near-term value-drivers, highlighted by our planned NDA submission for binimetinib based on results from our Phase 3 trial in NRAS-mutant melanoma patients (NEMO)," said Ron Squarer, Array’s Chief Executive Officer. "At ASCO (Free ASCO Whitepaper), we will present full results from the NEMO trial, as well as provide an update on our Phase 2 study of encorafenib plus cetuximab in BRAF-mutant colorectal cancer patients. Later this summer, we plan to share top-line results from COLUMBUS, our Phase 3 trial of binimetinib and encorafenib in BRAF melanoma patients. We also expect results from SELECT-1, a study of selumetinib in second line KRAS-mutant non-small cell lung cancer patients. Given our estimated cash runway, a series of strong partnerships and continued Novartis funding of ongoing binimetinib and encorafenib trials, we are well positioned to execute on our long-term strategy."

KEY PIPELINE UPDATES

Binimetinib (MEK162) and encorafenib (LGX818)
Novartis Agreement
Novartis continues to conduct and/or substantially fund all ongoing trials with binimetinib and encorafenib through their completion, including the NEMO and COLUMBUS trials. Reimbursement revenue from Novartis was approximately $74 million for the previous 9 months, of which $64 million was recorded over the past two quarters.

NEMO: Global Phase 3 trial of binimetinib versus dacarbazine in NRAS-mutant melanoma patients
Based on the results of the NEMO trial, Array plans to submit an NDA during the first half of 2016. Results from NEMO will be presented at the 2016 American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) conference (ASCO) (Free ASCO Whitepaper), and will include progression free survival (PFS), overall survival (OS), objective response rate (ORR), safety and pre-specified sub-group analyses, including outcomes in patients who received prior treatment with immunotherapy.

Activating NRAS mutations are present in approximately 20% of patients with metastatic melanoma, and has been a poor prognostic indicator for these patients. Treatment options for this population remain limited beyond immunotherapy (PD-1, CTLA4), therefore binimetinib could represent an important additional therapy for these patients.

COLUMBUS: Global Phase 3 trial of binimetinib plus encorafenib versus vemurafenib in BRAF-mutant melanoma patients
As part of Array’s standard data cleaning protocol, it was recently learned that additional PFS events need to be observed prior to database lock and final analysis, a process previously expected to be complete by the end of June. Array now projects COLUMBUS top-line results availability during the third quarter of 2016.

Activating BRAF mutations are present in approximately 50% of patients with metastatic melanoma. In two separate Phase 1/2 trials in this patient population, binimetinib plus encorafenib demonstrated encouraging clinical activity and an attractive tolerability profile, including low incidence of pyrexia, and little to no incidence of rash or photosensitivity. Patients treated in two Phase 3 trials of dabrafenib plus trametinib (COMBI-d and COMBI-v) experienced greater than 50% incidence of pyrexia (fever), while in a large, randomized trial of vemurafenib and cobimetinib (coBRIM) nearly 50% of patients experienced photosensitivity reactions. Of the patients who experienced pyrexia on COMBI-d and COMBI-v, one-third to one-half reported three or more events, and at least half required dose modifications including interruptions, reductions, or discontinuation as a result of their pyrexia. Of the patients who experienced photosensitivity on coBRIM, the median duration of photosensitivity was three months, duration was as long as 14 months for some patients. Only 63% of patients with photosensitivity reactions experienced resolution while on study.

BRAF-Mutant Colorectal Cancer
Array’s updated results, including PFS and OS, from its Phase 2 combination trial with encorafenib in patients with BRAF-mutant colorectal cancer (BRAF CRC) will be presented at ASCO (Free ASCO Whitepaper) 2016. Based on the strength of existing Phase 2 combination data, Array plans to initiate a Phase 3 global registration trial in this patient population later this year.

Colorectal cancer is the third most common cancer among men and women in the United States, with approximately 134,000 new cases and nearly 50,000 deaths from the disease projected in 2016. BRAF mutations occur in up to 20% percent of patients with colorectal cancer and represents a poor prognosis for these patients. Historical published PFS and OS results after first line range from 1.8 to 2.5 months and 4.7 to 5.9 months, respectively. In addition, historical published response rates from various studies for EGFR-based therapy in this population range from 6% to 8%. Array’s data shared at the 2015 European Society of Medical Oncology (ESMO) (Free ESMO Whitepaper)’s World Congress of Gastrointestinal Cancer (ESMO GI) compare favorably both to currently available therapies for BRAF CRC patients, and to other recently published investigational approaches in this population. The combination of encorafenib and cetuximab has demonstrated a well-tolerated safety profile with most treatment related adverse events being grade 1 or 2 and few grade 3 or 4 adverse events.

ARRY-797 (ARRY-371797)
Phase 2 trial on-going in patients with LMNA A/C-related dilated cardiomyopathy (DCM)
Array is conducting a 12-patient Phase 2 study to evaluate the effectiveness and safety of ARRY-797 in patients with LMNA A/C-related DCM, a serious, genetic cardiovascular disease. Results will be presented at the European Society of Cardiology on August 30, 2016. By age 45, approximately 70% of patients with LMNA A/C-related DCM will have died, suffered a major cardiac event, or will have undergone a heart transplant. Data on the primary endpoint of mean change in six-minute walk test (6MWT) at 12 weeks relative to baseline exceeds benchmarks set by a number of drugs for rare diseases recently approved on the basis of the 6MWT as a primary endpoint. Secondary endpoints in the ARRY-797 trial, including changes in N-Terminal pro-Brain-derived Natriuretic Peptide (NT-proBNP, a serum biomarker of heart failure severity), and patient reported outcomes, are directionally consistent with the primary endpoint. Data for patients followed through 48 weeks suggest a durable effect. Taken together, the data to date suggest a path forward for this program, and Array has met with regulators to discuss the design of a study that could be the basis for marketing approval.

Selumetinib (partnered with AstraZeneca)
Registration trials advancing in NSCLC (SELECT-1), thyroid cancer (ASTRA) and neurofibromatosis type 1
AstraZeneca continues to advance selumetinib in three registration trials: SELECT-1 in patients with KRAS-mutant non-small cell lung cancer (NSCLC), a registration trial in patients with neurofibromatosis type 1 and ASTRA in patients with differentiated thyroid cancer. AstraZeneca expects top-line results from SELECT-1 in the second half of 2016 and projects a regulatory filing of selumetinib in NSCLC in the first half of 2017.

SELECT-1 is a 500-patient randomized, double-blind, placebo-controlled study that was designed to evaluate the safety and efficacy of selumetinib plus docetaxel as a second line therapy in locally advanced or metastatic KRAS-mutant NSCLC. KRAS mutations are amongst the most common mutations in NSCLC, present in approximately a quarter of these patients. The study is designed to evaluate PFS as the primary endpoint and a key secondary endpoint is OS. AstraZeneca’s decision to progress selumetinib to Phase 3 in NSCLC followed the results from a randomized Phase 2 study evaluating the combination of selumetinib with docetaxel against docetaxel alone in KRAS-mutation positive NSCLC. This study demonstrated response rates of 37.2% vs 0% (p<0.0001), and a statistically significant improvement in PFS of 5.3 vs 2.1 months (HR 0.58, p<0.014).

ARRY-954 / Select Tropomyosin Receptor Kinase A (TrkA) inhibitor for pain and inflammation
Asia-Focused Strategic Collaboration with Asahi Kasei Pharma Corporation; Array retains the right for all compounds for all indications outside of Asia
In March 2016, Array announced a strategic collaboration with Asahi Kasei Pharma Corporation to develop and commercialize select preclinical TrkA inhibitors, including Array-invented ARRY-954, for pain, inflammation and other non-cancer indications. Under the terms of the agreement, Array retains the right for all compounds for all indications outside of Asia. Within Asia, Array retains the right to cancer indications for all compounds, excluding those compounds being developed by Asahi Kasei Pharma, including ARRY-954. Asahi Kasei Pharma will have exclusive rights to develop and commercialize products in Japan, Korea, Taiwan and China for pain, inflammation and other non-cancer indications. Array received an upfront payment of $12 million, is entitled to receive up to $64 million if certain development and commercialization milestones are achieved, and is eligible for up to double-digit royalties. Activation of the TrkA pathway by Nerve Growth Factor (NGF) has been implicated in the pathogenesis of many difficult to treat human pain conditions such as osteoarthritis pain, chronic low back pain, diabetic peripheral neuropathy, cancer pain and interstitial cystitis.

FINANCIAL HIGHLIGHTS

Cash, cash equivalents, marketable securities were approximately $118 million and accounts receivable was approximately $63 million at the end of the quarter. Accounts receivable primarily consist of receivables expected to be paid by Novartis within three months and the $12.0 million up-front fee from Asahi Kasei Pharma, which was received in April 2016. In March 2015, binimetinib and encorafenib became wholly-owned assets of Array, which prompted changes to the classification of revenue and expenses for the programs. The new expense classifications were included in the fourth quarter of fiscal 2015 financial results. Beginning in the first quarter of fiscal 2016, Array reports revenue from Novartis reimbursements under its agreements with Novartis for binimetinib and encorfenib as a separate line item called "reimbursement revenue." The net earnings (or loss) per share described below are diluted net earnings (or loss) per share.

Third Quarter of Fiscal 2016 Compared to Second Quarter of Fiscal 2016 (Sequential Quarters Comparison)
Revenue for the third quarter of fiscal 2016 was $43.0 million, compared to $35.4 million for the prior sequential quarter. The $7.6 million increase in revenue was primarily due to higher reimbursement revenue from Novartis. Cost of partnered programs for the third quarter of fiscal 2016 was $5.8 million, compared to $5.7 million for the prior quarter. Research and development expense was $48.8 million, compared to $41.4 million in the prior quarter. The increase in research and development expense is primarily related to the ongoing transition of binimetinib and encorafenib trials from Novartis to Array. Net loss for the third quarter was $22.7 million, or ($0.16) per share, and was $24.2 million, or ($0.17) per share in the prior quarter.

Third Quarter of Fiscal 2016 Compared to Third Quarter of Fiscal 2015 (Prior Year Comparison)
Compared to the same quarter of fiscal 2015, revenue for the third quarter of fiscal 2016 increased by $36.4 million, primarily due to $36.9 million in reimbursement revenue from Novartis. Cost of partnered programs decreased by $6.3 million compared to the third quarter of fiscal 2015 primarily due to binimetinib development costs being presented as research and development expense instead of cost of partnered programs upon becoming wholly-owned programs. Research and development expense increased by $37.0 million compared to the third quarter of fiscal 2015 due to the categorization of binimetinib costs, as well as new spending on encorafenib. Net loss for the third quarter of fiscal 2016 was $22.7 million, or ($0.16) per share, and was net income of $58.3 million, or $0.37 net income per share, for the same quarter in fiscal 2015.

Nine Months of Fiscal 2016 Compared to Nine Months of Fiscal 2015 (Prior Year Comparison)
For the nine months ended March 31, 2016, revenue was $94.7 million, compared to $39.6 million for the same period in fiscal 2015. Net loss for the nine months ended March 31, 2016, was $67.8 million, or ($0.47) per share, compared to a net income of $22.1 million, or $0.16 per share, in the comparable prior year period. The third quarter of fiscal 2015 included a one-time $80.0 million net gain on the binimetinib and encorafenib agreements. Cash outflows for the nine months ended March 31, 2016 was $62 million.

On May 3, 2016 AMAG Pharmaceuticals, Inc. (NASDAQ: AMAG), a specialty pharmaceutical company with a diverse portfolio of products in the areas of maternal health, anemia management and cancer supportive care, reported unaudited consolidated financial results for the first quarter ended March 31, 2016 (Filing, Q1, AMAG Pharmaceuticals, 2016, MAY 3, 2016, View Source [SID:1234511834]).

Most notably, the first quarter of 2016 included the approval of a single-dose, preservative-free formulation of Makena (hydroxyprogesterone caproate injection). Prior to the commercial availability of this new Makena formulation, healthcare providers and patients who wanted a preservative-free formulation of hydroxyprogesterone caproate had to use non-FDA-approved, compounded versions. The company believes the commercial launch of the single-dose, preservative-free formulation of Makena will enable AMAG to capture significant additional share from the compounded segment of the market. The company estimates that compounding pharmacies currently hold approximately 37% of the Makena-eligible market. Additionally, AMAG entered into an agreement with a leading provider of home nursing services, which will exclusively administer Makena to all indicated patients who are eligible for their home health services.

"We are off to a strong start in 2016, achieving goals on our next-generation program for Makena, including the commercial launch of our new single-dose, preservative-free formulation, as well as solidifying an important new strategic relationship to further expand access to FDA-approved Makena," said William Heiden, AMAG’s chief executive officer. "First quarter 2016 sales of Makena increased 17% over the prior year, and early data from the recent launch of the new formulation of Makena, including April enrollment data at the Makena Care Connection that is up approximately 50% over March, suggests an acceleration in sales growth. We expect these trends to continue through the remainder of the year and are confirming our annual net product sales guidance for Makena."

"CBR, our newborn stem cell preservation offering, as well as our anemia management and cancer supportive care products, performed in-line with our expectations and remain on track with our 2016 sales guidance," added Mr. Heiden.

1 See summaries of non-GAAP adjustments for the three months ended March 31, 2016 and 2015 at the conclusion of this press release.

First Quarter 2016 and Recent Business Highlights:

· Increased net product sales of Makena to $65 million, compared with $55.5 million in the first quarter of 2015. This growth in sales was driven by a 16% increase in volume as more at-risk pregnant women were treated with Makena. Net revenue per injection was up 1% versus the first quarter of 2015.

· Received approval from the Food and Drug Administration (FDA) in February 2016 for a single-dose, preservative-free formulation of Makena and began commercial promotion in April 2016.

· Entered into a new agreement with a leading provider of home nursing services, which had previously utilized compounded hydroxyprogesterone caproate and now will exclusively provide at-home administration of Makena.

· Continued development of the next-generation program to deliver Makena subcutaneously via an auto-injector, with a range of activities underway, such as CMC work and pilot pharmacokinetic studies. The company currently anticipates filing the supplemental New Drug Application (sNDA) in the second quarter of 2017 and recently received confirmation from the FDA that the review time will be six months from submission.

· Generated a record $24.2 million of Feraheme (ferumoxytol) sales in the first quarter of 2016, or 13% growth over the same period in the prior year. Strong execution of the Feraheme business strategies by the commercial team enabled the company to realize a 7% increase in volume.

· Began enrolling patients in a head-to-head, Phase 3 clinical trial evaluating the safety of Feraheme compared to Injectafer (ferric carboxymaltose injection) in adults with iron deficiency anemia (IDA). This study is intended to support an sNDA filing to broaden the use of Feraheme beyond the current chronic kidney disease (CKD) indication to include all adult IDA patients who have failed or cannot tolerate oral iron treatment.

· Increased cash, cash equivalents and investments by $13.9 million to $480 million, net of $12 million utilized to purchase the company’s common stock and to repay debt.

· Strengthened the executive management team with the additions of Nik Grund as chief commercial officer and Ted Myles as chief financial officer.

First Quarter Ended March 31, 2016 (unaudited)

Financial Results (GAAP Basis)

Total revenues for the first quarter of 2016 were $109.3 million, compared with $89.5 million in the first quarter of 2015. Net product sales of Makena were $65.0 million in the first quarter of 2016, compared with $55.5 million in the same period last year. Sales of Feraheme and MuGard totaled $24.5 million in the first quarter of 2016, compared with $21.9 million in the first quarter of 2015. Service revenue from Cord Blood Registry (CBR), which AMAG purchased in August 2015, totaled $19.5 million in the first quarter of 2016.

Costs of product sales and services totaled $23.8 million in the first quarter of 2016. In the first quarter of 2015, cost of product sales totaled $21.0 million and did not include CBR cost of services. Total operating expenses for the first quarter of 2016 were $78.0 million, compared with $39.7 million for the same period in 2015. The increase in operating expenses was primarily due to the acquisition of CBR in the third quarter of 2015, including the non-cash amortization of intangible assets, and higher research and development

costs. These R&D costs included the initiation of the company’s Phase 3 clinical trial to broaden the use of Feraheme to include all adult IDA patients, costs to support our Makena subcutaneous auto-injector and costs associated with preparing and filing with the FDA for a second source manufacturer of the single-dose, preservative-free formulation of Makena.

The company reported operating income of $7.4 million and a net loss of $7.5 million, or ($0.22) per basic and diluted share, for the first quarter of 2016, compared with operating income of $28.8 million and net income of $12.9 million, or $0.47 per basic share and $0.39 per diluted share, for the same period in 2015.

Financial Results (Non-GAAP Basis)1,2

Non-GAAP revenues totaled $117.9 million in the first quarter of 2016, up from $83.1 million in the first quarter of 2015. Non-GAAP CBR revenue totaled $28.1 million in the first quarter of 2016. The difference between GAAP and non-GAAP revenue for CBR represents purchase accounting adjustments related to deferred revenue. Non-GAAP revenue in 2015 excludes certain non-cash revenue related to the company’s ex-U.S. marketing agreement with its former partner, Takeda Pharmaceutical Company Limited.

Total costs and expenses on a non-GAAP basis totaled $70.4 million resulting in a gross margin of 92% and adjusted EBITDA margin of 40% for the first quarter of 2016. This compares to costs and expenses of $35.7 million in the same period of 2015, which resulted in a gross margin of 96% and adjusted EBITDA margin of 57%. The decline in gross margin resulted from the acquisition of CBR, which carries lower gross margins than the company’s pharmaceutical products. Investments in research and development to enhance the long-term revenue potential of Makena and Feraheme contributed to the lower adjusted EBITDA margin in the first quarter of 2016. Non-GAAP adjusted EBITDA for the first quarter of 2016 was $47.5 million, compared with $47.4 million for the same period in 2015.

After deducting cash interest expense, the company generated first quarter 2016 non-GAAP net income of $32.9 million, or $0.95 per non-GAAP basic share and $0.94 per non-GAAP diluted share. In the first quarter of 2015, non-GAAP net income totaled $40.0 million, or $1.47 per non-GAAP basic share and $1.17 per non-GAAP diluted share.

Balance Sheet Highlights

As of March 31, 2016, the company’s cash and investments totaled approximately $480 million and total debt (principal amount outstanding) was approximately $1.04 billion.

"We are reiterating our full year 2016 guidance for revenue, adjusted EBITDA and non-GAAP net income, including top-line revenue growth of approximately 40%, which underscores the strong recent trends for Makena and the overall underlying demand we are generating across our portfolio of products," said Frank Thomas, president and chief operating officer. "During the quarter and throughout 2016, we are investing in our products through R&D to potentially expand our label for Feraheme and provide more patient- and provider-friendly versions of Makena. We believe these investments will enhance the long-term revenue potential of these products."

2 See share count reconciliation at the conclusion of this press release.

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On May 3, 2016 Rigel Pharmaceuticals, Inc. (Nasdaq:RIGL) reported financial results for the first quarter ended March 31, 2016 (Press release, Rigel, MAY 3, 2016, View Source;p=RssLanding&cat=news&id=2164508 [SID:1234511894]).

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"We look forward to our upcoming Phase 3 data as we continue with our planning for the potential commercial launch of fostamatinib in the United States," said Raul Rodriguez, president and chief executive officer of Rigel. "Also, we initiated the Phase 2 proof-of-concept study with fostamatinib in autoimmune hemolytic anemia (AIHA). We anticipate that the results of these studies as well as the IgA nephropathy study will be forthcoming later this year," he added.

During the first quarter, Rigel announced that patient enrollment was completed for the two studies in the FIT Phase 3 clinical program of fostamatinib in immune thrombocytopenic purpura (ITP). The results from the first study are expected in the middle of 2016, with the results for the second study expected shortly thereafter. Rigel plans to submit a New Drug Application to the Food and Drug Administration in the first quarter of 2017, subject to the results of the program. In addition, Rigel is in the early stages of establishing its sales and marketing infrastructure for the commercial launch of fostamatinib.

For the first quarter of 2016, Rigel reported a net loss of $17.5 million, or $0.19 per share, compared to a net loss of $18.2 million, or $0.21 per share, in the first quarter of 2015.

Contract revenues from collaborations of $5.0 million in the first quarter of 2016, compared to $2.2 million in the first quarter of 2015, were comprised of the amortization of the $30.0 million upfront payment and FTE fees earned pursuant to Rigel’s collaboration and license agreement with Bristol-Myers Squibb.

Rigel reported total costs and expenses of $22.6 million in the first quarter of 2016, compared to $20.4 million in the first quarter of 2015. The increase in costs and expenses was primarily due to the increase in research and development costs related to Rigel’s clinical research programs with fostamatinib in ITP and AIHA.

As of March 31, 2016, Rigel had cash, cash equivalents and short-term investments of $103.6 million, compared to $126.3 million as of December 31, 2015. Rigel expects this amount to be sufficient to fund operations into the third quarter of 2017.

On May 03, 2016 Supernus Pharmaceuticals, Inc. (NASDAQ:SUPN), a specialty pharmaceutical company focused on developing and commercializing products for the treatment of central nervous system (CNS) diseases, reported financial results for first quarter 2016 and associated company developments (Press release, Supernus, MAY 3, 2016, View Source [SID:1234511895]).

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Commercial Update

First quarter 2016 product prescriptions for Trokendi XR and Oxtellar XR, as reported by IMS, totaled 114,773, a 49.7% increase over the first quarter of 2015.

Prescriptions
Q1 2016 Q1 2015 Change %

Trokendi XR 85,987 55,227 55.7 %
Oxtellar XR 28,786 21,463 34.1 %

Total 114,773 76,690 49.7 %

Source Data: Product prescriptions as reported by IMS

Total revenue for the first quarter of 2016 was $43.1 million, a 53.1% increase over $28.1 million in the same period last year. Total revenue for both periods consisted almost exclusively of net product sales.

Net Product Sales ($mil.)
Q1 2016 Q1 2015 Change %

Trokendi XR $ 32.3 $ 20.9 54.5 %
Oxtellar XR $ 10.7 $ 7.2 49.3 %

Total $ 43.0 $ 28.1 53.1 %

Consistent with industry trends and the Company’s experience in the first quarter last year, product prescriptions and net product sales for Trokendi XR and Oxtellar XR were unfavorably impacted by the reset of insurance coverage at the beginning of the year, with high deductible and high co-pay programs. Additionally, changes in wholesaler inventory levels and ordering patterns during the first quarter of 2016 had the effect of reducing net product sales by approximately $3 million in the first quarter of 2016.

"Our business continues to post strong growth compared to last year. Total first quarter IMS prescriptions, and net product sales grew by 50% or more compared to the same period last year. We continue to build on the momentum we finished with last year promoting the benefits of our products to patients with epilepsy," said Jack Khattar, President and CEO of Supernus Pharmaceuticals.

Regarding our supplemental new drug application requesting approval to expand the Trokendi XR label to include treatment of migraine in adults, we are ready to launch the new migraine indication once we receive full approval from the FDA.

Progress of Product Pipeline

Enrollment continues for both Phase III trials for SPN-810, which is currently in development for Impulsive Aggression in patients who have ADHD, and for the Phase IIb trial for SPN-812, currently in development for ADHD. The Company continues to expect Phase III data for SPN-810 to be available by mid 2017, and data from the SPN-812 Phase IIb trial to be available by early 2017.

"In addition to our recent findings on the favorable emerging clinical profile of SPN-812 as it relates to adverse events, we completed the evaluation of the cardiac effects portion of the single ascending and multiple ascending dose study. We are pleased to report that there was no clinically significant change in QT interval and other ECG parameters. We believe these additional safety data in adult healthy volunteers, which show a lack of cardiac effects, are very encouraging and further strengthen the differentiation of SPN-812," said Jack Khattar.

Collaboration Update

Shire recently announced positive results of SHP465 in a safety and efficacy study in children and adolescents with ADHD. The study addresses a key U.S. Food and Drug Administration (FDA) requirement, keeping SHP465 on track for resubmission in the fourth quarter of 2016 and a potential launch in the second half of 2017, if it is approved by the FDA. SHP465 was originally developed by Shire Laboratories, the former division of Shire that subsequently became Supernus Pharmaceuticals. Based on the agreement between Supernus and Shire, Shire will pay to Supernus a single-digit percentage royalty on net sales of the product.

Operating Expenses

Research and development expenses in the first quarter of 2016 were $10.6 million, as compared to $3.7 million in the same quarter the prior year. This increase is primarily due to the ongoing Phase III testing of SPN-810 and Phase IIb testing of SPN-812.

Selling, general and administrative expenses in the first quarter of 2016 were $25.2 million, as compared to $19.4 million in the same quarter the prior year. The increase is primarily due to the continued increase in our sales and marketing efforts for both Trokendi XR and Oxtellar XR and the efforts in preparing for the launch of the migraine indication for Trokendi XR.

Operating Income and Earnings Per Share

Operating income in the first quarter of 2016 was $5.3 million, an increase of 55.0% over operating income of $3.4 million in the same period last year. This improvement in operating income is primarily due to the increase in net product sales.

Diluted earnings per share were $0.08 in the first quarter ended March 31, 2016, compared to $0.02 in the same period last year.

Weighted-average diluted common shares outstanding were approximately 51.2 million in the first quarter of 2016, as compared to approximately 44.9 million in the same period the prior year.

Capital Resources

As of March 31, 2016, the Company had $114.0 million in cash, cash equivalents, marketable securities, and long term marketable securities, as compared to $117.2 million at December 31, 2015. As of March 31, 2016, approximately $6.6 million of the Company’s six year, $90 million notes, bearing interest at 7.5% per annum, remain outstanding.

Financial Guidance

For full year 2016, the Company reiterates its expectation that net product sales will range from $200 million to $210 million, R&D expenses to range from $55 million to $65 million, and operating income to range from $28 million to $35 million.

On May 3, 2016 MorphoSys AG (FSE: MOR; Prime Standard Segment; TecDAX, OTC: MPSYY) reported its first quarter interim statement, outlining the key events of the first three months ending March 31, 2016 (Press release, MorphoSys, MAY 3, 2016, View Source [SID:1234511804]).

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Financial results for the first quarter of 2016

Group revenue in the first quarter of 2016 reached EUR 12.1 million (Q1/2015: EUR 70.4 million), and EBIT was EUR -9.7 million (Q1/2015: EUR 52.8 million). Previous-year figures included a non-recurring effect of approximately EUR 59 million.
The Group’s liquidity position on March 31, 2016 amounted to EUR 287.0 million (December 31, 2015: EUR 298.4 million).
The Company confirmed its 2016 financial year guidance for revenue in the range of EUR 47 million to EUR 52 million and EBIT in the range of EUR -58 million to EUR -68 million.
Operating highlights of the first quarter of 2016

In January, MorphoSys disclosed the receipt of a milestone payment in connection with the start of a global phase 2 clinical study. This study was initiated by Bayer and is designed to support registration of anetumab ravtansine (BAY 94-9343) as a potential new treatment for mesothelioma.
In March, MorphoSys repurchased 52,295 of its own shares in the amount of EUR 2,179,963 to be used for long-term incentive (LTI) programs, specifically the LTI Plan granted on April 1, 2016 to the Company’s Management Board and Senior Management Group.
At the end of the first quarter, MorphoSys’s product pipeline comprised a total of 104 therapeutic antibodies, 26 of which are in clinical development. Three partnered programs are currently in phase 3 trials.
Events after the end of the first quarter of 2016

In early April, MorphoSys announced the start of a phase 2 clinical combination trial which has been named L-MIND (Lenalidomide-MOR208 IN DLBCL), with MOR208 and the cancer drug lenalidomide (Revlimid) in patients with diffuse large B-cell lymphoma (DLBCL).
Also in early April, MorphoSys announced the initiation of a phase 1 trial with the Ylanthia antibody MOR106, which is being co-developed with Galapagos for the treatment of inflammatory diseases.
On April 4, 2016, MorphoSys announced that it filed a lawsuit in the United States (U.S.) District Court of Delaware against Janssen Biotech and Genmab for patent infringement. With this complaint, MorphoSys seeks redress for the infringing manufacture, use and sale of Janssen’s and Genmab’s daratumumab, an antibody targeting CD38.
On April 21, 2016, MorphoSys announced that its partner Novartis confirmed that a phase 2b/3 study examining bimagrumab (BYM338) in sporadic Inclusion Body Myositis (sIBM) did not meet its primary endpoint. Data are currently being reviewed and will inform decisions on the bimagrumab development program. Ongoing clinical trials are being continued at this time.
In EURO million* 3-Months 2016 3-Months 2015


Group Revenues 12.1 70.4
Total Operating Expenses 21.9 17.7
Other Income/Expenses 0.1 0.0
Earnings Before Interest and Taxes – EBIT (9.7) 52.8
Consolidated Net Profit / (Loss) (7.2) 40.9
Total EPS, diluted, in EURO (0.28) 1.55

* Differences due to rounding

"The proprietary portfolio is making excellent progress with the first combination trial of MOR208 now ongoing, and the start of clinical development of MOR106, an innovative new antibody from our collaboration with Galapagos," stated Dr. Simon Moroney, Chief Executive Officer of MorphoSys AG. "The outcome of the phase 3 bimagrumab trial was disappointing, but we look forward to reporting on multiple milestones in 2016, including results from the registration trials for guselkumab and additional data from our broad development pipeline."

"The results for the first three months of 2016 are fully in line with our expectations. With our solid financial position, we are well-positioned to continue delivering on our research and development goals," commented Jens Holstein, Chief Financial Officer of MorphoSys AG. "We will continue to focus on the expansion of our pipeline."

Financial Review of the First Three Months of 2016 (IFRS)

In comparison to the previous year, Group revenues declined to EUR 12.1 million (Q1/2015: EUR 70.4 million). Revenues in the comparable period of 2015 contained a non-recurring effect in the amount of about EUR 59 million from the termination of the partnership with Celgene to co-develop and co-promote MOR202. Success-based payments amounted to 8%, or EUR 1.0 million (Q1/2015: 1%, or EUR 0.5 million), of total revenue. The Proprietary Development segment recorded revenues of EUR 0.1 million (Q1/2015: EUR 59.4 million). Revenues in the Partnered Discovery segment comprised EUR 12.0 million (Q1/2015: EUR 11.0 million).

Total operating expenses for the first three months of 2016 amounted to EUR 21.9 million (Q1/2015: EUR 17.7 million). Total research and development expenses were EUR 18.6 million (Q1/2015: EUR 14.7 million). R&D expenses mainly consisted of costs for external lab services and personnel costs. General and administrative expenses increased slightly to EUR 3.2 million (Q1/2015: EUR 3.0 million) mainly driven by higher expenses for personnel. Earnings before interest and taxes (EBIT) amounted to EUR -9.7 million (Q1/2015: EUR 52.8 million).

The Proprietary Development segment reported a segment EBIT of EUR -14.3 million (Q1/2015: EUR 49.7 million), while Partnered Discovery showed a segment EBIT of EUR 7.7 million (Q1/2015: EUR 5.8 million). Proprietary R&D expenses including technology development amounted to EUR 14.6 million (Q1/2015: EUR 10.4 million).

On March 31, 2016, the Group’s liquidity position amounted to EUR 287.0 million compared to EUR 298.4 million on December 31, 2015. The Company’s liquidity is reflected in the balance sheet items "cash and cash equivalents", "available-for-sale financial assets", "bonds, available-for-sale" and current and non-current "financial assets classified as loans and receivables". The decline in liquidity was mainly the result of the use of cash for operations in the first three months of 2016 and for the repurchase of shares for the Group’s long-term incentive programs.

Financial guidance for 2016

MorphoSys re-confirmed its guidance for 2016. MorphoSys anticipates total Group revenues in the range of EUR 47 million to EUR 52 million and expects EBIT to be in the range of EUR -58 million to EUR -68 million. Proprietary R&D expenses are expected to rise to EUR 76 million to EUR 83 million. This guidance does not include any potential in-licensing or co-development of additional development candidates.