On August 8, 2016 Allergan plc (NYSE: AGN) reported its second quarter 2016 continuing operations performance (Press release, Allergan, AUG 8, 2016, View Source;p=irol-newsArticle&ID=2193636 [SID:1234514368]).

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Second Quarter 2016 Continuing Operations

($ in millions, except per share amounts)

Q2 ’16

Q2 ’15

Q1 ’16

Q2 ’16
v Q2
’15

Q2 ’16
v Q1
’16

Total net revenues

$ 3,684.8

$ 3,628.7

$ 3,399.3

1.5%

8.4%

Branded net revenues*

$ 3,709.2

$ 3,673.8

$ 3,431.2

1.0%

8.1%

Operating (Loss)

$ (487.6)

$ (476.1)

$ (171.5)

2.4%

184.3%

Diluted EPS – Continuing Operations

$ (1.25)

$ (1.38)

$ (0.41)

(9.4)%

204.9%

Cash Flow from Operations

$ 1,382.5

$ 1,401.3

$ 1,218.5

(1.3)%

13.5%

SG&A Expense

$ 1,210.0

$ 1,121.1

$ 1,096.3

7.9%

10.4%

R&D Expense

$ 636.5

$ 349.7

$ 403.1

82.0%

57.9%

Continuing Operations Tax Rate

37.9%

44.7%

81.6%

(6.8)%

(43.7)%

Non-GAAP Adjusted Operating Income

$ 1,860.0

$ 2,008.7

$ 1,734.1

(7.4)%

7.3%

Non-GAAP Diluted EPS

$ 3.35

$ 3.67

$ 2.99

(8.7)%

12.0%

Non-GAAP Adjusted EBITDA

$ 1,936.6

$ 2,080.8

$ 1,816.1

(6.9)%

6.6%

Non-GAAP SG&A Expense

$ 1,038.8

$ 899.4

$ 969.0

15.5%

7.2%

Non-GAAP R&D Expense

$ 345.0

$ 302.0

$ 276.5

14.2%

24.8%

Non-GAAP Continuing Operations Tax Rate

7.1%

8.0%

9.7%

(0.9)%

(2.6)%

* Excludes the reclassification of revenues of ($24.4) million in Q2 2016, ($45.1) million in Q2 2015, and ($31.9) million in Q1 2016 related to the portion of Allergan product revenues sold by our Anda Distribution Business into discontinued operations.

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Total net revenues of $3.7 billion, a two percent increase versus the prior year quarter, were impacted by the loss of exclusivity on Namenda IR, offset by strong performance in key brands and new product launches.

"Allergan delivered another quarter of strong operating performance, while taking important steps to advance our evolution as a focused Growth Pharma leader," said Brent Saunders, CEO and President, Allergan. "Our teams delivered strong revenues powered by robust performance from key brands, including BOTOX, RESTASIS, LINZESS, JUVEDERM and LO LOESTRIN. Our R&D teams have delivered thirteen major U.S. and international approvals, including BYVALSON and NAMZARIC, and completed nine major regulatory submissions, including XEN for glaucoma and True Tear for dry eye to the Food and Drug Administration, so far this year."

"2016 has been a year of significant, positive transition for Allergan. On August 2, we announced the completion of the divestiture of our Global Generics business, and on August 3, announced the proposed divestiture of our Anda distribution business, to Teva. These steps position Allergan as a pure branded focused business able to maximize the power of its therapeutic areas and the promise of its leading Open Science pipeline of 65+ mid-to-late stage development programs," added Saunders.

"Thank you to our more than 16,000 colleagues around the world, who have delivered strong results despite a period of significant change, advanced important innovation for patients, and are the driving force behind our therapeutic area leadership and strong connection to the customers we serve. These efforts have helped us become the most dynamic and exciting Company in our industry," said Saunders.

GAAP operating loss from continuing operations in the second quarter 2016 was $488 million. Non-GAAP operating income from continuing operations in the second quarter 2016 was $1.86 billion. For the second quarter 2016, adjusted EBITDA from continuing operations was $1.94 billion, compared to $2.08 billion for the second quarter 2015. The decrease was primarily due to the loss of exclusivity on NAMENDA IR. Cash flow from operations for the second quarter of 2016 was $1.4 billion.

Operating Expenses
Total GAAP SG&A was $1.2 billion for the second quarter 2016 compared to $1.1 billion in the prior year period. Total non-GAAP SG&A was $1.0 billion for the second quarter 2016 compared to $899 million in the prior year period as a result of increased promotional spending to support the launches of new products including VIBERZI, VRAYLAR and KYBELLA. GAAP R&D investment for the second quarter 2016 was $637 million. Non-GAAP R&D investment for the second quarter 2016 was $345 million. R&D investment increased as a result of an increasing number of products moving into phase 3 development.

Amortization and Tax
Amortization expense from continuing operations for the second quarter 2016 was $1.63 billion, compared to $1.52 billion in the second quarter of 2015. The Company’s GAAP continuing operations tax rate was 37.9 percent in the second quarter 2016. The Company’s non-GAAP continuing operations tax rate was 7.1 percent in the second quarter 2016.

Capitalization
As of June 30, 2016, Allergan had cash and marketable securities of $507 million and outstanding indebtedness of $39.6 billion. "Post the completion of the Teva transaction we have made significant progress toward strengthening our balance sheet to support our long-term growth," said Tessa Hilado, Chief Financial Officer, Allergan. "Using the proceeds of the Teva transaction and cash flows from operations in the second quarter, we have repaid $9.3 billion in debt, leaving us with $33.3 billion in total outstanding debt and approximately $27.6 billion remaining in cash. We plan to commence our share repurchase program shortly with the initial focus on repurchasing approximately $5 billion in shares over the remainder of the year. Upon the conclusion of this program, we will evaluate whether to move forward and repurchase the remaining $5 billion authorized by the Allergan board. This is in-line with our larger capitalization strategy – which is focused on maximizing value for our shareholders over the long-term."

Discontinued Operations and Continuing Operations
As a result of the decision to hold for sale our Anda Distribution business as of June 30, 2016, which we subsequently announced we are selling to Teva, and the now completed divestiture of the Company’s Global Generics business to Teva on August 2, 2016, the second quarter 2016 financial results of these businesses are being reported as discontinued operations in the condensed consolidated statements of operations. The Company’s Anda Distribution results will be reported as discontinued operations until the close of that transaction. A portion of the third quarter 2016 Global Generics business results will be reported as discontinued operations in Allergan’s third quarter 2016 earnings report. Included in segment revenues are product sales that are sold by the Anda Distribution business once the Anda Distribution business has sold the product to a third party customer. These sales are included in segment results and are excluded from total continuing operations revenues through a reduction to Corporate revenues. Cost of sales for these products in discontinued operations is equal to our average third-party cost of sales for third-party brand products distributed by Anda Distribution.

Continuing operations includes the U.S. General Medicine, U.S. Specialized Therapeutics and International business segments. All prior year results have been recast to reflect continuing operations results and will be available along with other earnings materials on our website at View Source

Second Quarter 2016 Business Segment Results

U.S. Specialized Therapeutics

(Unaudited; $ in millions)
Three Months Ended June 30,

2016 (1)

2015 (1)

Eye Care
$ 636.1

$ 578.6
Total Medical Aesthetics
419.8

366.2
Facial Aesthetics

320.2

263.7
Plastic Surgery

52.8

54.1
Skin Care

46.8

48.4
Medical Dermatology
97.1

120.7
Neuroscience & Urology
326.3

277.7
Other Revenues
9.6

4.5
Net revenues
$ 1,488.9

$ 1,347.7
Operating expenses:

Cost of sales(2)

75.1

74.4
Selling and marketing

287.8

247.8
General and administrative

46.0

20.9
Segment contribution

$ 1,080.0

$ 1,004.6
Segment margin

72.5%

74.5%
Segment gross margin(3)

95.0%

94.5%

(1) Includes revenues earned that were distributed through the Anda Distribution business to third party customers.
(2) Excludes amortization and impairment of acquired intangibles including product rights.
(3) Defined as net revenues less segment related cost of sales as a percentage of net revenues.

U.S. Specialized Therapeutics net revenues grew 11 percent driven by strong growth in Eye Care, Facial Aesthetics and Neuroscience.

Eye Care

RESTASIS net revenues in the second quarter of 2016 were $371.3 million, driven by continued strong promotional efforts.
LUMIGAN/GANFORT net revenues in the second quarter of 2016 were $80.6 million, impacted by modest prescription declines.
ALPHAGAN/COMBIGAN net revenues in the second quarter of 2016 were $96 million. Overall prescriptions remain stable.
OZURDEX net revenues in the second quarter of 2016 were $21.5 million, driven by the acceleration of sales in DME following publication of new clinical data.
Medical Aesthetics

Facial Aesthetics
BOTOX Cosmetic net revenues in the second quarter of 2016 were $189.9 million, driven by continued market share expansion, enhanced promotional focus and overall continued strong demand for the product.
Fillers net revenues in the second quarter of 2016 were $117.6 million, reflecting strong sales of JUVEDERM and the continued benefit of new product introductions from the Vycross line.
KYBELLA net revenues in the second quarter of 2016 were $12.7 million, as we focus on developing the market for submental fullness.
Plastic Surgery
Breast implant net revenues in the second quarter of 2016 were stable at $51.7 million.
Skin Care
SkinMedica net revenues in the second quarter of 2016 were strong at $29.1 million.
Medical Dermatology

ACZONE and TAZORAC net revenues in the second quarter of 2016 were $54.1 million and $23.4 million, respectively.
Neurosciences & Urology

BOTOX Therapeutic revenues in the second quarter of 2016 were $296 million, driven by continued strong growth in migraine and overactive bladder.
RAPAFLO revenues in the second quarter of 2016 were stable at $29.4 million.
U.S. Specialized Therapeutics gross margin for the second quarter of 2016 was 95 percent. SG&A expenses increased 24 percent in the second quarter 2016 primarily due an expansion of the medical aesthetics salesforce and the launch of Kybella in the U.S. Segment contribution for the second quarter 2016 increased 7.5% percent versus the prior year period to $1.08 billion.

U.S. General Medicine

(Unaudited; $ in millions)

Three Months Ended June 30,

2016 (1)

2015 (1)

Central Nervous System

$ 317.5

$ 560.8
Gastroenterology

442.0

373.2
Women’s Health

296.1

219.4
Anti-Infectives

63.1

44.1
Established Brands

308.5

394.5
Other Revenues

21.9

16.0
Net revenues

$ 1,449.1

$ 1,608.0
Operating expenses:

Cost of sales(2)

214.9

238.0
Selling and marketing

332.7

309.2
General and administrative

43.7

18.1
Segment contribution

$ 857.8

$ 1,042.7
Segment margin

59.2%

64.8%
Segment gross margin(3)

85.2%

85.2%

(1) Includes revenues earned that were distributed through the Anda Distribution business to third party customers.
(2) Excludes amortization and impairment of acquired intangibles including product rights.
(3) Defined as net revenues less segment related cost of sales as a percentage of net revenues.

U.S. General Medicine net revenues were impacted by a decline in Central Nervous System and Established Brands revenues, offset by strong growth in Gastroenterology, Women’s Health and Anti-Infectives performance.

Central Nervous System
Allergan CNS franchise net revenues were down 43.4% year over year reflecting the loss of exclusivity of Namenda IR in July 2015. Sales of key products and new launches continued strong performance in the second quarter 2016.

NAMZARIC net revenues in the second quarter of 2016 were $12.8 million. Following approval of the expanded label, Namzaric is well-positioned to be the standard of care for patients with moderate Alzheimer’s disease.
NAMENDA XR net revenues in the second quarter of 2016 were $166.5 million, a decline of $38 million over the previous year as a result of lower net selling price and volume.
Overall, NAMENDA XR plus NAMZARIC days of therapy volume have been stable. Decreases in NAMENDA XR revenues were impacted by higher levels of investment to support the future of the franchise.
VRAYLAR continues to achieve rapid acceptance six months into launch with net revenues in the second quarter of 2016 of $11.1 million.
VIIBRYD/FETZIMA continue to perform well with net revenues in the second quarter of 2016 of $81.7 million.
SAPHRIS net revenues remained stable at $41.3 million for the quarter.
Gastrointestinal

LINZESS net revenues in the second quarter of 2016 were $150.5 million, driven by continued strong OTC conversion.
VIBERZI net revenues in the second quarter of 2016 were $20.4 million. The product continues to trend at approximately 90 percent of sales for Linzess at the same time of launch.
ASACOL/DELZICOL net revenues in the second quarter of 2016 were $119.8 million. ASACOL HD prescriptions declined as a result of lower promotion and formulary coverage. ASACOL HD is approaching loss of exclusivity on August 1, 2016.
Women’s Health

Lo LOESTRIN net revenues in the second quarter of 2016 were $101 million, driven by continuing strong demand.
ESTRACE Cream and MINASTRIN 24 net revenues in the second quarter of 2016 were $97.2 million and $83.0 million, respectively.
Anti-Infectives

TEFLARO, AVYCAZ and DALVANCE continue to experience strong performance with net revenues in the second quarter of 2016 of $35.2 million, $13.7 million and $10.2 million, respectively.
Established Brands

BYSTOLIC net revenues in the second quarter of 2016 were $150.3 million. Overall prescriptions experienced a modest decline following reintroduction of the 20 mg dosage form.
U.S. General Medicine gross margin for the second quarter of 2016 remained stable at 85.2 percent. SG&A expenses increased 15 percent in the second quarter 2016 primarily due to incremental promotional costs in support of VIBERZI and VRAYLAR. Overall profitability decreased with segment contribution for the second quarter 2016 decreasing 18 percent versus the prior year period to $858 million.

International

(Unaudited; $ in millions)
Three Months Ended June 30,

2016

2015

Eye Care
$ 318.7

$ 301.7
Total Medical Aesthetics
284.1

262.2
Facial Aesthetics

240.6

215.2
Plastic Surgery

40.3

43.2
Skin Care

3.2

3.8
Botox Therapeutics and Other
141.1

129.8
Other Revenues
13.1

23.4
Net revenues
$ 757.0

$ 717.1
Operating expenses:

Cost of sales(1)

115.0

111.8
Selling and marketing

207.2

196.1
General and administrative

30.9

35.0
Segment contribution

$ 403.9

$ 374.2
Segment margin

53.4%

52.2%
Segment gross margin (2)

84.8%

84.4%

(1) Excludes amortization and impairment of acquired intangibles including product rights.
(2) Defined as net revenues less segment related cost of sales as a percentage of net revenues.

International continues to experience strong growth, driven by Eye Care, Facial Aesthetics and Botox Revenues.

Eye Care

LUMIGAN/GANFORT revenues in the second quarter of 2016 were $94.5 million reflecting stable performance across Allergan’s glaucoma product franchise.
ALPHAGAN/COMBIGAN revenues in the second quarter of 2016 remained stable at $44.2 million.
OZURDEX revenues in the second quarter of 2016 were $45.7 million, driven by its launch in China.
OPTIVE revenues in the second quarter of 2016 remained stable at $26.0 million.
Medical Aesthetics

Facial Aesthetics
BOTOX Cosmetic revenues in the second quarter of 2016 were $132.7 million, driven by continued international market share expansion and strong demand for the product.
Fillers revenues in the second quarter of 2016 were $107.3 million, reflecting continued strong performance and the benefit of new product introductions in international markets.
Plastic Surgery
Breast implant revenues in the second quarter of 2016 were $40.2 million.
Botox Therapeutic & Other Products

BOTOX Therapeutic revenues in the second quarter of 2016 were $84.8 million, driven by continued strong performance of Botox Migraine and share expansion in key markets.
ASACOL/DELZICOL revenues in the second quarter of 2016 were $11 million.
International gross margin for the second quarter of 2016 remained stable at 84.8 percent. SG&A expenses increased 3 percent in the second quarter 2016 primarily due to incremental promotional costs for new product launches. Segment contribution increased 8 percent to $404 million due to higher sales of key products with higher margins, including Ozurdex.

Pipeline Update
R&D productivity continued during the second quarter of 2016. Key development highlights included:

U.S. and International Branded Product Approvals and Launches

TEFLARO (ceftaroline fosamil) received U.S. Food and Drug Administration (FDA) for its supplemental New Drug Application (sNDA) for pediatric patients 2 months of age to less than 18 years of age with acute bacterial skin and skin structure infections (ABSSSI).
BYVALSON (nebivolol and valsartan) 5 mg/ 80 mg tablets received FDA approval for the treatment of hypertension to lower blood pressure.
JUVÉDERM VOLBELLA XC, received FDA approval for use in the lips for lip augmentation and for correction of perioral rhytids, commonly referred to as perioral lines, in adults over the age of 21.
BOTOX Vista (Allergan’s botulinum toxin type A product) received approval from the Japanese Ministry of Health, Labour and Welfare for use as a treatment for crow’s feet lines (CFL).
JUVEDERM VOLITE with lidocaine received a CE mark in the European Union.
AVYCAZ (ceftazidime and avibactam) received FDA approval of its sNDA including clinical data from a Phase 3 trial evaluating the safety and efficacy of AVYCAZ, in combination with metronidazole, for the treatment of complicated intra-abdominal infections (cIAI) caused by designated susceptible microorganisms.
Allergan and Adamas Pharmaceuticals, Inc. announced that the FDA approved a new, expanded label for NAMZARIC (memantine and donepezil hydrochlorides). The expanded label allows patients with moderate to severe Alzheimer’s disease, who are currently stabilized on Aricept, donepezil hydrochloride (10 mg), to start combination therapy directly with NAMZARIC.
Second Quarter 2016 Regulatory Milestones & Clinical Updates

Allergan announced that its New Drug Application (NDA) filing for oxymetazoline HCl cream 1.0%, a topical prescription product for the treatment of persistent facial erythema (redness) associated with rosacea in adults, was accepted by the FDA for review.
Allergan and Ironwood Pharmaceuticals announced that the FDA accepted for review its sNDA for the 72 mcg dose of linaclotide for use in the treatment of adults with chronic idiopathic constipation (CIC).
Allergan announced that the FDA accepted its 510(k) Premarket Notification Application for the XEN Glaucoma Treatment System (consisting of the XEN45 Gel Stent and the XEN Injector).
Allergan announced positive results from two pivotal trials for True Tear, a handheld stimulator being studied to temporarily increase tear production upon activation in patients with dry eye disease due to decreased tear production. The studies, OCUN-009 and OCUN-010, each met their primary and secondary efficacy endpoints. The Company also filed a de novo application with the FDA for True Tear in the second quarter.
Allergan announced that the Committee for Medicinal Products for Human Use (CHMP) adopted a Positive Opinion for the Marketing Authorization of ENZEPI (pancrelipase) in the European Union.
Allergan plc and Gedeon Richter announced positive results from Venus I, one of two pivotal Phase III clinical trials evaluating the efficacy and safety of ulipristal acetate in women with uterine fibroids.
Allergan received a Positive Opinion from the Swedish Medical Products Agency (MPA) for BELKYRA (deoxycholic acid). BELKYRA will be the first prescription medicine to be licensed in Europe for the treatment of moderate to severe convexity or fullness associated with submental fat (often called double chin) in adults when the presence of submental fat has a psychological impact for the patient.
Full Year 2016 Continuing Operations Guidance1
Allergan’s full year 2016 continuing operations standalone estimates are based on management’s current belief about prescription trends, pricing levels, inventory levels and the anticipated timing of future product launches and events. Continuing operations includes the U.S. Specialized Therapeutics, U.S. General Medicine and International.

GAAP
NON-GAAP
Total Reported Net Revenues
$14.65 billion – $14.90 billion
$14.65 billion – $14.90 billion
Total Branded Net Revenues2
$14.75 billion — $15 billion (~10% growth*)
$14.75 billion — $15 billion (~10% growth*)
Gross Margin (as a % of revenues)
~88%
~89%
SG&A Expense
~$4.4 billion
~$4 billion
R&D Expense
~$2.1 billion
~$1.5 billion
Net Interest Expense
~$1.2 billion
~$1.3 billion
Tax Rate
~57%
~9%
Earnings / (Loss) Per Share3
($1.95 – $2.15)
$13.75 – $14.20
Share Count4
391 million shares
413 million shares
1 Excludes Anda from Net Revenues and expenses. Guidance based on reported net revenues.
2 Excludes revenues of Allergan products sold through Anda which are no longer included in our reported continuing operations revenue as a result of discontinued operations accounting.
* Excludes Namenda IR, divestitures and foreign exchange.
3 GAAP (loss) per share includes the impact of amortization of approximately $6.4 billion, IPR&D impairments and asset sales and impairments, net of $256 million, other income and expense of approximately $150 million and dividends on preferred shares of approximately $278 million.
4GAAP EPS shares do not include dilution of shares as earnings are a net loss. As such, the dilution impact of preferred share conversion and outstanding equity awards is not included in the forecasted shares.

On August 8, 2016 Heron Therapeutics, Inc. (NASDAQ: HRTX), a biotechnology company focused on improving the lives of patients by developing best-in-class medicines that address major unmet medical needs, reported second quarter 2016 financial results and highlighted recent corporate progress (Press release, Heron Therapeutics, AUG 8, 2016, View Source;p=irol-newsArticle&ID=2193823 [SID:1234514369]).
Recent Corporate Progress:
Heron announced preliminary, positive, top-line efficacy results from two Phase 2 clinical studies of HTX-011, its lead product candidate for the management of post-operative pain in patients undergoing bunionectomy and inguinal hernia repair, and safety data from its ongoing Phase 2 program. HTX-011 achieved the primary endpoints in both studies as well as several important secondary endpoints.
Heron entered into an agreement with Tang Capital Partners, LP whereby Tang Capital will lend the Company up to $100 million. The loan has a two-year term and bears interest of 8% per annum. The first close of $50 million occurred on August 5, 2016. The second close of an additional $50 million is subject to the achievement of a corporate milestone. There are no fees, no warrants and no equity conversion feature associated with this transaction.
Heron appointed Christian Waage as a member of the Heron Board of Directors.
"We continue to work closely with the FDA on our NDA for SUSTOL and look forward to bringing this important therapeutic to patients suffering from chemotherapy-induced nausea and vomiting," commented Barry D. Quart, Pharm.D., Chief Executive Officer of Heron Therapeutics. "Also, our recently reported, positive, top-line results from our Phase 2 studies of HTX-011 in patients undergoing both bunionectomy and inguinal hernia repair strengthen our belief that HTX-011 may represent a best-in-class therapeutic for the management of post-operative pain."
Results of Operations
As of June 30, 2016, Heron had approximately $74.6 million in cash, cash equivalents and short-term investments, or $124.6 million in pro-forma cash, cash equivalents and short-term investments adjusting for the first close of the recently announced loan agreement. This compares to $131.2 million in cash, cash equivalents and short-term investments as of December 31, 2015.
Heron’s net cash used for operating activities for the three and six months ended June 30, 2016 was $27.1 million and $59.5 million, respectively, compared to net cash used for operating activities of $15.8 million and $35.5 million, respectively, for the same periods in 2015.
Heron’s net loss for the three and six months ended June 30, 2016 was $43.2 million and $76.7 million, or $1.17 per share and $2.09 per share, respectively, compared to a net loss of $23.1 million and $43.7 million, or $0.74 per share and $1.45 per share, respectively, for the same periods in 2015.
The increases in net cash used for operating activities and net loss in the 2016 periods as compared to the 2015 periods were primarily due to costs incurred in preparation for the commercial launch of SUSTOL, as well as clinical and manufacturing costs related to our Phase 1 and Phase 2 clinical studies for HTX-011 and costs associated with the development of HTX-019.

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On August 8, 2016 Bellicum Pharmaceuticals, Inc. (Nasdaq:BLCM), a clinical stage biopharmaceutical company focused on discovering and developing novel cellular immunotherapies for cancers and orphan inherited blood disorders, reported financial results for the second quarter of 2016 and provided an update on recent developments (Press release, Bellicum Pharmaceuticals, AUG 8, 2016, View Source;p=irol-newsArticle&ID=2193851 [SID:1234514370]).

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"In the last six months, we have achieved important milestones across our stem cell transplant, TCR and CAR T programs," said Tom Farrell, President and Chief Executive Officer of Bellicum. "We’ve received orphan drug status from the EU and US for BPX-501 and rimiducid, and have reached initial agreement with EMA around a pathway to filing Marketing Authorization Applications for each based on the ongoing BP-004 clinical trial. In addition, we are pleased to report that the investigational new drug applications for both our BPX-701 TCR and BPX-601 GoCAR-T product candidates have been cleared by the FDA, and we are preparing to start Phase 1 studies."

Program and Regulatory Updates

BPX-501:

Received US and EU orphan drug designations for BPX-501 and rimiducid, and announced strategy to pursue EMA approval under exceptional circumstances based on expanded BP-004 trial. Bellicum has met with regulatory authorities in Europe to discuss the potential approval pathway for BPX-501 and for rimiducid for the treatment of immunodeficiency and GvHD following a haploidentical HSCT in pediatric patients with leukemias, lymphomas and rare inherited blood diseases who do not have a matched donor. Based on these regulatory discussions, Bellicum believes that data from the European arm of its BP-004 trial, with a six-month follow-up time and expanded to enroll additional patients, could form the basis of Marketing Authorization Applications for BPX-501 and rimiducid. In place of a randomized trial, the Company intends to collect data from a concurrent observational study of allogeneic HSCT outcomes in the pediatric setting. Details will be further refined in a formal protocol assistance process.
Reported new interim data from BP-004 trial in an oral presentation at the 42nd Annual Meeting of the European Society for Blood and Marrow Transplantation in April. Results demonstrated disease-free outcomes, reduced treatment-related mortality, reduced infection rates, faster immune reconstitution, and significant reductions in time-to-hospital discharge and re-hospitalizations, compared to historical controls. The Company expects to provide updated data by the end of 2016.
Initiated BP-008, a Phase 1 study of BPX-501 to treat post-transplant relapse in adults and children with blood cancers. The safety study, which includes matched as well as haploidentical transplant recipients, will also evaluate the potential for a titrated dose of rimiducid to resolve uncontrolled GvHD while preserving a greater proportion of BPX-501 cells.
BPX-601:

Following allowance by the FDA of its Investigational New Drug (IND) application, Bellicum is completing preparations for the start of BP-012, a Phase 1 BPX-601 GoCAR-T trial in an initial indication of non-resectable pancreatic cancer. GoCAR-T contains Bellicum’s proprietary iMC activation switch and is designed to treat solid tumors expressing prostate stem cell antigen. The clinical trial (NCT02744287), which is expected to enroll up to 30 patients in a 3+3 dose escalation/de-escalation design, will be conducted at Baylor Sammons Cancer Center in Dallas, Texas.
BPX-701:

With its BPX-701 IND allowed by the FDA, the Company is preparing for initiation of BP-011, a Phase 1 clinical trial with its high-affinity T cell receptor (TCR) product candidate. BPX-701 incorporates the CaspaCIDe safety switch and is designed to target malignant cells expressing the preferentially-expressed antigen in melanoma, or PRAME. Initial planned indications include Refractory or Relapsed Acute Myeloid Leukemia and Myelodysplastic Syndromes, with an additional study planned for metastatic uveal melanoma. BP-011 (NCT02743611), which is expected to enroll up to 36 AML/MDS patients in a 3+3 dose escalation/de-escalation design, will be conducted at Oregon Health and Science University and Leiden University Medical Center (LUMC).
CD19 CAR T Program:

In July 2016, the Company decided to support CD19 programs designed to establish clinical proof-of-concept for CaspaCIDe in the CD19 setting being advanced by two of our academic collaborators, in place of advancing BPX-401. The Company believes that this strategy allows a cost-effective and differentiated approach to the highly competitive landscape of CD19-targeted therapies in development.
Corporate Updates

Expanded research collaboration with Leiden University Medical Center for discovery of natural high-affinity TCRs for several cancers. Bellicum will provide financial support to LUMC over a three-year term in exchange for the right to exclusively license any high-affinity TCRs discovered under the new agreement.
U.S. patent issued that strengthens the IP around Bellicum’s CaspaCIDe cell therapy safety platform. U.S. patent 9,393,292 was issued to Baylor College of Medicine for a method of cell therapy that enables the selective elimination of administered cells that have been modified to express an inducible caspase-9 protein (iCasp9). Bellicum holds exclusive worldwide rights to the invention.
Second Quarter and Six Months Ended June 30, 2016 Financial Results

Bellicum reported a net loss of $16.5 million for the second quarter of 2016 and $31.6 million for the six months ended June 30, 2016, compared to a net loss of $10.5 million and $18.3 million for the comparable periods in 2015. The results included non-cash, stock-based compensation charges of $3.1 million and $6.2 million for the second quarter and six months ended June 30, 2016 and $2.1 million and $3.6 million for the comparable periods in 2015.

As of June 30, 2016, cash and investments totaled $136.6 million. Bellicum continues to expect to end 2016 with approximately $80 to $90 million in cash, cash equivalents and investments, and that current cash resources will be sufficient to meet operating requirements through 2017. This guidance includes planned spending in the second half of 2016 of approximately $15 million for capital projects to enable in-house U.S. manufacturing.

Research and development expenses were $12.2 million and $23.2 million, for the three and six months ended June 30, 2016, respectively, compared to $8.0 million and $13.7 million during the comparable periods in 2015. The higher expenses in the 2016 periods were primarily due to an increase in manufacturing and clinical expenses as a result of increased patient enrollment in our BPX-501 clinical trials, increased expenses for the IND-enabling activities on our product candidates BPX-601, BPX-701 and increased personnel and infrastructure costs.

General and administrative expenses were $4.2 million and $8.5 million for the three and six months ended June 30, 2016, respectively, compared to $2.8 million and $5.0 million during the comparable periods in 2015. The higher expenses in the 2016 periods were primarily due to the growth of the organization, including an increase in costs related to personnel, higher facility costs and increased legal, accounting and travel related expenses.

On August 8, 2016 Merck (NYSE:MRK), known as MSD outside the United States and Canada, reported that the U.S. Food and Drug Administration (FDA) has approved KEYTRUDA (pembrolizumab), the company’s anti-PD-1 (programmed death receptor-1) therapy, at a fixed dose of 200 mg every three weeks, for the treatment of patients with recurrent or metastatic head and neck squamous cell carcinoma (HNSCC) with disease progression on or after platinum-containing chemotherapy (Press release, Merck & Co, AUG 8, 2016, View Source [SID:1234514343]). Under the FDA’s accelerated approval regulations, this indication for KEYTRUDA is approved based on tumor response rate and durability of response. Continued approval for this indication may be contingent upon verification and description of clinical benefit in the confirmatory trials. For HNSCC patients, PD-L1 testing is not needed prior to use of KEYTRUDA.

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The approval is based on data from the KEYNOTE-012 study, which included patients with recurrent or metastatic HNSCC who had disease progression on or after platinum-containing chemotherapy or following platinum-containing chemotherapy administered as part of induction, concurrent, or adjuvant therapy and ECOG performance status (PS) of zero or one. The data showed an objective response rate (ORR) of 16 percent (95% CI: 11, 22), complete response rate of five percent, with responses of six months or longer observed in 82 percent (n=23/28) of the responding patients. ORR and duration of response were similar regardless of human papilloma virus (HPV) status.

Immune-mediated adverse reactions occurred with KEYTRUDA including pneumonitis, colitis, hepatitis, endocrinopathies, and nephritis. Based on the severity of the adverse reaction, KEYTRUDA should be withheld or discontinued and corticosteroids administered. Based on its mechanism of action, KEYTRUDA can cause fetal harm when administered to a pregnant woman. Female patients of reproductive potential should be advised of the potential hazard to a fetus. For more information regarding immune-mediated adverse reactions and use in pregnancy, see "Selected Important Safety Information" below.

"Today’s approval represents a meaningful advance for the oncology community, as well as for our head and neck cancer clinical program," said Dr. Roger M. Perlmutter, president, Merck Research Laboratories. "Together with prior approvals in the treatment of other tumor types, today’s action by the FDA underscores our tireless commitment to addressing the unmet needs of patients suffering from a broad range of cancers."

KEYNOTE-012 was the first clinical study to investigate the role of a PD-1 inhibitor in patients with recurrent or metastatic HNSCC with disease progression on or after platinum-containing chemotherapy. Merck currently has the largest immuno-oncology clinical development program, including multiple registration-enabling studies in head and neck cancer, and is conducting research investigating KEYTRUDA (pembrolizumab) as a monotherapy, as well as in combination with chemotherapy compared to the current standard of care.

"Head and neck cancer is a complex disease that historically has been associated with high recurrence rates and poor long-term outcomes, highlighting the critical need for new treatment options," said Dr. Tanguy Seiwert, associate director of the Head and Neck Cancer Program and assistant professor of medicine at The University of Chicago. "The approval of KEYTRUDA for previously treated patients with recurrent or metastatic head and neck squamous cell carcinoma is an important step forward in treating this disease."

KEYTRUDA is a humanized monoclonal antibody that works by increasing the ability of the body’s immune system to help detect and fight tumor cells. KEYTRUDA blocks the interaction between PD-1 and its ligands, PD-L1 and PD-L2, thereby activating T lymphocytes which may affect both tumor cells and healthy cells.

"Head and neck squamous cell carcinoma presents unique challenges including limited treatment options, especially for patients with recurrent or metastatic disease," said Holly Boykin, executive director, Head and Neck Cancer Alliance. "We welcome the approval of KEYTRUDA as a new treatment option for people whose lives are impacted by this devastating disease."

Data Supporting the Approval

The accelerated FDA approval was based on a multicenter, nonrandomized, open-label, multi-cohort phase 1b study, KEYNOTE-012, that evaluated safety in 192 patients with recurrent or metastatic HNSCC and ECOG PS of zero or one; efficacy was evaluated in 174 of these patients who had disease progression on or after platinum-containing chemotherapy administered for recurrent or metastatic HNSCC or following platinum-containing chemotherapy administered as part of induction, concurrent, or adjuvant therapy. Patients were enrolled regardless of tumor HPV status (33% were HPV-positive). The median number of prior lines of therapy administered for the treatment of HNSCC was two. Nearly all (95%) of the patients enrolled had prior radiation therapy. Patients received KEYTRUDA (pembrolizumab) at a dose of 10 mg/kg every two weeks (n=53) or a 200 mg fixed dose every three weeks (n=121) until unacceptable toxicity or disease progression. Patients without disease progression were treated for up to 24 months. Treatment with KEYTRUDA could be reinitiated for subsequent disease progression and administered for up to one additional year. The primary efficacy outcome measures were ORR according to Response Evaluation Criteria in Solid Tumors (RECIST) v1.1, as assessed by blinded independent central review (BICR), and duration of response.

Efficacy analysis showed an ORR of 16 percent (95% CI: 11, 22) with a complete response rate of five percent. The median follow-up time was 8.9 months. Among the 28 responding patients, the median duration of response had not been reached (range 2.4+ to 27.7+ months), with 23 patients having responses of six months or longer. The ORR and duration of response were similar irrespective of dosage regimen (10 mg/kg every 2 weeks or 200 mg every 3 weeks) or HPV status.

In HNSCC, serious adverse reactions occurred in 45 percent of patients receiving KEYTRUDA. The most frequent serious adverse reactions reported in at least two percent of patients were pneumonia, dyspnea, confusional state, vomiting, pleural effusion, and respiratory failure. The incidence of adverse reactions, including serious adverse reactions, was similar between dosage regimens (10 mg/kg every 2 weeks or 200 mg every 3 weeks). The most common adverse reactions (reported in at least 20% of patients) were fatigue (46%), decreased appetite (22%), and dyspnea (20%). Adverse reactions in patients with HNSCC were generally similar to those occurring in patients with melanoma and non-small cell lung cancer (NSCLC), with the exception of increased incidences of facial edema (10% all Grades; 2.1% Grades 3-4) and new or worsening hypothyroidism.

About KEYTRUDA (pembrolizumab)

KEYTRUDA is administered as an intravenous infusion over 30 minutes every three weeks for the approved indications. KEYTRUDA for injection is supplied in a 100 mg single use vial.

KEYTRUDA Indications and Dosing

Melanoma

KEYTRUDA is indicated for the treatment of patients with unresectable or metastatic melanoma at a dose of 2 mg/kg every three weeks.

Lung Cancer

KEYTRUDA is indicated for the treatment of patients with metastatic non-small cell lung cancer (NSCLC) whose tumors express PD-L1 as determined by an FDA-approved test with disease progression on or after platinum-containing chemotherapy, at a dose of 2 mg/kg every three weeks. Patients with EGFR or ALK genomic tumor aberrations should have disease progression on FDA-approved therapy for these aberrations prior to receiving KEYTRUDA (pembrolizumab). This indication is approved under accelerated approval based on tumor response rate and durability of response. An improvement in survival or disease-related symptoms has not yet been established. Continued approval for this indication may be contingent upon verification and description of clinical benefit in the confirmatory trials.

Head and Neck Cancer

KEYTRUDA is indicated for the treatment of patients with recurrent or metastatic head and neck squamous cell carcinoma (HNSCC) with disease progression on or after platinum-containing chemotherapy at a fixed dose of 200 mg every three weeks. This indication is approved under accelerated approval based on tumor response rate and durability of response. Continued approval for this indication may be contingent upon verification and description of clinical benefit in the confirmatory trials.

Selected Important Safety Information for KEYTRUDA (pembrolizumab)

Immune-mediated pneumonitis, including fatal cases, occurred in patients receiving KEYTRUDA. Monitor patients for signs and symptoms of pneumonitis. Evaluate suspected pneumonitis with radiographic imaging and administer corticosteroids for Grade 2 or greater pneumonitis. Withhold KEYTRUDA for Grade 2; permanently discontinue KEYTRUDA for Grade 3 or 4 or recurrent Grade 2 pneumonitis.

Immune-mediated colitis occurred in patients receiving KEYTRUDA. Monitor patients for signs and symptoms of colitis. Administer corticosteroids for Grade 2 or greater colitis. Withhold KEYTRUDA for Grade 2 or 3; permanently discontinue KEYTRUDA for Grade 4 colitis.

Immune-mediated hepatitis occurred in patients receiving KEYTRUDA. Monitor patients for changes in liver function. Administer corticosteroids for Grade 2 or greater hepatitis and, based on severity of liver enzyme elevations, withhold or discontinue KEYTRUDA.

Hypophysitis occurred in patients receiving KEYTRUDA. Monitor patients for signs and symptoms of hypophysitis (including hypopituitarism and adrenal insufficiency). Administer corticosteroids and hormone replacement as clinically indicated. Withhold KEYTRUDA for Grade 2; withhold or discontinue for Grade 3 or 4 hypophysitis.

New or worsening hypothyroidism occurred in 28 (14.6%) of 192 patients, including Grade 3 (0.5%) hypothyroidism. Thyroid disorders can occur at any time during treatment. Monitor patients for changes in thyroid function (at the start of treatment, periodically during treatment, and as indicated based on clinical evaluation) and for clinical signs and symptoms of thyroid disorders. Administer replacement hormones for hypothyroidism and manage hyperthyroidism with thionamides and beta-blockers as appropriate. Withhold or discontinue KEYTRUDA (pembrolizumab) for Grade 3 or 4 hyperthyroidism.

Type 1 diabetes mellitus, including diabetic ketoacidosis, occurred in patients receiving KEYTRUDA. Monitor patients for hyperglycemia or other signs and symptoms of diabetes. Administer insulin for type 1 diabetes, and withhold KEYTRUDA and administer anti-hyperglycemics in patients with severe hyperglycemia.

Immune-mediated nephritis occurred in patients receiving KEYTRUDA. Monitor patients for changes in renal function. Administer corticosteroids for Grade 2 or greater nephritis. Withhold KEYTRUDA for Grade 2; permanently discontinue KEYTRUDA for Grade 3 or 4 nephritis.

Other clinically important immune-mediated adverse reactions can occur. For suspected immune-mediated adverse reactions, ensure adequate evaluation to confirm etiology or exclude other causes. Based on the severity of the adverse reaction, withhold KEYTRUDA and administer corticosteroids. Upon improvement to Grade 1 or less, initiate corticosteroid taper and continue to taper over at least 1 month. Based on limited data from clinical studies in patients whose immune-related adverse reactions could not be controlled with corticosteroid use, administration of other systemic immunosuppressants can be considered. Resume KEYTRUDA when the adverse reaction remains at Grade 1 or less following corticosteroid taper. Permanently discontinue KEYTRUDA for any Grade 3 immune-mediated adverse reaction that recurs and for any life-threatening immune-mediated adverse reaction.

Severe and life-threatening infusion-related reactions have been reported in 3 (0.1%) of 2117 patients. Monitor patients for signs and symptoms of infusion-related reactions including rigors, chills, wheezing, pruritus, flushing, rash, hypotension, hypoxemia, and fever. For Grade 3 or 4 reactions, stop infusion and permanently discontinue KEYTRUDA.

Based on its mechanism of action, KEYTRUDA can cause fetal harm when administered to a pregnant woman. If used during pregnancy, or if the patient becomes pregnant during treatment, apprise the patient of the potential hazard to a fetus. Advise females of reproductive potential to use highly effective contraception during treatment and for 4 months after the last dose of KEYTRUDA.

KEYTRUDA (pembrolizumab) was discontinued due to adverse reactions in 17 percent of 192 patients. Serious adverse reactions occurred in 45 percent of patients. The most frequent serious adverse reactions reported in at least 2 percent of patients were pneumonia, dyspnea, confusional state, vomiting, pleural effusion, and respiratory failure. The most common adverse reactions (reported in at least 20% of patients) were fatigue (46%), decreased appetite (22%), and dyspnea (20%).

It is not known whether KEYTRUDA is excreted in human milk. Because many drugs are excreted in human milk, instruct women to discontinue nursing during treatment with KEYTRUDA and for 4 months after the final dose.

Safety and effectiveness of KEYTRUDA have not been established in pediatric patients.

Our Focus on Cancer

Our goal is to translate breakthrough science into innovative oncology medicines to help people with cancer worldwide. At Merck Oncology, helping people fight cancer is our passion and supporting accessibility to our cancer medicines is our commitment. Our focus is on pursuing research in immuno-oncology and we are accelerating every step in the journey – from lab to clinic – to potentially bring new hope to people with cancer.

As part of our focus on cancer, Merck is committed to exploring the potential of immuno-oncology, with one of the fastest-growing development programs in the industry. We are currently executing an expansive research program that includes more than 300 clinical trials evaluating our anti-PD-1 therapy across more than 30 tumor types. We also continue to strengthen our immuno-oncology portfolio through strategic acquisitions and prioritizing the development of several promising immunotherapeutic candidates with the potential to improve the treatment of advanced cancers.

For more information about our oncology clinical trials, visit www.merck.com/clinicaltrials

On August 8, 2016 Aeterna Zentaris Inc. (NASDAQ: AEZS) (TSX: AEZ) (the "Company") reported that it is expanding its promotion of APIFINY, the only cancer-specific, non-PSA blood test available to assess the risk for the presence of prostate cancer, into the important Florida market pursuant to its exclusive promotional agreement with Armune BioScience, Inc. ("Armune"), the owner of the product (Press release, AEterna Zentaris, AUG 8, 2016, View Source [SID:1234514371]). The expansion into Florida follows Armune’s receipt of a clinical laboratory license from the State of Florida.

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"Our sales and marketing teams are well positioned to leverage the opportunity in the Florida market. We believe APIFINY provides significant value in aiding clinicians to more accurately determine the optimal clinical pathway for men at risk of prostate cancer by means of its non-PSA based measurement of risk for the presence of prostate cancer. APIFINY helps meet the needs of achieving value in today’s shifting healthcare environment that involves improving outcomes and patient experiences while lowering overall costs," commented Jude Dinges, Chief Commercial Officer of the Company.

"We are excited to enter the Florida market with the recent approval of our laboratory license by the State of Florida," said David Esposito, President and Chief Executive Officer of Armune. "With over 7,000 tests ordered since the launch of APIFINY, we anticipate significant demand being generated from the Florida market. Given the current concerns of PSA testing throughout the world, APIFINY is well positioned to offer clinicians additional information in the assessment of prostate cancer risk. In addition, we are confident that APIFINY will help to address our healthcare system’s demand for improved outcomes at lower costs."

About Prostate Cancer

Other than skin cancer, prostate cancer is the most common cancer in American men. The American Cancer Society predicted that 220,800 new cases of prostate cancer in the United States would occur in 2015, that there would be 27,540 prostate cancer deaths during the year and that one man in seven would be diagnosed with prostate cancer during his lifetime. Approximately 60% of prostate cancer is diagnosed in men aged 65 or older, and it is rare before age 40. Prostate cancer is the second leading cause of cancer death in American men, behind only lung cancer. Prostate cancer can be a serious disease, but most men diagnosed with prostate cancer do not die from it. In fact, more than 2.9 million men in the United States who have been diagnosed with prostate cancer at some point are still alive today.

About APIFINY

APIFINY is the only cancer-specific, non-PSA blood test that may aid clinicians in the assessment of risk for the presence of prostate cancer. APIFINY technology measures specific biological markers known to be associated with the immune system’s response to prostate cancer and is based on the measurement of eight prostate-cancer-specific autoantibodies in human serum. These autoantibodies are produced and amplified by the immune system in response to the presence of prostate cancer cells. The autoantibodies are stable and, because of their amplification, are likely to be abundant and easy to detect, especially with small tumors characteristic of early-stage cancers. The autoantibody markers span a range of biological functions integral to prostate cancer progression. APIFINY is offered as a lab developed test by Armune BioScience in its CLIA regulated laboratory located in Ann Arbor, MI.

About Armune BioScience

Armune is a medical diagnostics company that develops and commercializes unique proprietary technology exclusively licensed from the University of Michigan for diagnostic and prognostic tests for cancer. The Armune BioScience Laboratory is a commercial reference laboratory, certified and regulated by the federal Clinical Laboratory Improvement Amendments (CLIA) law established in 1988. The laboratory’s CLIA Certificate permits it to perform APIFINY and other high-complexity medical tests. Armune, a private company, has a corporate headquarters in Kalamazoo, MI and a research and commercial laboratory in Ann Arbor, MI. For more information, visit www.armune.com.