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Puma Biotechnology Reports Third Quarter 2018 Financial Results

On November 1, 2018 Puma Biotechnology, Inc. (NASDAQ: PBYI), a biopharmaceutical company, reported its financial results for the third quarter ended September 30, 2018 (Press release, Puma Biotechnology, NOV 1, 2018, View Source [SID1234530615]). Unless otherwise stated, all comparisons are for the third quarter 2018 compared to the third quarter 2017.

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Net product revenue in the third quarter of 2018 was $52.6 million, compared to net product revenue of $6.1 million in the third quarter of 2017. Puma Biotechnology received approval from the U.S. Food and Drug Administration (FDA) for NERLYNX (neratinib) for the treatment of early stage HER2-positive breast cancer following adjuvant trastuzumab-based therapy on July 17, 2017, and the Company began shipment to wholesalers at the end of July 2017.

Based on generally accepted accounting principles in the United States (GAAP), Puma reported a net loss applicable to common stock of $14.2 million, or $0.37 per share, for the third quarter of 2018, compared to a net loss applicable to common stock of $77.2 million, or $2.07 per share, for the third quarter of 2017. Net loss applicable to common stock for the first nine months of 2018 was $82.9 million, or $2.19 per share, compared to $227.9 million, or $6.15 per share, for the first nine months of 2017.

Non-GAAP adjusted net income was $6.6 million, or $0.17 per basic share and $0.16 per diluted share, for the third quarter of 2018, compared to non-GAAP adjusted net loss of $50.7 million, or $1.36 per share, for the third quarter of 2017. Non-GAAP adjusted net loss for the first nine months of 2018 was $14.5 million, or $0.38 per basic and diluted share, compared to non-GAAP adjusted net loss of $144.7 million, or $3.90 per share, for the first nine months of 2017. Non-GAAP adjusted net income (loss) excludes stock-based compensation expense, which represents a significant portion of overall expense and has no impact on the cash position of the Company. For a reconciliation of GAAP net loss to non-GAAP adjusted net income (loss) and GAAP net loss per share to non-GAAP adjusted net income (loss) per share, please see the financial tables at the end of this news release.

Net cash used in operating activities for the third quarter of 2018 was $7.3 million. Net cash used in operating activities for the first nine months of 2018 was $31.2 million. At September 30, 2018, Puma had cash and cash equivalents of $68.3 million and marketable securities of $59.7 million, compared to cash and cash equivalents of $81.7 million at December 31, 2017.

"The third quarter of 2018 marked the achievement of another important milestone for Puma with the European Commission granting marketing authorisation for NERLYNX for the extended adjuvant treatment of hormone receptor positive HER2-positive early stage breast cancer," said Alan H. Auerbach, Chairman, Chief Executive Officer and President of Puma. "We expect this new medicine to be commercially available to patients in Europe in 2019, beginning with the expected launch in Germany during the first half of 2019 and followed by additional countries throughout Europe in the second half of 2019."

"We also continue to drive toward expanding availability of NERLYNX throughout the world," Mr. Auerbach added. "In the third quarter, our New Drug Submission was accepted in Canada, and our

licensing partner in China, CANbridge Pharmaceutical Inc., received confirmation that the country’s National Medical Products Administration accepted its New Drug Application for the extended adjuvant treatment of adult patients with early stage HER2-positive breast cancer, following adjuvant trastuzumab based-therapy."

Mr. Auerbach added, "We anticipate the following key milestones over the next 12 months: (i) reporting data from the Phase III NALA trial in third-line metastatic breast cancer patients in the fourth quarter of 2018 or first half of 2019; (ii) submitting for regulatory approval of NERLYNX for the extended adjuvant HER2-positive early stage breast cancer indication in additional countries in the fourth quarter of 2018 and first half of 2019; (iii) reporting additional data from the Phase II CONTROL trial in the fourth quarter of 2018; (iv) reporting additional data from the Phase II SUMMIT trial in the fourth quarter of 2018 or first half of 2019; and (v) meeting with the FDA in the first quarter of 2019 to discuss the clinical development and regulatory strategy for neratinib in HER2 mutated cancers based on the results of the ongoing SUMMIT Phase II trial."

Revenue

Total revenue consists of net product revenue from sales of NERLYNX, Puma’s first and only commercial product to date, and license revenue. For the third quarter of 2018, total revenue was $62.6 million, of which $52.6 million was net product revenue and $10.0 million was license revenue received from one of Puma’s sub-licensees. For the first nine months of 2018, total revenue was $179.9 million, of which $139.4 million was net product revenue and $40.5 million was license revenue. The FDA approved NERLYNX for commercial sale in the United States in July 2017 and Puma commenced shipment to wholesalers in late July.

Operating Costs and Expenses

Operating costs and expenses were $73.9 million for the third quarter of 2018, compared to $83.5 million for the third quarter of 2017. Operating costs and expenses for the first nine months of 2018 were $256.0 million, compared to $234.9 million for the first nine months of 2017.

Cost of Sales:

Cost of sales was $9.0 million for the third quarter of 2018 and $24.3 million for the first nine months of 2018, compared to $1.5 million for the third quarter and first nine months of 2017. The Company had no product sales prior to the third quarter of 2017.

Selling, General and Administrative Expenses:

Selling, general and administrative expenses were $28.5 million for the third quarter of 2018, compared to $32.5 million for the third quarter of 2017. SG&A expenses for the first nine months of 2018 were $105.2 million, compared to $75.8 million for the first nine months of 2017. The $29.4 million year-to-date increase was attributable to increases of approximately $26.9 million in internal expenses, such as payroll and payroll-related expenses attributable to the addition of a salesforce since the third quarter of 2017. External expenses declined approximately $1.5 million during the same time period and employee stock-based compensation increased approximately $4.0 million, primarily related to the addition of sales staff to support the commercial launch of NERLYNX in the United States. Puma expects SG&A expenses in 2018 and into 2019 to remain higher than in 2017 as it markets NERLYNX commercially in the United States and launches the product in other territories.

Research and Development Expenses:

Research and development (R&D) expenses were $36.4 million for the third quarter of 2018, compared to $49.5 million for the third quarter of 2017. R&D expenses for the first nine months of 2018 were $126.5 million, compared to $157.5 million for the first nine months of 2017. The $31.0 million year-to-date decrease resulted primarily from decreases of approximately $18.9 million in stock-based compensation and of approximately $15.4 million for external expenses related to clinical trials, manufacturing and logistics associated with clinical supply. Puma expects R&D expenses in 2018 to continue to decline slightly when compared with R&D expenses in 2017 based on a decline in clinical trial activities as existing trials continue to wind down.

LEXICON PHARMACEUTICALS REPORTS THIRD QUARTER 2018 FINANCIAL RESULTS AND PROVIDES A BUSINESS UPDATE

On November 1, 2018 Lexicon Pharmaceuticals, Inc. (Nasdaq: LXRX), reported financial results and provided a business update for the three months ended September 30, 2018 (Press release, Lexicon Pharmaceuticals, NOV 1, 2018, View Source;2018.htm [SID1234530613]).

"In the third quarter, we and our collaborator, Sanofi, have been working diligently with regulatory agencies to make sotagliflozin available for patients with type 1 diabetes as quickly as possible and we continue to make progress in growing XERMELO for its current indication," said Lonnel Coats, Lexicon’s president and chief executive officer. "Our collaborator, Ipsen, continues to gain approvals and market authorizations for XERMELO in Europe. We are making good progress on our pipeline. By end of year, we expect to start a clinical trial for telotristat ethyl, the investigational form of XERMELO, in biliary tract cancer as well as announce data for LX2761 in diabetes and LX9211, a neuropathic pain candidate, in healthy volunteers."

Third Quarter Product and Pipeline Highlights

XERMELO (telotristat ethyl) 250 mg

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XERMELO was approved in Australia in September for the treatment of carcinoid syndrome diarrhea in combination with somatostatin analog (SSA) therapy in adults inadequately controlled by somatostatin analog (SSA) therapy.
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In the third quarter, Ipsen launched XERMELO in several European countries including Sweden and Switzerland.

Sotagliflozin

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In September, clinical data for sotagliflozin were presented at the European Association for the Study of Diabetes (EASD) 54th annual meeting. Data from patient exit interviews from a sotagliflozin Phase 3 study were also presented, reporting meaningful improvements in patient reported outcomes.

Third Quarter 2018 Financial Highlights

Revenues: Revenues for the three months ended September 30, 2018 decreased to $6.9 million from $26.9 million for the corresponding period in 2017, primarily due to lower revenues recognized from the collaboration and license agreement with Sanofi, partially offset by an increase in net product revenues. Net product revenues for the three months ended September 30, 2018 included $6.3 million from net sales of XERMELO in the U.S., up 19% from the prior year quarter and 5% from the second quarter of 2018.

Cost of Sales: Cost of sales related to sales of XERMELO for each of the three months ended September 30, 2018 and 2017 was $0.6 million.

Research and Development (R&D) Expenses: Research and development expenses for the three months ended September 30, 2018 decreased to $13.8 million from $39.1 million for the corresponding period in 2017, primarily due to lower external clinical development costs relating to sotagliflozin.

Selling, General and Administrative (SG&A) Expenses: Selling, general and administrative expenses for the three months ended September 30, 2018 decreased to $15.6 million from $16.7 million for the corresponding period in 2017, primarily due to decreased marketing costs.

Net Loss: Net loss for the three months ended September 30, 2018 was $27.5 million, or $0.26 per share, compared to a net loss of $30.7 million, or $0.29 per share, in the corresponding period in 2017. For the three months ended

September 30, 2018 and 2017, net loss included non-cash, stock-based compensation expense of $2.9 million and $2.6 million, respectively.

Cash and Investments: As of September 30, 2018, Lexicon had $187.3 million in cash and investments, as compared to $310.8 million as of December 31, 2017.

Anticipated Near-Term Milestones

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4Q 2018 – Phase 1b data for LX2761 in type 2 diabetes
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4Q 2018 – Phase 1a data for LX9211 (neuropathic pain candidate) in healthy volunteers
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4Q 2018 – Initiation of clinical development of telotristat ethyl in biliary tract cancer
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March 22, 2019 – PDUFA date for sotagliflozin in type 1 diabetes

Conference Call and Webcast Information

Lexicon management will hold a live conference call and webcast today at 8:00 am EDT / 7:00 am CDT to review its financial and operating results and to provide a general business update. The dial-in number for the conference call is 888-645-5785 (U.S./Canada) or 970-300-1531 (international). The conference ID for all callers is 6394419. The live webcast and replay may be accessed by visiting Lexicon’s website at www.lexpharma.com/investors. An archived version of the webcast will be available on the website for 14 days.

About XERMELO (telotristat ethyl)

Discovered using Lexicon’s unique approach to gene science, XERMELO (telotristat ethyl) is the first and only approved oral therapy for carcinoid syndrome diarrhea in combination with SSA therapy in adults inadequately controlled by SSAs. XERMELO targets tryptophan hydroxylase, an enzyme that mediates the excess serotonin production within metastatic neuroendocrine tumor (mNET) cells. Lexicon has built the in-house capability and infrastructure to launch and market XERMELO in the U.S., where it retains all commercialization rights. Lexicon also retains rights to market XERMELO in Japan. Lexicon has established a license and collaboration agreement with Ipsen to commercialize XERMELO in Europe and other countries outside of U.S. and Japan.

XERMELO was approved by the U.S. Food and Drug Administration on February 28, 2017 and by the European Commission on September 19, 2017 for the treatment of carcinoid syndrome diarrhea in combination with SSA therapy in adults inadequately controlled by SSA therapy. Carcinoid syndrome is a rare condition that occurs in patients living with metastatic NETs (mNETs) and is characterized by frequent and debilitating diarrhea. XERMELO targets the overproduction of serotonin inside mNET cells, providing an additional treatment option for patients suffering from carcinoid syndrome diarrhea.

XERMELO (telotristat ethyl) Important Safety Information

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Warnings and Precautions: XERMELO may cause constipation, which can be serious. Monitor for signs and symptoms of constipation and/or severe, persistent, or worsening abdominal pain in patients taking XERMELO. Discontinue XERMELO if severe constipation or severe, persistent, or worsening abdominal pain develops.
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Adverse Reactions: The most common adverse reactions (≥5%) include nausea, headache, increased gamma-glutamyl-transferase, depression, flatulence, decreased appetite, peripheral edema, and pyrexia.
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Drug Interactions: If necessary, consider increasing the dose of concomitant CYP3A4 substrates, as XERMELO may decrease their systemic exposure. If combination treatment with XERMELO and short-acting octreotide is needed, administer short-acting octreotide at least 30 minutes after administering XERMELO.

For more information about XERMELO, see Full Prescribing Information at www.xermelo.com.

About Sotagliflozin

Discovered using Lexicon’s unique approach to gene science, sotagliflozin is an investigational oral dual inhibitor of two proteins responsible for glucose regulation known as sodium-glucose co-transporter types 1 and 2 (SGLT1 and SGLT2). SGLT1 is responsible for glucose absorption in the gastrointestinal tract, and SGLT2 is responsible for glucose reabsorption by the kidney.

Lexicon entered into a collaboration and license agreement with Sanofi in November 2015 under which Lexicon granted Sanofi an exclusive, worldwide (excluding Japan), royalty-bearing right and license to develop, manufacture and commercialize sotagliflozin. Lexicon is responsible for all clinical development activities relating to type 1 diabetes and has exercised an exclusive option to co-promote and have a significant role, in collaboration with Sanofi, in the commercialization of sotagliflozin for the treatment of type 1 diabetes in the U.S. Sanofi is responsible for all clinical development and commercialization of sotagliflozin for the treatment of type 2 diabetes worldwide (excluding Japan) and is solely responsible for the commercialization of sotagliflozin for the treatment of type 1 diabetes outside the U.S. (excluding Japan). A New Drug Application and a Marketing Authorization Application for sotagliflozin are currently under review at the U.S. Food and Drug Administration and the European Medicines Agency, respectively, and the product has not yet been approved for use in the U.S. or in Europe.

Eagle Pharmaceuticals, Inc. Reports Third Quarter 2018 Results

On November 1, 2018 Eagle Pharmaceuticals, Inc. ("Eagle" or the "Company") (Nasdaq: EGRX) reported its financial results for the three and nine months ended September 30, 2018 (Press release, Eagle Pharmaceuticals, NOV 1, 2018, View Source [SID1234530583]). Highlights of and subsequent to the third quarter of 2018 include:

Business and Recent Highlights:

Commenced a $50.0 million accelerated share repurchase (the "ASR") as part of a new $150.0 million share repurchase authorization;
Announced that the Company’s fulvestrant formulation did not meet the primary bioequivalence endpoints evaluating Eagle’s formulation compared to FASLODEX in its open label, randomized, pharmacokinetic ("PK") and safety study conducted in 600 healthy female volunteers across multiple U.S. sites;
Entered into an agreement with the United States Army Medical Research Institute of Chemical Defense ("USAMRICD"), the nation’s leading science and technology laboratory in the area of medical chemical countermeasures research and development, to conduct a study to evaluate the neuroprotective effects of RYANODEX (dantrolene sodium);
Appointed David Pernock to the position of Chief Operating Officer;
Completed enrollment of the Company’s second clinical study to further evaluate the safety and efficacy of RYANODEX for the treatment of exertional heat stroke ("EHS"), an investigational new indication for the product;
Named to the Fortune 100 List of Fastest-Growing Companies, ranking 16th overall, including achieving the #1 positions for EPS 3-year growth of 392% and revenue 3-year growth of 109%; and
United States Patent and Trademark Office ("USPTO") issued patent number 10,052,385 for BENDEKA. The USPTO has now issued or allowed a total of 16 patents in the BENDEKA family of patents expiring from 2026 to 2033.
Financial Highlights:

Third Quarter 2018

Total revenue for the third quarter of 2018 was $51.3 million, compared to $63.0 million in the third quarter of 2017, which included a $12.5 million milestone payment for BENDEKA;
Eagle launched bendamustine hydrochloride 500ml solution ("Big Bag") on May 15, 2018 and Big Bag product sales were $8.0 million in the third quarter of 2018; for the week ending October 19, 2018, the Company achieved market share of 5% according to IMS Health;
Q3 2018 RYANODEX product sales were $3.5 million, up 9% compared to Q3 2017;
Q3 2018 net income was $14.0 million, or $0.94 per basic and $0.91 per diluted share, compared to net income of $15.4 million, or $1.03 per basic and $0.98 per diluted share in Q3 2017;
Q3 2018 Adjusted Non-GAAP net income was $18.3 million, or $1.22 per basic and $1.18 per diluted share, compared to Adjusted Non-GAAP net income of $19.2 million, or $1.27 per basic and $1.22 per diluted share in Q3 2017; and
Cash and cash equivalents were $91.2 million, accounts receivable was $78.5 million, and debt was $45.0 million as of September 30, 2018.
Reiterating 2018 Expense Guidance:
R&D expense is expected to be in the range of $46.0 – $50.0 million ($40.0 – $44.0 million on a non-GAAP basis)
SG&A expense is expected to be in the range of $61.0 – $64.0 million ($44.0 – $47.0 million on a non-GAAP basis)
"While we were disappointed in the outcome of the fulvestrant trial, we believe in the strength of the remaining products in our pipeline and our ability to generate long-term meaningful earnings. We are conducting a confirmatory study with the U.S. military to evaluate RYANODEX as a treatment for nerve agent exposure and continue to make progress on an intramuscular formulation. And, we maintain a positive view of a potential exertional heat stroke application. We are also advancing our vasopressin and pemetrexed assets. Consequently, we have decided to expand our share repurchase program to $150 million," stated Scott Tarriff, Chief Executive Officer of Eagle Pharmaceuticals.

"The $50 million of Eagle stock we purchased as part of an ASR represents the confidence of management and the Board of Directors in the value we are building at Eagle. As a publicly traded company, Eagle has raised an aggregate $110 million of equity capital. With the ASR completed, as of November 1, 2018, we have now repurchased $154 million of Eagle stock, without levering the balance sheet. With a strong base business, an exciting pipeline and growing cash position, we expect to continue building long-term value for shareholders," concluded Tarriff.

Third Quarter 2018 Financial Results

Total revenue for the three months ended September 30, 2018 was $51.3 million, as compared to $63.0 million for the three months ended September 30, 2017. Royalty revenue was $35.2 million, compared to $43.6 million in the third quarter of 2017. BENDEKA royalties were $33.8 million, compared to $41.4 million in the third quarter of 2017. A summary of total revenue is outlined below:

Research and development expenses decreased to $6.0 million for the third quarter of 2018, compared to $9.0 million in the third quarter of 2017. The year over year decrease reflects a substantial reduction in fulvestrant and pemetrexed expenses in the third quarter of 2018, partially offset by the cost of the EHS trial. Excluding stock-based compensation and other non-cash and non-recurring items, R&D expense during the third quarter of 2018 was $5.0 million.

SG&A expenses decreased to $13.9 million in the third quarter of 2018 compared to $16.7 million in the third quarter of 2017. The year over year decrease reflects lower external legal costs as well as a reduction in EHS marketing expenses. Excluding stock-based compensation and other non-cash and non-recurring items, third quarter 2018 SG&A expense was $9.7 million.

Net income for the third quarter of 2018 was $14.0 million, or $0.94 per basic and $0.91 per diluted share, compared to net income of $15.4 million, or $1.03 per basic and $0.98 per diluted share in the three months ended September 30, 2017, due to the factors discussed above.

Adjusted Non-GAAP net income for the third quarter of 2018 was $18.3 million, or $1.22 per basic and $1.18 per diluted share, compared to Adjusted Non-GAAP net income of $19.2 million or $1.27 per basic and $1.22 per diluted share in the third quarter of 2017. For a full reconciliation of Adjusted Non-GAAP net income to the most comparable GAAP financial measures, please see the tables at the end of this press release.

Liquidity

As of September 30, 2018, the Company had $91.2 million in cash and cash equivalents and $78.5 million in net accounts receivable, $53.2 million of which was due from Teva Pharmaceutical Industries Ltd. The Company had $45.0 million in outstanding debt.

In the third quarter of 2018, we purchased $12.1 million of Eagle’s common stock as part of our expanded $100 million share buyback program. From August 2016 through November 1, 2018, we have repurchased $154.0 million of our common stock, including the $50.0 million ASR. As disclosed on October 30, 2018, the Company’s Board of Directors retired the prior share repurchase program and approved a new $150.0 million share repurchase authorization (including the entry into the ASR).

Conference Call

As previously announced, Eagle management will host its third quarter 2018 conference call as follows:

Date Thursday, November 1, 2018
Time 8:30 A.M. EDT
Toll free (U.S.) 877-876-9173
International 785-424-1669
Webcast (live and replay)
www.eagleus.com, under the "Investor + News" section

A replay of the conference call will be available for one week after the call’s completion by dialing 800-839-2459 (US) or 402-220-7218 (International) and entering conference call ID EGRXQ318. The webcast will be archived for 30 days at the aforementioned URL.

Cytokinetics, Inc. Reports Third Quarter 2018 Financial Results

On November 1, 2018 Cytokinetics, Incorporated (Nasdaq: CYTK) reported financial results for the third quarter of 2018. Net loss for the third quarter was $22.8 million, or $0.40 per share, compared to a net loss for the third quarter of 2017 of $32.4 million, or $0.60 per share. Cash, cash equivalents and investments totaled $210.3 million at September 30, 2018 (Press release, Cytokinetics, NOV 1, 2018, View Source [SID1234530581]).

"With five programs advancing in development, we were pleased to report progress of our expanded pipeline of muscle biology directed potential medicines as recently outlined at our R&D Day," said Robert I. Blum, Cytokinetics’ President and Chief Executive Officer. "We look forward to beginning multiple trials across our cardiac muscle programs before year-end as well as soon completing enrollment in FORTITUDE-ALS, our Phase 2 clinical trial of reldesemtiv in patients with ALS, with results expected next year. I believe that the company has never been better positioned programmatically, operationally and financially to potentially deliver on the promise of our pioneering leadership in muscle biology."

Recent Highlights and Upcoming Milestones

Cardiac Muscle Programs

omecamtiv mecarbil (cardiac myosin activator)

Continued patient enrollment in GALACTIC-HF (Global Approach to Lowering Adverse Cardiac Outcomes Through Improving Contractility in Heart Failure), the Phase 3 cardiovascular outcomes clinical trial of omecamtiv mecarbil. Enrollment has surpassed 70 percent completion with over 5,800 patients randomized to date having the high-risk profile intended by the trial design. We expect completion of patient enrollment in GALACTIC-HF to occur during the first half of 2019. We also expect that GALACTIC-HF will have accrued a sufficient number of events to enable the Data Monitoring Committee to conduct a first interim analysis for the trial, the design of which is tied to the potential for futility, in the first half of 2019.

Conducted readiness activities in advance of the initiation of METEORIC-HF (Multicenter Exercise Tolerance Evaluation of Omecamtiv Mecarbil Related to Increased Contractility in Heart Failure). METEORIC-HF is a Phase 3, randomized, placebo-controlled, double-blind, parallel group, multicenter clinical trial designed to evaluate the effect of treatment with omecamtiv mecarbil compared to placebo on exercise capacity as determined by cardiopulmonary exercise testing (CPET) following 20 weeks of treatment. Cytokinetics is working together with Amgen towards the objective of starting METEORIC-HF by the end of 2018.
AMG 594 (cardiac troponin activator)

Continued pre-clinical development of AMG 594 and filed an IND in collaboration with Amgen. AMG 594 is a novel, first-in-class, selective, oral, small molecule cardiac troponin activator, discovered under a joint research program with Amgen. In preclinical models, AMG 594 increases myocardial contractility by binding to cardiac troponin through an allosteric mechanism that sensitizes the cardiac sarcomere to calcium. Based on preclinical data, AMG 594 may offer differentiated efficacy and dose-related convenience relative to omecamtiv mecarbil.

We expect that Amgen will initiate a Phase 1 program for AMG 594 before the end of the year to assess its safety, tolerability, pharmacokinetics and its potential to increase cardiac function in healthy volunteers.
CK-3773274 (CK-274, cardiac myosin inhibitor)

Continued pre-clinical development and filed an IND for CK-274. CK-274 is a novel, oral, small molecule cardiac myosin inhibitor that company scientists discovered independent of its collaborations. CK-274 arose from an extensive next-generation chemical optimization program conducted with careful attention to therapeutic index and pharmacokinetic properties and as may translate into best-in-class potential in clinical development. In preclinical models, CK-274 reduces myocardial contractility by binding directly to cardiac myosin at a distinct and selective allosteric binding site preventing myosin from entering a force producing state.

We expect to initiate a Phase 1 program for CK-274 before the end of the year to assess its safety, tolerability, pharmacokinetics and its effect on cardiac function in healthy volunteers.
Skeletal Muscle Program

reldesemtiv (next-generation FSTA)

Announced that additional results from the Phase 2 clinical study of reldesemtiv in patients with spinal muscular atrophy (SMA) were presented by John W. Day, M.D., Ph.D., Professor of Neurology and Pediatrics (Genetics), Stanford University at the 2018 Muscle Study Group Scientific Meeting in Oxford, UK, showing sustained increases in 6MWD and MEP four weeks after discontinuation of study drug.

Continued site activation and patient enrollment in FORTITUDE-ALS (Functional Outcomes in a Randomized Trial of Investigational Treatment with CK-2127107 to Understand Decline in Endpoints – in ALS), the Phase 2 clinical trial of reldesemtiv which is designed to assess the change from baseline in percent predicted slow vital capacity and other measures of skeletal muscle function after 12 weeks of treatment with reldesemtiv in patients with ALS. FORTITUDE-ALS has enrolled over 400 patients toward the objective of 445 patients in the trial and is being conducted by Cytokinetics in collaboration with Astellas. We expect to complete enrollment in FORTITUDE-ALS in Q4 2018 with results from this clinical trial expected in the first half of 2019.

With Astellas, announced the Phase 2 clinical trial of reldesemtiv in patients with chronic obstructive pulmonary disease (COPD), which was designed to assess its effect on physical function, did not meet the primary endpoint and did not demonstrate a statistically significant treatment difference in any of the secondary endpoints. Adverse events were similar between groups receiving reldesemtiv and placebo.

With Astellas, announced that an interim analysis of the Phase 1b clinical trial of reldesemtiv in elderly subjects with limited mobility, which was designed to assess its effect on measures of physical function, was recently conducted. The Data Monitoring Committee determined that the pre-defined criteria for lack of efficacy of reldesemtiv had been met; Astellas has proceeded to notify investigators to halt further enrollment in the trial.
Pre-Clinical Development and Ongoing Research

Continued pre-clinical development of CK-3762601 (CK-601), a next-generation fast skeletal muscle troponin activator (FSTA) into IND-enabling studies under our collaboration with Astellas.

Continued research in collaboration with Astellas directed to the discovery of next-generation skeletal muscle activators. The companies are continuing their joint research program with Astellas providing sponsorship of Cytokinetics’ activities through 2019.

Continued independent research activities directed to our other muscle biology research programs.
Corporate

Announced that The ALS Association Golden West Chapter is the inaugural recipient of the Cytokinetics Communications Fellowship, an annual grant from the company intended to support increased capacity and community engagement for nonprofit organizations.
Financials

Revenues for the three and nine months ended September 30, 2018 were $10.6 million and $22.1 million, respectively, compared to $6.2 million and $13.4 million for the corresponding periods in 2017. Revenues for the first nine months of 2018 stemmed from our strategic alliance with Astellas.

Research and development expenses for the third quarter of 2018 decreased to $21.4 million from $24.9 million for the third quarter of 2017, primarily due to cessation of development of tirasemtiv in late 2017, offset in part by increased spending in clinical trials of reldesemtiv and preclinical activities for CK-274 and other potential drug candidates. Research and development expenses for the first nine months of 2018 increased to $65.9 million from $64.0 million for the first nine months of 2017, primarily due to increased spending in clinical trials of reldesemtiv and preclinical activities for CK-274 as well as other potential drug candidates, offset in part by suspension of development of tirasemtiv in late 2017.

General and administrative expenses for the three and nine months ended September 30, 2018 decreased to $7.2 million and $23.7 million, respectively, from $9.7 million and $26.2 million for the same periods in 2017, respectively, primarily due to reduced pre-commercial activities for tirasemtiv and reduced other corporate activities.

Conference Call and Webcast Information

Members of Cytokinetics’ senior management team will review the company’s third quarter results via a webcast and conference call today at 4:30 PM Eastern Time. The webcast can be accessed through the Investors & Media section of the Cytokinetics website at www.cytokinetics.com. The live audio of the conference call can also be accessed by telephone by dialing either (866) 999-CYTK (2985) (United States and Canada) or (706) 679-3078 (international) and typing in the passcode 9785146.

An archived replay of the webcast will be available via Cytokinetics’ website until November 8, 2018. The replay will also be available via telephone by dialing (855) 859-2056 (United States and Canada) or (404) 537-3406 (international) and typing in the passcode 9785146 from November 1, 2018 at 7:30 PM Eastern Time until November 8, 2018.

EMERGENT BIOSOLUTIONS REPORTS FINANCIAL RESULTS FOR THIRD QUARTER AND NINE MONTHS OF 2018

On November 1, 2018 Emergent BioSolutions Inc. (NYSE: EBS) reported financial results for the quarter and nine months ended September 30, 2018 (Press release, Emergent BioSolutions, NOV 1, 2018, View Source [SID1234530579]).

Our financial and operational performance is solidly in line with expectations and we are confident in a strong finish to the year, driven by our organic business as well as the impact of the PaxVax and Adapt Pharma acquisitions," said Daniel J. Abdun-Nabi, CEO of Emergent BioSolutions. He continued, "Strategically, we have broadened our reach into the public health threats market, strengthened our portfolio of unique products, and expanded the patients and customers that we serve. Operationally, we have added substantial manufacturing and sales capabilities, diversified our product development pipeline, and strengthened our pool of engaged and talented employees. Financially, we now expect to achieve our 2020 revenue goal of at least $1 billion in 2019, a full year ahead of schedule, bolstering our ability to create long-term shareholder value."

Richard S. Lindahl, CFO of Emergent BioSolutions, said, "The acquisitions of Adapt Pharma and PaxVax create a step-change forward for Emergent. On a combined basis, we expect the two entities to contribute between $270 and $300 million of incremental revenue and to be accretive to adjusted net income and adjusted EBITDA in 2019. We are actively engaged in integration and our entire team is excited to move forward together as we continue to diversify our revenue sources, realize scale efficiencies and drive strong cash flow from the now larger Emergent business operations."

Q3 2018 AND RECENT BUSINESS ACCOMPLISHMENTS
Acquisitions
·
Acquired specialty vaccines company PaxVax and its U.S. Food and Drug Administration (FDA) approved vaccines for typhoid, Vivotif (Typhoid Vaccine Live Oral Ty21a), and cholera, Vaxchora (Cholera Vaccine, Live, Oral), along with a development pipeline focused on infectious disease vaccines and related U.S.- and Europe-based manufacturing infrastructure.
·
Acquired Adapt Pharma and its flagship product NARCAN (naloxone HCl) Nasal Spray, the first and only needle-free presentation of naloxone approved by the FDA and Health Canada, for the emergency treatment of known or suspected opioid overdose, and the leading community-use option for naloxone delivery.
Product Development
·
Initiated a Phase 1 clinical study of ZIKV-IG, the Company’s anti-Zika virus immune globulin being developed as a therapeutic intervention against Zika virus disease; the candidate was granted Fast Track designation by the FDA in December 2017.
Financing
·
To fund the recent acquisitions of PaxVax and Adapt Pharma and pay related fees, costs, and expenses for both transactions, the Company incurred a total of $768 million of debt; this debt was incurred pursuant to an amended and restated credit facility that provides up to $1.05 billion of financing through a $600 million revolver and a $450 million term loan.

2018 FINANCIAL PERFORMANCE

(I) Quarter Ended September 30, 2018 (Unaudited)

Revenues

Total Revenues
For Q3 2018, total revenues were $173.7 million, an increase of 16% over 2017. Total revenues reflect a significant increase in product sales.

Product Sales
For Q3 2018, product sales were $133.3 million, an increase of $19.0 million or 17% as compared to 2017. The increase primarily reflects sales of ACAM2000, (Smallpox (Vaccinia) Vaccine, Live) and Raxibacumab injection, a fully human monoclonal antibody, both acquired in Q4 2017, (included in Other product sales).

Contract Manufacturing
For Q3 2018, revenue from the Company’s contract manufacturing operations was $22.2 million, an increase of $3.3 million or 17% as compared to 2017. The increase primarily reflects increased manufacturing services for existing commercial customers at the Company’s Camden site.

Contracts and Grants
For Q3 2018, revenue from the Company’s development-based contracts and grants was $18.2 million, an increase of $2.0 million or 12% as compared to 2017. The increase primarily reflects increased R&D activities related to certain ongoing funded development programs.

Operating Expenses

Cost of Product Sales and Contract Manufacturing
For Q3 2018, cost of product sales and contract manufacturing was $73.2 million, an increase of $28.7 million or 64% as compared to 2017. The increase primarily reflects the impact of an increase in Other product sales associated principally with ACAM2000 and Raxibacumab, which were acquired in the fourth quarter of 2017, offset by lower BioThrax (Anthrax Vaccine Adsorbed) sales during the quarter.

Research and Development (Gross and Net)
For Q3 2018, gross R&D expenses were $37.0 million, an increase of $14.3 million or 63% as compared to 2017. The increase primarily reflects an increase in costs associated with contract development services.

For Q3 2018, net R&D expense, which reflects investments made in development programs that are not currently funded in whole or in part by third-party partners and is calculated as gross research and development expenses minus contracts and grants revenue, was $18.8 million, an increase of $12.3 million or 189% as compared to 2017. The increase primarily reflects investment in process improvements related to ACAM2000 at the Canton site and increased costs associated with the Phase 2 clinical trial for the FLU-IGIV program. The Q3 2018 net R&D expense was 12% of net revenue (total revenue less contracts & grants).

Selling, General and Administrative
For Q3 2018, selling, general and administrative expenses were $42.1 million, an increase of $7.6 million or 22% as compared to 2017. The increase primarily reflects higher acquisition related (diligence and legal) costs associated with the PaxVax and Adapt Pharma transactions.

Income Taxes
For Q3 2018, the provision for income tax expense in the amount of $0.6 million includes a discrete benefit of $5.6 million primarily related to finalizing positions taken on the Company’s 2017 U.S. federal and state income tax filings and stock compensation activity, resulting in an effective tax rate of 3%.

Net Income & Adjusted Net Income
For Q3 2018, the Company recorded net income of $20.9 million, or $0.41 per diluted share, versus net income of $33.6 million, or $0.68 per diluted share, in 2017. (1)

For Q3 2018, the Company recorded adjusted net income of $28.2 million, or $0.55 per diluted share, versus adjusted net income of $37.1 million, or $0.73 per diluted share, in 2017. (2)

EBITDA & Adjusted EBITDA
For Q3 2018, the Company recorded EBITDA of $34.4 million, or $0.67 per diluted share, versus $57.5 million, or $1.14 per diluted share, in 2017. (2)

For Q3 2018, the Company recorded adjusted EBITDA of $39.6 million, or $0.77 per diluted share, versus $60.5 million, or $1.20 per diluted share, in 2017. (2)

(II) Nine Months Ended September 30, 2018 (Unaudited)

Revenues

Total Revenues
For the nine months of 2018, total revenues were $511.7 million, an increase of $144.6 million or 39% over 2017. Total revenues reflect a significant increase in product sales and contract development and manufacturing services revenue.

Product Sales
For the nine months of 2018, product sales were $389.1 million, an increase of $129.2 million or 50% as compared to 2017. The increase primarily reflects sales of ACAM2000 and Raxibacumab, both acquired in Q4 2017.

Selling, General and Administrative
For the nine months of 2018, selling, general and administrative expenses were $121.8 million, an increase of $20.3 million or 20% as compared to 2017. The increase primarily reflects higher acquisition related (diligence and legal) costs associated with the PaxVax and Adapt Pharma transactions, as well as non-capitalized costs associated with critical IT systems improvements and higher non-cash compensation expenses associated with the Company’s equity awards program.

Income Taxes
For the nine months of 2018, the provision for income tax expense in the amount of $11.8 million includes a discrete benefit of $8.7 million primarily related to stock compensation activity and finalizing positions taken on the Company’s 2017 US federal and state income tax filings, resulting in an effective tax rate of 15%.

Net Income & Adjusted Net Income
For the nine months of 2018, the Company recorded net income of $66.2 million, or $1.29 per diluted share, versus net income of $48.7 million, or $1.03 per diluted share, in 2017. (1)

For the nine months of 2018, the Company recorded adjusted net income of $81.4 million, or $1.59 per diluted share, versus adjusted net income of $57.8 million, or $1.15 per diluted share, in 2017. (2)

EBITDA & Adjusted EBITDA
For the nine months of 2018, the Company recorded EBITDA of $116.7 million, or $2.28 per diluted share, versus $100.8 million, or $2.01 per diluted share, in 2017. (2)

For the nine months of 2018, the Company recorded adjusted EBITDA of $123.9 million, or $2.42 per diluted share, versus $108.7 million, or $2.17 per diluted share, in 2017. (2)

2018 FINANCIAL FORECAST & OPERATIONAL GOALS
The company is revising its financial forecast for 2018. The revised forecast reflects:
·
the strength of the organic business performance (excluding acquisitions, financing and other related costs), which is expected to be at the higher end of the previous forecast;
·
the incremental impact in the fourth quarter of the operations of PaxVax and Adapt Pharma;
·
a total of approximately $50 million in pre-tax transaction and integration costs, preliminary purchase accounting impacts and additional interest expense related to these recent acquisitions; and
·
an estimated effective tax rate of approximately 22% to 23%.

FOOTNOTES
(1)
See "Calculation of Diluted Earnings Per Share."
(2)
See "Reconciliation of Net Income to Adjusted Net Income, EBITDA and Adjusted EBITDA" for a definition of terms and a reconciliation table.
(3)
The Company reintroduced the use of Adjusted EBITDA following the closing of the acquisitions of PaxVax and Adapt Pharma, which excludes additional specified items that can be highly variable and the non-cash impact of certain purchase accounting adjustments, in order to provide a more complete understanding of factors and trends affecting the Company’s business.

CONFERENCE CALL AND WEBCAST INFORMATION
Company management will host a conference call at 5:00 pm (Eastern Time) today, November 1, 2018, to discuss these financial results. This conference call can be accessed live by telephone or through Emergent’s website:

Live Teleconference Information:
Dial in: [US] (855) 766-6521; [International] (262) 912-6157
Conference ID: 93346559

Live Webcast Information:
Visit View Source for the live webcast feed.