February 23, 2017 (GLOBE NEWSWIRE): Radius Health, Inc. ("Radius" or the "Company") (Nasdaq:RDUS), a science-driven biopharmaceutical company that is committed to developing innovative therapeutics in the areas of osteoporosis, oncology and endocrine diseases, reported its financial results for the fourth quarter and full year ended December 31, 2016, and provided a business update (Filing, Q4/Annual, Radius, 2016, FEB 23, 2017, View Source [SID1234517895]). As of December 31, 2016, Radius had $332.4 million in cash, cash equivalents and marketable securities.

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"We continue to work closely with the U.S. Food and Drug Administration as we move towards the March 30, 2017 PDUFA for abaloparatide-SC for postmenopausal osteoporosis. Our highly experienced leadership is completing the build out of our commercial organization with seasoned talent who have demonstrated success across sales, marketing, reimbursement and distribution and are fully prepared to support a successful launch, pending favorable regulatory review," said Robert Ward, President and Chief Executive Officer of Radius. "2017 will be a major inflection point for Radius, as we evolve towards a commercial company. We are confident that we are prepared for this change and have the talent, experience and resources required to deliver sustainable high performance."

Pipeline Updates
Abaloparatide-SC
Radius’ new drug application (NDA) in the United States for abaloparatide-SC for the treatment of postmenopausal women with osteoporosis was accepted for filing by the FDA and granted a Prescription Drug User Fee Act (PDUFA) date of March 30, 2017. Radius’ marketing authorisation application (MAA) to the European Medicines Agency (EMA), is currently undergoing regulatory review, and we anticipate receiving an opinion from the Committee for Medicinal Products for Human Use (CHMP) in 2017.

On February 1, 2017, results from the first six months of the recently completed 24- month ACTIVExtend trial were published in the Mayo Clinic Proceedings "Eighteen Months of Treatment With Subcutaneous Abaloparatide Followed by 6 Months of Treatment With Alendronate in Postmenopausal Women With Osteoporosis: Results of the ACTIVExtend Trial". The 24-month ACTIVExtend clinical trial has completed and Radius will report the top line results in the second quarter of 2017.

Abaloparatide-SC as a treatment for postmenopausal women with osteoporosis is an investigational product and its safety and efficacy have not been established.

Abaloparatide-TD
Last September, at the annual meeting of the American Association for Bone Mineral Research (ASBMR), we presented the positive results from a human replicative clinical evaluation of an optimized abaloparatide transdermal patch. These results established an important demonstration of how we have changed the pharmacokinetic profile in our program to develop a bioequivalent transdermal patch. Currently, we are focused on completing the manufacturing, scale-up, and other required activities needed to initiate a pivotal study to evaluate bioequivalence to abaloparatide-SC. We believe that the transdermal patch program has the potential to allow physicians who treat osteoporosis, but rarely use injectable drugs, an opportunity to expand their practices to include the use of anabolic therapy.

RAD1901
On December 8, 2016, at the San Antonio Breast Cancer symposium we reported on the encouraging results of our ongoing Phase 1 studies of RAD1901 in advanced breast cancer. We were pleased with the clear demonstration of activity at the 400 mg dose in this heavily pretreated patient population. We plan to engage with regulatory agencies to gain alignment on defining the next steps for the program in the first half of 2017, which would include the design of a Phase 2 trial. Also in the first half of this year, we plan to report results from our completed Phase 2b trial in vasomotor symptoms.

RAD140
In December 2016, we submitted an investigational new drug application, or IND, to the FDA for RAD140, a selective androgen receptor modulator discovered in-house at Radius. We expect to initiate a first-in-human Phase 1 clinical trial in women with hormone receptor positive breast cancer in 2017.

Building A Commercial Organization For Sustainable Growth
In our evolution towards becoming a fully integrated biopharmaceutical company, our accomplished senior leadership is completing the build out of our commercial, medical and compliance organizations to support the potential commercialization of abaloparatide-SC in the United States, pending favorable regulatory review. Our sales leaders have already hired over 90% of our clinical sales specialists with a focus on identifying the most experienced team possible. The result is a sales team with substantial osteoporosis, injectable and women’s health experience, and the majority have had prior launch experience, which matches the depth of experience across our Medical Science Liaison team.

If approved, we intend to distribute abaloparatide-SC in the United States through a network of distributors and specialty pharmacies. Under this distribution model, both the distributors and specialty pharmacies would take physical delivery of product and the specialty pharmacies would dispense the product directly to patients.
Under the leadership of our Chief Compliance Officer, we are continuing to strengthen our compliance program in support of launch of abaloparatide-SC as part of our commitment to a strong culture of compliance and good corporate governance.

Radius Expects the Following Upcoming Milestones

• Abaloparatide-SC

• FDA PDUFA date of March 30, 2017

• Receive a CHMP opinion regarding the EMA’s review of the abaloparatide-SC MAA in 2017

• Enter into a partnership for the potential commercialization of abaloparatide-SC prior to commercial launch

• Report top-line results from the recently completed 24-month ACTIVExtend clinical trial in the second quarter of 2017

• RAD1901

• Complete ongoing Phase 1 breast cancer clinical trials

• Engage with regulatory authorities in 1H 2017 to gain alignment on defining next steps for the program, which would include the design of a Phase 2 breast cancer trial

• In 1H 2017, complete, and report results from, our ongoing Phase 2b vasomotor trial

• RAD140

• Initiate a first-in-human Phase 1 study in 2017 in women with hormone receptor positive breast cancer
Radius Expects To Make Presentations at the Following Upcoming Conferences

• On March 6, 2017, Radius President and CEO, Robert Ward will make a presentation and will host one-on-ones at the Cowen Conference in Boston

• On March 24-25, 2017, at the 2017 World Congress of Osteoporosis, Osteoarthritis and Musculoskeletal Diseases (WCO-IOF-ESCEO), 4 scientific presentations will be made on abaloparatide titled:

• "Effects of abaloparatide-SC on bone mineral density and risk of fracture in postmenopausal women aged 80 years or older with osteoporosis"

• "Abaloparatide-SC decreases vertebral, nonvertebral, major osteoporotic, and wrist fractures in a subset of postmenopausal women at high risk of fracture by FRAX score"

• "Abaloparatide-SC for postmenopausal osteoporosis: analysis of the number needed to treat compared with teriparatide"

• "Abaloparatide-SC significantly reduces vertebral and nonvertebral fractures and increases bone mineral density regardless of baseline risk: results from the ACTIVE phase 3 clinical trial"
Fourth Quarter 2016 Financial Results
For the three months ended December 31, 2016, Radius reported a net loss of $52.7 million, or $1.22 per share, as compared to a net loss of $33.2 million, or $0.77 per share, for the three months ended December 31, 2015. The increase in net loss for the three months ended December 31, 2016 as compared to the three months ended December 31, 2015 was primarily due to an increase in research and development and general and administrative expenses, partially offset by a decrease in loss on retirement of note payable, a decrease in interest expense and an increase in interest income.

Research and development expenses for the three months ended December 31, 2016 were $25.6 million, compared to $22.2 million for the same period in 2015. This increase was primarily driven by higher research and development costs associated with the development of RAD1901 to support a Phase 1 study in metastatic breast cancer that commenced in late 2014 and a Phase 2b study in postmenopausal vasomotor symptoms that commenced in December 2015. This increase was also a result of an increase in compensation expense, including stock-based compensation, due to an increase in headcount from December 31, 2015 to December 31, 2016.

General and administrative expenses for the three months ended December 31, 2016 were $27.5 million, compared to $11.6 million for the same period in 2015. This increase was primarily attributable to an increase in professional support costs, including the costs associated with increasing headcount and preparing for the potential commercialization of abaloparatide-SC, subject to a favorable regulatory review.

This increase was also driven by an increase in compensation expense, including stock-based compensation, due to an increase in headcount from December 31, 2015 to December 31, 2016.

Full Year 2016 Financial Results
For the twelve months ended December 31, 2016, Radius reported a net loss of $182.8 million, or $4.24 per share, as compared to a net loss of $101.5 million, or $2.56 per share, for the twelve months ended December 31, 2015. The increase in net loss for 2016 was primarily due to an increase in research and development expenses and general and administrative expenses, partially offset by a decrease in loss on retirement of note payable, a decrease in interest expense and an increase in interest income.

Research and development expenses for the twelve months ended December 31, 2016 were $107.4 million, compared to $68.3 million for 2015. The increase was primarily attributable to increased compensation expense, including an increase of $3.3 million of non-cash stock-based compensation expense, due to growth in headcount from 48 research and development employees as of December 31, 2015, to 107 research and development employees as of December 31, 2016. This increase was also driven by higher contract service costs associated with the development of our investigational product candidate RAD1901 as a result of the increased clinical and manufacturing activities in 2016, as compared to 2015. These increases were partially offset by a decrease in the total professional contract service costs associated with the development of abaloparatide-SC as more subjects completed study protocol activities associated with the 24-month ACTIVExtend clinical trial in 2016, as compared to 2015.

General and administrative expenses for the twelve months ended December 31, 2016 were $77.5 million, compared to $30.8 million for 2015. This increase was primarily due to increased professional support costs of approximately $19.4 million, including costs associated with preparing for the potential commercialization of abaloparatide-SC, subject to a favorable regulatory review, as compared to 2015. This increase was also driven by increased compensation expense, including an increase of $8.0 million of non-cash stock-based compensation expense, due to growth in headcount from 27 general and administrative employees as of December 31, 2015, to 130 general and administrative employees as of December 31, 2016.

For the twelve months ended December 31, 2016, the decrease in loss on retirement of note payable was $1.6 million and other expenses increased by $0.3 million. These amounts were partially offset by the increase in interest income from investments of $1.4 million and a decrease in interest expense of $1.9 million.

As of December 31, 2016, Radius had $332.4 million in cash, cash equivalents and marketable securities. Based upon Radius’ cash, cash equivalents and marketable securities balance, Radius believes that, prior to the consideration of revenue from the potential future sales, subject to favorable regulatory review, of any of its investigational products, it has sufficient capital to fund its development plans, U.S. commercial scale-up and other operational activities for not less than twelve months from the date of this press release and into 2018.

On February 23, 2017 Emergent BioSolutions Inc. (NYSE: EBS) reported financial results for the quarter and twelve months ended December 31, 2016 (Filing, Q4/Annual, Emergent BioSolutions, 2016, FEB 23, 2017, View Source [SID1234517884]).

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2016 FINANCIAL HIGHLIGHTS (1) (2)

4Q 2016

CY 2016

(in millions)

Combined & Continuing Operations Basis

Combined
Basis

Continuing Operations
Basis

Total Revenues

$
151.7

$
510.2

$
488.8

Net Income

$
32.3

$
51.8

$
62.5

Adjusted Net Income (3)

$
36.6

$
73.1

$
77.5

EBITDA (3)

$
61.3

$
111.5

$
141.7

(1)
The presentation of Emergent’s financial performance using the "Combined Basis" method includes the impact of the operations associated with the Company’s former biosciences business which was spun-off into a separate publicly traded company, Aptevo Therapeutics Inc., on August 1, 2016. The presentation of Emergent’s financial performance using the "Continuing Operations Basis" method excludes the impact of the operations of Aptevo.

(2) See "Reconciliation of Statement of Operations" for a reconciliation of the Company’s Statement of Operations for the Three and Twelve Months Ended December 31, 2016 on a continuing operations basis to that on a combined basis.

(3) See "Reconciliation of Net Income to Adjusted Net Income and EBITDA" for a definition of terms and a reconciliation table.

2016 BUSINESS ACCOMPLISHMENTS
·
Signed a follow-on contract with the Centers for Disease Control and Prevention (CDC) to supply approximately 29.4 million doses of BioThrax (Anthrax Vaccine Adsorbed) to the Strategic National Stockpile (SNS) through September 2021, valued at up to $911 million
·
Signed a five-year contract with the Biomedical Advanced Research and Development Authority (BARDA) for advanced development and procurement of NuThrax (anthrax vaccine adsorbed with CPG 7909 adjuvant), the Company’s next generation anthrax vaccine candidate, valued at up to $1.6 billion
·
Received a Sole Source Notification issued by BARDA for the procurement of approximately $100 million of BioThrax for delivery into the SNS within 24 months from the date of contract award
·
Achieved U.S. Food and Drug Administration (FDA) licensure for large-scale manufacturing of BioThrax in Building 55
·
Completed the spin-off of Aptevo Therapeutics Inc.

2016 FINANCIAL PERFORMANCE
Note: The following discussion of Emergent’s year to date and quarter ended December 31, 2016 unaudited, financial performance is on a Continuing Operations Basis.

(I) Quarter Ended December 31, 2016

Revenues

Product Sales
For Q4 2016, product sales were $87.5 million, a decrease of 30% as compared to 2015. The decrease is principally attributable to lower BioThrax deliveries under the Company’s new contract with the CDC, signed in December 2016.

Three Months Ended
December 31,

(in millions)

2016

2015

% Change

Product Sales

BioThrax

$
43.8

$
111.9

(61
)%
Other

$
43.7

$
12.5

249
%
Total Product Sales

$
87.5

$
124.4

(30
)%

Contract Manufacturing
For Q4 2016, revenue from the Company’s contract manufacturing operations was $16.7 million, an increase of 59% as compared to 2015. The increase primarily reflects an increase in fill/finish services at the Company’s Camden facility in Baltimore.

Contracts and Grants
For Q4 2016, contracts and grants revenue was $47.5 million, an increase of 91% as compared to 2015. The increase primarily reflects an increase in development funding for the Company’s Bayview facility in Baltimore designated as a Center for Innovation in Advanced Development and Manufacturing (CIADM) and plasma collection for the Company’s VIGIV [Vaccinia Immune Globulin Intravenous (Human)] program.

Operating Expenses

Cost of Product Sales and Contract Manufacturing
For Q4 2016, cost of product sales and contract manufacturing was $38.3 million, an increase of 11% as compared to 2015. The increase reflects an increase in the BioThrax cost per dose sold associated with lower production yield in the period in which the doses sold were produced, along with increased costs associated with the increase in Other product sales volume, partially offset by a decrease in BioThrax sales to the CDC.

Research and Development
For Q4 2016, gross research and development (R&D) expenses were $27.1 million, an increase of 7% as compared to 2015.

For Q4 2016, net R&D was fully funded, resulting in a net contribution from funded development programs of $20.4 million, as compared to a net expense of $0.5 million in 2015. Net R&D, which is more representative of the Company’s actual out-of-pocket investment in product development, is calculated as gross research and development expenses less contracts and grants revenue.

Three Months Ended
December 31,

(in millions)

2016

2015

% Change

Research and Development Expenses [Gross]

$
27.1

$
25.3

(7
)%
Adjustments:

– Contracts and grants revenue

$
47.5

$
24.8

91
%
Net Research and Development Expenses (Income)

$
(20.4
)

$
0.5

—

Selling, General and Administrative
For Q4 2016, selling, general and administrative expenses were $35.4 million, an increase of 1% as compared to 2015.

Net Income
For Q4 2016, net income was $32.3 million, or $0.67 per diluted share, versus $42.5 million, or $0.90 per diluted share, in 2015.

For Q4 2016 and 2015, net income per diluted share is computed using the "if-converted" method. This method requires net income to be adjusted to add back interest expense and amortization of debt issuance cost, both net of tax, associated with the Company’s 2.875% Convertible Senior Notes due 2021. As a result, net income per diluted share for Q4 2016 is adjusted in the amount of $1.1 million, from $32.3 million to $33.4 million, and diluted shares outstanding were 49.6 million. Net income per diluted share for Q4 2015 is adjusted in the amount of $0.9 million, from $42.5 million to $43.4 million, and diluted shares outstanding were 48.1 million.

(II) Twelve Months Ended December 31, 2016

Revenues

Product Sales
For the twelve months of 2016, product sales were $296.3 million, a decrease of 10% as compared to 2015. The decrease is principally attributable to a 19% reduction in BioThrax sales, including reduced deliveries in 4Q 2016 related to the timing of signing the Company’s follow-on contract with CDC in December 2016.

Twelve Months Ended
December 31,

(in millions)

2016

2015

% Change

Product Sales

BioThrax

$
237.0

$
293.9

(19
)%
Other

$
59.3

$
35.1

69
%
Total Product Sales

$
296.3

$
329.0

(10
)%

Contract Manufacturing
For the twelve months of 2016, revenue from contract manufacturing operations was $49.1 million, an increase of 14% as compared to 2015. The increase reflects an increase in fill/finish services from the Company’s Camden facility and an increase in bulk manufacturing services from the Company’s facility in Winnipeg, partially offset by a decrease in contract manufacturing revenue related to the production of an MVA Ebola vaccine candidate in 2015.

Contracts and Grants
For the twelve months of 2016, contracts and grants revenue was $143.4 million, an increase of 22% as compared to 2015. The increase reflects an increase in development funding for the Company’s CIADM program, VIGIV program related to plasma collection, and the NuThrax program related to preparations for a Phase III clinical trial. These increases were offset by lower development funding for the Company’s Anthrasil [Anthrax Immune Globulin Intravenous (Human)] program related to timing of plasma collection, PreviThrax (recombinant protective antigen anthrax vaccine, purified) candidate related to reduced interest by the U.S. government to fund such a program, and Building 55 related to FDA licensure of the facility in August 2016.

Operating Expenses

Cost of Product Sales and Contract Manufacturing
For the twelve months of 2016, cost of product sales and contract manufacturing was $131.3 million, an increase of 22% as compared to 2015. The increase primarily reflects an increase in the BioThrax cost per dose sold associated with lower production yield, along with increased costs associated with the increase in Other product sales volume, partially offset by a decrease in BioThrax sales to the SNS.

Research and Development
For the twelve months of 2016, gross R&D expenses were $108.3 million, a decrease of 9% as compared to 2015. The decrease primarily reflects lower contract service costs.

For the twelve months of 2016, net R&D was fully funded, resulting in a net contribution from funded development programs of $35.1 million, as compared to a net expense of $1.8 million in 2015.

Twelve Months Ended
December 31,

(in millions)

2016

2015

% Change

Research and Development Expenses [Gross]

$
108.3

$
119.2

(9
)%
Adjustments:

– Contracts and grants revenue

$
143.4

$
117.4

22
%
Net Research and Development Expenses (Income)

$
(35.1
)

$
1.8

—

Selling, General and Administrative
For the twelve months of 2016, selling, general and administrative expenses were $143.7 million, an increase of 19% as compared to 2015. This increase includes costs associated with restructuring activities at the Company’s Lansing, Michigan site, along with increased professional services to support the Company’s strategic growth initiatives and increased information technology investments.

Net Income
For the twelve months of 2016, net income was $62.5 million, or $1.35 per diluted share, versus $107.6 million, or $2.36 per diluted share, in 2015.

Pursuant to the "if-converted" method, net income per diluted share for the twelve months of 2016 is adjusted in the amount of $4.0 million, from $62.5 million to $66.5 million, and diluted shares outstanding were 49.1 million. Net income from continuing operations per diluted share for the twelve months of 2015 is adjusted in the amount of $3.9 million, from $107.6 million to $111.5 million, and diluted shares outstanding were 47.3 million.

2017 FORECAST & OPERATIONAL GOALS
Full Year 2017 Forecast:
·
Total revenue of $500 to $530 million, including BioThrax sales of $265 to $280 million
·
GAAP net income of $60 to $70 million
·
Adjusted net income of $70 to $80 million (3)
·
EBITDA of $135 to $145 million (3)

(3)
See "Reconciliation of Net Income to Adjusted Net Income and EBITDA" for a definition of terms and a reconciliation table.

Revised 1Q 2017 Forecast:
·
Total revenue of $110 to $125 million

2017 Operational Goals:
·
Initiate three Phase I or II clinical studies for EID therapeutics
·
Advance NuThrax development to enable initiating a Phase III study in 2018
·
Initiate two human factor studies for a nerve agent antidote auto-injector
·
Complete an acquisition that generates revenue within 12 months of closing

2020 FINANCIAL & OPERATIONAL GOALS
The Company is targeting the following 2020 financial and operational goals:
·
Total Revenue: $1 billion
·
Revenue Mix: >10% of total revenue from ex-US customers
·
Expense Discipline: Net R&D <15% of net revenue (4); SG&A <25% of total revenue
·
Net Income: 13% of total revenue
·
Product Development Pipeline: Six products in clinical or advanced development (three dual market)

(4) Computed as Total Revenue less Contracts & Grants Revenue.

RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME AND EBITDA
This press release contains two financial measures (Adjusted Net Income and EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization)) that are considered "non-GAAP" financial measures under applicable Securities and Exchange Commission rules and regulations. These non-GAAP financial measures should be considered supplemental to and not a substitute for financial information prepared in accordance with generally accepted accounting principles. The Company’s definition of these non-GAAP measures may differ from similarly titled measures used by others. Adjusted Net Income adjusts for specified items that can be highly variable or difficult to predict, or reflect the non-cash impact of charges resulting from purchase accounting. EBITDA reflects net income excluding the impact of depreciation, amortization, interest expense and provision for income taxes. The Company views these non-GAAP financial measures as a means to facilitate management’s financial and operational decision-making, including evaluation of the Company’s historical operating results and comparison to competitors’ operating results. These non-GAAP financial measures reflect an additional way of viewing aspects of the Company’s operations that, when viewed with GAAP results and the reconciliations to the corresponding GAAP financial measure, may provide a more complete understanding of factors and trends affecting the Company’s business.

The determination of the amounts that are excluded from these non-GAAP financial measures are a matter of management judgment and depend upon, among other factors, the nature of the underlying expense or income amounts. Because non-GAAP financial measures exclude the effect of items that will increase or decrease the Company’s reported results of operations, management strongly encourages investors to review the Company’s consolidated financial statements and publicly filed reports in their entirety.

(I)
Reconciliation of Net Income to Adjusted Net Income

COMBINED BASIS
(in millions, except per share value)

Three Months Ended December 31,

2016

2015

Source
Net Income

$
32.3

$
33.3

NA
Adjustments:
+ Acquisition-related costs (transaction & integration)

1.0

2.0

SG&A
+ Non-cash amortization charges

1.9

2.7

COGS, SG&A,
Other Income
+ Exit and disposal costs

2.6

1.2

SG&A
+ Impact of purchase accounting on inventory step-up

1.1

—

COGS
Tax effect

(2.3
)

(2.1
)
NA
Total Adjustments

4.3

3.8

NA
Adjusted Net Income
Adjusted Net Income per Diluted Share

$
36.6
$0.74

$
37.1
$0.77

NA

CONTINUING OPERATIONS BASIS
(in millions, except per share value)

Three Months Ended December 31,

2016

2015

Source
Net Income

$
32.3

$
42.5

NA
Adjustments:
+ Acquisition-related costs (transaction & integration)

1.0

0.1

SG&A
+ Non-cash amortization charges

1.9

2.2

COGS, SG&A,
Other Income
+ Exit and disposal costs

2.6

—

SG&A
+ Impact of purchase accounting on inventory step-up

1.1

—

COGS
Tax effect

(2.3
)

(0.8
)
NA
Total Adjustments

4.3

1.5

NA
Adjusted Net Income
Adjusted Net Income per Diluted Share

$
36.6
$0.74

$
44.0
$0.91

NA

COMBINED BASIS
(in millions, except per share value)

Twelve Months Ended December 31,

2016

2015

Source
Net Income

$
51.8

$
62.9

NA
Adjustments:
+ Spin-off and acquisition-related costs (transaction & integration)

10.4

5.5

SG&A
+ Non-cash amortization charges

9.6

10.8

COGS, SG&A,
Other Income
+ Exit and disposal costs

11.7

1.2

SG&A
+ Impact of purchase accounting on inventory step-up

1.1

0.6

COGS
Tax effect

(11.5
)

(6.3
)
NA
Total Adjustments

21.3

11.8

NA
Adjusted Net Income
Adjusted Net Income per Diluted Share

$
73.1
$1.48

$
74.7
$1.58

NA

CONTINUING OPERATIONS BASIS
(in millions, except per share value)

Twelve Months Ended December 31,

2016

2015

Source
Net Income From Continuing Operations

$
62.5

$
91.4

NA
Adjustments:
+ Acquisition-related costs (transaction & integration)

1.7

2.1

SG&A
+ Non-cash amortization charges

8.4

8.9

COGS, SG&A,
Other Income
+ Exit and disposal costs

11.7

—

SG&A
+ Impact of purchase accounting on inventory step-up

1.1

0.3

COGS
Tax effect

(8.0
)

(4.0
)
NA
Total Adjustments

15.0

7.4

NA
Adjusted Net Income From Continuing Operations
Adjusted Net Income per Diluted Share

$
77.5
$1.57

$
98.8
$2.09

NA

(II)
Reconciliation of Net Income to EBITDA

COMBINED BASIS

(in millions, except per share value)

Three Months Ended December 31,

2016

2015

Net Income

$
32.3

$
33.3

Adjustments:

+ Depreciation & Amortization

9.7

9.1

+ Provision For Income Taxes

16.8

14.5

+ Total Interest Expense

2.5

1.6

Total Adjustments

29.0

25.2

EBITDA
EBITDA per Diluted Share

$
61.3
$1.24

$
58.5
$1.22

CONTINUING OPERATIONS BASIS

(in millions, except per share value)

Three Months Ended December 31,

2016

2015

Net Income From Continuing Operations

$
32.3

$
42.5

Adjustments:

+ Depreciation & Amortization

9.7

8.3

+ Provision For Income Taxes

16.8

20.7

+ Total Interest Expense

2.5

1.6

Total Adjustments

29.0

30.6

EBITDA From Continuing Operations
EBITDA per Diluted Share

$
61.3
$1.24

$
73.1
$1.52

COMBINED BASIS

(in millions, except per share value)

Twelve Months Ended December 31,

2016

2015

Net Income

$
51.8

$
62.9

Adjustments:

+ Depreciation & Amortization

36.7

33.8

+ Provision For Income Taxes

15.4

26.9

+ Total Interest Expense

7.6

6.5

Total Adjustments

59.7

67.2

EBITDA
EBITDA per Diluted Share

$
111.5
$2.26

$
130.1
$2.75

CONTINUING OPERATIONS BASIS

(in millions, except per share value)

Twelve Months Ended December 31,

2016

2015

Net Income From Continuing Operations

$
62.5

$
91.4

Adjustments:

+ Depreciation & Amortization

34.9

31.2

+ Provision For Income Taxes

36.7

44.3

+ Total Interest Expense

7.6

6.5

Total Adjustments

79.2

82.0

EBITDA From Continuing Operations
EBITDA per Diluted Share

$
141.7
$2.87

$
173.4
$3.67

RECONCILIATION OF STATEMENT OF OPERATIONS
The following table provides a reconciliation of the Company’s Statement of Operations for the Twelve Months Ended December 31, 2016 on a continuing operations basis to that on a combined basis, which takes into account the impact of the Aptevo-related discontinued operations.

Emergent BioSolutions Inc. and Subsidiaries

Consolidated Statements of Operations





Year Ended December 31, 2016

Continuing Operations

Discontinuing Operations

Combined

Revenues:

(Unaudited)

Product sales

$
296.3

$
21.2

317.5

Contract manufacturing

49.1

–

49.1

Contracts and grants

143.4

0.2

143.6

Total revenues

488.8

21.4

510.2

Operating expenses:

Cost of product sales and contract manufacturing

131.3

11.6

142.9

Research and development

108.3

18.0

126.3

Selling, general and administrative

143.7

23.8

167.5

Income from operations

105.5

(32.0
)

73.5

Other income (expense):

Interest income

1.1

–

1.1

Interest expense

(7.6
)

–

(7.6
)
Other income, net

0.2

–

0.2

Total other expense, net

(6.3
)

(0.0
)

(6.3
)

Income (loss) before provision for (benefit) from income taxes

99.2

(32.0
)

67.2

Provision for (benefit from) income taxes

36.7

(21.3
)

15.4

Net income

$
62.5

$
(10.7
)

$
51.8

On February 23, 2017 RedHill Biopharma Ltd. (NASDAQ:RDHL) (TASE:RDHL) ("RedHill" or the "Company"), a specialty biopharmaceutical company primarily focused on the development and commercialization of late clinical-stage, proprietary, orally-administered, small molecule drugs for gastrointestinal and inflammatory diseases and cancer, reported its financial results for the fourth quarter and full-year ended December 31, 2016 (Press release, RedHill Biopharma, FEB 23, 2017, View Source [SID1234517881]).

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Fourth Quarter 2016 Results1

Revenues for the fourth quarter of 2016 were $0.1 million, compared to immaterial revenues for the fourth quarter of 2015.

Research and Development Expenses for the fourth quarter of 2016 were $7.5 million, up 51% compared to the fourth quarter of 2015. The increase was mainly due to the ongoing Phase III and Phase II studies with BEKINDA for gastroenteritis and IBS-D, respectively, the ongoing Phase III study with RHB-104 for Crohn’s disease and ongoing studies with YELIVA for multiple indications.

General, Administrative and Business Development Expenses for the fourth quarter of 2016 were $1.6 million, down 6.9% compared to the fourth quarter of 2015. The decrease was mainly due to a decrease in professional services.

Operating Loss for the fourth quarter of 2016 was $9 million, up 33% compared to the fourth quarter of 2015. The increase was mainly due to an increase in research and development expenses, as detailed above.

Financial Income, net for the fourth quarter of 2016 was $0.6 million, up 214%, compared to the fourth quarter of 2015. The increase was mainly due to a fair value gain on derivative financial instruments.

Net Cash Used in Operating Activities for the fourth quarter of 2016 was $10.1 million, up 69% compared to the fourth quarter of 2015. The increase was mainly due to the increase in operating loss, as detailed above.

Net Cash Provided by Investment Activities for the fourth quarter of 2016 was $21.3 million, up 206% compared to the fourth quarter of 2015. The increase was mainly due to maturity of bank deposits.

Net Cash Provided by Financing Activities for the fourth quarter of 2016 was $35.9 million compared to an immaterial amount for the fourth quarter of 2015. The increase was mainly due to the December 2016 public offering.

Full-Year 2016 Results2

Revenues for 2016 were $0.1 million, compared to immaterial revenues in 2015.

Research and Development Expenses for 2016 were $25.2 million, up 42% compared to 2015. The increase was mainly due to the ongoing Phase III MAP US study with RHB-104 for Crohn’s disease, the ongoing Phase III and Phase II studies with BEKINDA for gastroenteritis and IBS-D, respectively, and the ongoing studies with YELIVA for multiple indications.

General, Administrative and Business Development Expenses for 2016 were $5.4 million, up 31% compared to 2015. The increase was mainly due to an increase in professional services, compensation and other operating expenses.

Operating Loss for 2016 was $30.5 million, up 39% compared to 2015. The increase was mainly due to an increase in research and development expenses, as detailed above.

Financial Income, net for 2016 was $1.2 million, up 29% compared to 2015. The increase was mainly due to a fair value gain on derivative financial instruments.

Net Cash Used in Operating Activities for 2016 was $28.2 million, up 59% compared to 2015. The increase was mainly due to an increase in operating loss, as detailed above.

Net Cash Provided by Investment Activities for 2016 was $24.5 million, up 215% compared to 2015. The difference was mainly due to maturity of bank deposits.

Net Cash Provided by Financing Activities for 2016 was $36 million, down 34% compared to 2015. The decrease resulted primarily from the two public offerings in February and July 2015 of the comparable period.

Cash Balance3 as of December 31, 2016 was $66.3 million, an increase of $8.2 million compared to $58.1 million as of December 31, 2015 and an increase of $25.8 million compared to $40.5 million as of September 30, 2016.

Micha Ben Chorin, RedHill’s CFO, said: "Our strong cash position of approximately $66 million at the end of 2016 should allow us to continue to execute our strategic plans for 2017. We are looking forward to an important year ahead, including the planned initiation of a confirmatory Phase III study with RHB-105 for H. pylori infection, a second independent DSMB meeting for the ongoing MAP US Phase III study with RHB-104 for Crohn’s disease, top-line results from the ongoing Phase III and Phase II studies with BEKINDA for gastroenteritis and IBS-D, respectively, and commencement of our promotional activities in the U.S. with Donnatal."

Conference Call and Webcast Information:

The Company will host a conference call on Thursday, February 23, 2017, at 9:00 am EST to review the financial results and business highlights.

To participate in the conference call, please dial the following numbers 5-10 minutes prior to the start of the call: United States: +1-877-280-1254; International: +1-646-254-3366; and Israel: +972-3-763-0145. The access code for the call is 4402478.

The conference call will be broadcasted live and available for replay on the Company’s website, View Source, for 30 days. Please access the Company’s website at least 15 minutes ahead of the conference to register, download, and install any necessary audio software.

Select 2016 and recent operational highlights:

RHB-105 – H. pylori bacterial infection (confirmatory Phase III) (QIDP status)

Following the announcement of the successful final results from a first Phase III clinical study with RHB-105 for the eradication of H. pylori infection (the ERADICATE Hp study) in March 2016, RedHill concluded two positive Type B meetings with the U.S. Food and Drug Administration (FDA) regarding RHB-105. The first meeting, announced in April 2016, confirmed the path to marketing approval of RHB-105 and the planned confirmatory Phase III study. A second Type B meeting, announced in November 2016, discussed the chemistry, manufacturing and controls (CMC) aspects of the RHB-105 Phase III development program towards filing the CMC package as part of the potential U.S. New Drug Application (NDA) to be submitted for RHB-105, subject to successful completion of the planned confirmatory Phase III study.

The two-arm, randomized, double-blind, active comparator confirmatory Phase III study, comparing RHB-105 against a dual therapy amoxicillin and omeprazole regimen at equivalent doses, is planned to be initiated in the second quarter of 2017, subject to the successful completion of the ongoing supportive pharmacokinetic (PK) program and submission of the Clinical Study Report to the FDA. The confirmatory Phase III study is planned to enroll approximately 440 patients in up to 55 clinical sites in the U.S.

RHB-104 – Crohn’s disease (Phase III), multiple sclerosis (Phase IIa) and nontuberculous mycobacteria (NTM) infections

In October 2016, RedHill provided an update on the RHB-104 Phase III Crohn’s disease development program, planned enhancements to the ongoing MAP US Phase III study and expected milestones, including an increase in the total number of patients planned to be enrolled in the MAP US study from 270 to 410, and the addition of an open-label extension study offering patients who complete 26 weeks of study participation and remain out of remission (Crohn’s disease active index (CDAI) > 150) the opportunity to receive treatment with RHB-104 for a 52-week period. The open-label extension study is expected to be initiated in the coming weeks.

Following a pre-planned review of safety data from its ongoing MAP US study by an independent Data and Safety Monitoring Board (DSMB), RedHill announced in December 2016 that it had received a unanimous recommendation to continue the MAP US study as planned. A second independent DSMB meeting of the MAP US study, expected in the second quarter of 2017, will include an interim efficacy analysis and will evaluate the option for an early stop for success for overwhelming efficacy, according to a pre-specified statistical significance threshold.

Taking into account the increase in the total number of patients planned in the MAP US study, and assuming the MAP US study is not stopped for success or inefficacy following the independent DSMB meeting in the second quarter of 2017, completion of recruitment is expected by the end of 2017.

In December 2016, RedHill announced encouraging top-line final results of a Phase IIa, proof-of-concept clinical study, evaluating RHB-104 as an add-on therapy to interferon beta-1a in patients treated for relapsing remitting multiple sclerosis (the CEASE MS study). The top-line final results (48 weeks) were consistent with previously announced interim results, suggesting meaningful positive safety and clinical signals upon 24 weeks of treatment with RHB-104 as an add-on therapy, thereby supporting further clinical development.

In January 2017, RedHill announced that RHB-104 had been granted Qualified Infectious Disease Product (QIDP) designation by the FDA for the treatment of nontuberculous mycobacteria (NTM) infections. RedHill plans to consult with the FDA regarding the RHB-104 development program for NTM infections.

BEKINDA (RHB-102) – acute gastroenteritis and gastritis (Phase III) and IBS-D (Phase II)

In February 2017, RedHill announced that the last patient enrolled in the randomized, double-blind, placebo-controlled Phase III clinical study with BEKINDA 24 mg in the U.S. for acute gastroenteritis and gastritis (the GUARD study) had completed the treatment course and observation period for the primary endpoint evaluation. Top-line results are expected in the second quarter of 2017.

A randomized, double-blind, placebo-controlled Phase II clinical study with BEKINDA 12 mg for the treatment of diarrhea-predominant irritable bowel syndrome (IBS-D) is ongoing in the U.S. with top-line results expected in mid-2017.

YELIVA (ABC294640) – Phase I/II studies for multiple oncology and inflammatory indications

In June 2016 , RedHill announced positive final results from a Phase I study with YELIVA in patients with advanced solid tumors. The Phase I study, conducted at the Medical University of South Carolina Hollings Cancer Center, successfully met its primary and secondary endpoints, demonstrating that the drug is well-tolerated and can be safely administered to cancer patients at doses predicted to have therapeutic activity.

In September 2016, RedHill announced a research collaboration with Stanford University School of Medicine for the evaluation of YELIVA. The research collaboration is intended to complement RedHill’s planned Phase Ib clinical study to evaluate YELIVA as a radioprotectant for prevention of mucositis in head and neck cancer patients undergoing therapeutic radiotherapy. The Phase Ib study is planned to be initiated in mid-2017.

In October 2016, RedHill announced the initiation of a Phase II clinical study with YELIVA for advanced hepatocellular carcinoma at the Medical University of South Carolina.

In December 2016, RedHill announced that the first patient was dosed in a Phase Ib/II study with YELIVA for refractory or relapsed multiple myeloma, conducted at Duke University Medical Center.

A Phase I/II clinical study evaluating YELIVA in patients with refractory/relapsed diffuse large B-cell lymphoma is ongoing at the Louisiana State University Health Sciences Center and was recently amended to address overall recruitment prospects and to include Kaposi sarcoma patients in the study.

A Phase II study to evaluate the efficacy of YELIVA in patients with moderate to severe ulcerative colitis is planned to be initiated in the second half of 2017.

RIZAPORT (RHB-103) – acute migraines (approved for marketing in Germany)

In 2016, RedHill and its co-development partner, IntelGenx Corp., entered into exclusive license agreements for the commercialization of RIZAPORT oral thin-film for acute migraines with Grupo JUSTE S.A.Q.F (now Exeltis Healthcare, S.L.) for Spain and with Pharmatronic Co. for South Korea.

Re-submission of the RIZAPORT NDA to the FDA is expected in the third quarter of 2017.
MESUPRON (upamostat) – Gastrointestinal and other solid tumors
In January 2017, RedHill announced the signing of a new collaboration agreement with the Department of Molecular Biology and Genetics of Denmark-based Aarhus University for the evaluation of RedHill’s Phase II-stage oncology drug candidate, MESUPRON. The new research collaboration follows previous non-clinical studies conducted with Denmark’s Aarhus University and is designed to identify additional high affinity molecular targets of MESUPRON. Further evaluation of MESUPRON, together with Aarhus University, may allow for selection of appropriate sub-populations of patients toward demonstrating the activity of MESUPRON in planned clinical trials.

RedHill is currently preparing a protocol for a Phase I/II study of the safety, efficacy and dose evaluation of MESUPRON in combination with chemotherapy in patients receiving adjuvant chemotherapy for resected pancreatic cancer. The Phase I/II study is expected to be initiated in the second half of 2017 in up to six sites in Germany.

Donnatal (Phenobarbital, Hyoscyamine Sulfate, Atropine Sulfate, Scopolamine Hydrobromide)

As part of RedHill’s strategic initiative to become a revenue-generating, gastrointestinal-focused, specialty pharmaceutical company with a commercial presence in the U.S., the Company entered in January 2017 into an exclusive co-promotion agreement with a subsidiary4 of Concordia International Corp., granting RedHill certain U.S. promotional rights for Donnatal, a prescription oral drug used with other drugs in the treatment of irritable bowel syndrome (irritable colon, spastic colon, mucous colitis) and acute enterocolitis (inflammation of the small bowel)5. RedHill expects to initiate promotion of Donnatal in the coming months.

Financial Highlights

In December 2016, RedHill closed an underwritten public offering and a registered direct offering of American Depositary Shares (ADSs) and warrants to purchase ADSs for aggregate net proceeds, after deducting underwriting discounts and commissions, placement agent fees and other offering expenses, of $35.9 million. Investors in the public offering included, among others, Sabby Management, LLC, DAFNA Capital Management, Rosalind Advisors, Inc., Koramic Holding, Lincoln Park Capital, and Nexthera Capital LP.

About Donnatal:
Donnatal (Phenobarbital, Hyoscyamine Sulfate, Atropine Sulfate, Scopolamine Hydrobromide), a prescription drug, is classified as possibly effective as an adjunctive therapy in the treatment of irritable bowel syndrome (irritable colon, spastic colon, mucous colitis) and acute enterocolitis. Donnatal slows the natural movements of the gut by relaxing the muscles in the stomach and intestines and acts on the brain to produce a calming effect. Donnatal comes in two formulations: immediate release Donnatal Tablets and immediate release Donnatal Elixir, a fast acting liquid.

Donnatal is contraindicated in patients who have glaucoma, obstructive uropathy, obstructive disease of the gastrointestinal tract, paralytic ileus, unstable cardiovascular status, severe ulcerative colitis, myasthenia gravis, hiatal hernia with reflux esophagitis, or known hypersensitivity to any of the ingredients. Patients who are pregnant or breast-feeding or who have autonomic neuropathy, hepatic or renal disease, hyperthyroidism, coronary heart disease, congestive heart failure, cardiac arrhythmias, tachycardia or hypertension should notify their doctor before taking Donnatal. Side effects may include: dryness of the mouth, urinary retention, blurred vision, dilation of pupils, rapid heartbeat, loss of sense of taste, headache, nervousness, drowsiness, weakness, dizziness, insomnia, nausea, vomiting and allergic reactions which may be severe.

Further information, including prescribing information, can be found on www.donnatal.com.

Please see the following website for important safety information about Donnatal: View Source

On February 23, 2017 Ligand Pharmaceuticals Incorporated (NASDAQ: LGND) reported financial results for the three and 12 months ended December 31, 2016, and provided an operating forecast and program updates (Filing, Q4/Annual, Ligand, 2016, FEB 23, 2017, View Source [SID1234517872]). Ligand management will host a conference call today beginning at 4:30 p.m. Eastern time.

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"2016 was an exceptional year for Ligand. We reported substantial revenue growing more than 50% over last year and strong operating cash flow. Evomela, a new commercial product with a high royalty rate to Ligand, launched and joined Promacta and Kyprolis as major drivers of royalty revenue. We also had a very successful year operating our OmniAb business following the acquisition of OMT approximately one year ago. Additionally, many new deals entered our portfolio and numerous late-stage partnered assets generated meaningful positive news," said John Higgins, Chief Executive Officer. "2017 is positioned to be another year of strong growth in revenue and cash flow. We anticipate beginning to receive royalties from new product launches, and look forward to major data readouts from many late-stage partnered programs, results from our Phase 2 GRA trial and partners entering the clinic with antibodies from our OmniAb platform."

Fourth Quarter 2016 Financial Results

Total revenues for the fourth quarter of 2016 were $38.2 million, compared with $21.2 million for the same period in 2015, an increase of 80%. Royalty revenues were $19.6 million, compared with $11.5 million for the same period in 2015 primarily due to higher royalties from Promacta and Kyprolis. Material sales were $9.1 million, compared with $7.2 million for the same period in 2015 due to timing of Captisol purchases for use in clinical trials and commercial products. License and milestone revenues were $9.5 million, compared with $2.4 million for the same period in 2015 due to a higher number of contract payments and contributions from OmniAb-related deals.

Cost of goods sold was $2.9 million for the fourth quarter of 2016, compared with $0.9 million for the same period in 2015 due to the timing and mix of Captisol sales. Amortization of intangibles was $2.7 million, compared with $0.6 million for the same period in 2015 due primarily to additional amortization of intangibles related to the acquisition of OMT. Research and development expense was $6.4 million, compared with $2.3 million for the same period of 2015 as a result of the addition of OMT-related expenses, timing of spending on internal development programs and non-cash stock-based compensation expense. General and administrative expense was $6.6 million, compared with $6.2 million for the same period in 2015 due to costs associated with OMT and non-cash stock-based compensation expense.

GAAP net loss for the fourth quarter of 2016 was $3.1 million, or $0.15 per share, compared with GAAP net income for the fourth quarter of 2015 of $6.3 million, or $0.29 per diluted share. GAAP net income for the fourth quarter of 2016 was impacted by a $9.0 million non-cash charge related to Viking Therapeutics, primarily for a markdown of the book value of our holdings in Viking to current market values. Adjusted net income for the fourth quarter of 2016 was $16.1 million, or $0.74 per diluted share, compared with adjusted net income for the same period in 2015 of $12.2 million, or $0.59 per diluted share. Adjusted net income and EPS are now being reported on a fully-taxed basis, as disclosed in the Form 8-K filed with the Securities and Exchange Commission January 18, 2017. See "Adjusted Financial Measures" and the accompanying table below for the adjusted calculations and reconciliation to comparable GAAP financial measures.

As of December 31, 2016, Ligand had cash, cash equivalents and short-term investments of $141.0 million. Cash generated from operations was $21.0 million and $63.0 million for the 2016 fourth quarter and full year, respectively.

Full Year Financial Results

Total revenues in 2016 were $109.0 million, compared with $71.9 million for 2015, an increase of 52%. Royalty revenues were $59.4 million, compared with $38.2 million for 2015 primarily due to higher royalties from Promacta and Kyprolis. Material sales were $22.5 million, compared with $27.7 million for 2015 due to timing of Captisol purchases for use in clinical trials and commercial products. License and milestone revenues were $27.0 million, compared with $6.1 million for 2015 due to a higher number of contract payments and contributions from OmniAb-related deals.

Cost of goods sold was $5.6 million in 2016, compared with $5.8 million for 2015 due to the timing and mix of Captisol sales. Amortization of intangibles was $10.6 million, compared with $2.4 million for 2015 due primarily to additional amortization of intangibles related to the acquisition of OMT. Research and development expense was $21.2 million, compared with $11.0 million for 2015 as a result of the addition of OMT-related expenses, timing of spending on internal development programs and non-cash stock-based compensation expense. General and administrative expense was $26.6 million, compared with $24.4 million for 2015 due to costs associated with OMT and non-cash stock-based compensation expense.

GAAP net loss in 2016 was $1.6 million, or $0.08 per share, compared with GAAP net income in 2015 of $229.8 million, or $10.83 per diluted share. The difference is primarily attributable to a net income tax benefit in 2015 of $206.0 million, or $9.70 per diluted share, from the release of valuation allowance. 2016 GAAP net loss was also impacted by a $23.1 million non-cash charge associated with our investment in Viking, primarily consisting of a loss on dilution as a result of Viking financings and the mark-to-market charge taken in the fourth quarter of 2016. Adjusted net income for 2016 was $46.7 million, or $2.15 per diluted share, compared with adjusted net income in 2015 of $47.6 million, or $2.31 per diluted share.

2017 Financial Forecast

The Company expects 2017 revenues to consist of three components: royalties, material sales and contract (license and milestone) revenue. At this time, Ligand estimates 2017 core revenue to include royalties of approximately $87 million, material sales of approximately $23 million and contract payments of at least $20 million. During 2017, Ligand estimates it could potentially receive up to an additional $30 million of contract payments, however external events are out of Ligand’s control so the Company will provide more information about the timing and probability for any additional contract revenue expected to be booked in 2017 as the year progresses. Ligand estimates that cash expenses for 2017 will be in the range of $28 million to $30 million, consistent with the cash expenses incurred for 2016. Ligand notes that with core revenue of $130 million, adjusted earnings per diluted share would be approximately $2.70. This amount is expected to be higher in the event additional contract revenue is received in 2017. The core adjusted EPS figure reflects the Company’s new fully-taxed adjusted EPS methodology, including a 36% to 39% tax rate, but the Company continues to pay less than 1% cash taxes as it utilizes its over $500 million of remaining NOLs.

ASC 606 – Revenue Accounting Standard

In May 2014 the Financial Accounting Standards Board issued Accounting Standards Codification Topic 606 (ASC 606), Revenue From Contracts With Customers, which is intended to provide a single, comprehensive revenue recognition model for all contracts with customers and thereby improve comparability within industries, across industries, and across capital markets. Companies must implement this new standard no later than January 1, 2018 and they can elect to adopt the standard after January 1, 2017. At this time, Ligand does not expect to adopt ASC 606 as of January 1, 2017.

Fourth Quarter 2016 and Recent Business Highlights

Portfolio Program Progress

Promacta/Revolade

•
Novartis reported fourth quarter 2016 net sales of Promacta (eltrombopag) of $178 million, a $45 million or 34% increase over the same period in 2015.

Kyprolis (carfilzomib), an Amgen Product Utilizing Captisol

•
On February 2, 2017, Amgen reported fourth quarter 2016 net sales of Kyprolis (carfilzomib) of $183 million, a $35 million or 24% increase over the same period in 2015.
•
On February 2, 2017, Ono Pharmaceutical reported that Kyprolis sales in Japan were ¥11 billion ($9.7 million) since the product was launched in August of 2016 through December 31, 2016.
•
On November 10, 2016, Amgen announced a collaboration with Janssen Biotech, Inc. to evaluate the combination of Amgen’s Kyprolis (carfilzomib) and Janssen’s DARZALEX (daratumumab) in multiple clinical studies in patients with multiple myeloma. The first study initiated as part of this agreement is a Phase 3 registrational trial evaluating Kyprolis in combination with DARZALEX and dexamethasone compared to Kyprolis and dexamethasone alone in patients with multiple myeloma who have had one, two or three prior lines of therapy. The study is anticipated to start enrolling patients in April 2017.

Additional Pipeline and Partner Developments

•
Retrophin announced positive top-line results from the Phase 2 DUET study of sparsentan for the treatment of focal segmental glomerulosclerosis (FSGS). The study achieved statistical significance in the primary efficacy endpoint for the overall sparsentan treatment group, demonstrating a greater than two-fold reduction of proteinuria compared to irbesartan after the eight-week, double-blind treatment period. Additional data from the Phase 2 DUET study of sparsentan for the treatment of FSGS were presented at the late-breaking High-Impact Clinical Trials oral session at the American Society of Nephrology Kidney Week 2016. Retrophin also announced it would meet with the FDA in January 2017 regarding the regulatory pathway for sparsentan in FSGS.
•
Lundbeck announced FDA approval of Carnexiv (carbamazepine) injection as a short-term replacement therapy for oral carbamazepine formulations in adults with certain seizure types when oral administration is temporarily not feasible. Ligand earned a $1.25 million milestone payment upon approval and is entitled to receive a royalty of 2.75% on net sales of Carnexiv.
•
Sage Therapeutics announced an expedited development plan for brexanolone (SAGE-547) in the treatment of postpartum depression (PPD) following receipt of formal meeting minutes from a breakthrough therapy meeting with the FDA. Sage anticipates announcing top-line data from the PPD registration trials in 2H 2017.
•
Melinta Therapeutics announced that the NDAs for approval of IV and oral Baxdela (delafloxacin) for the treatment of patients with acute bacterial skin and skin structure infections (ABSSSI) were accepted for filing by the FDA and were granted a PDUFA date of June 19, 2017. If approved, Ligand is entitled to receive a 2.5% royalty on net sales of the IV formulation of Baxdela and a $1.5 million approval milestone payment.
•
The FDA granted orphan designation to Merck’s Noxafil for treatment of invasive aspergillosis.
•
Merck announced that it stopped the Phase 2/3 EPOCH study evaluating verubecestat in people with mild-to-moderate Alzheimer’s disease due to the conclusion that the efficacy endpoint could not be achieved. No safety concerns where noted. Results from EPOCH will be analyzed and presented at an upcoming scientific meeting.

The external Data Monitoring Committee recommended that the ongoing Phase 3 APECS study, which is evaluating verubecestat in people with prodromal Alzheimer’s disease, continue unchanged. Results from the APECS study are expected in February 2019.
•
Eli Lilly presented data on Captisol-enabled prexasertib (LY2606368) demonstrating activity in patients with BRCA wild type sporadic high-grade serous ovarian cancer at the European Society for Medical Oncology 2016 Congress.
•
Viking Therapeutics announced it expects the Phase 2 clinical trial of VK5211in patients recovering from hip fracture surgery and the Phase 2 clinical trial of VK2809 in patients with primary hypercholesterolemia and non-alcoholic fatty liver disease to be completed in the second quarter of 2017.
•
Viking Therapeutics announced positive initial results from a proof-of-concept study of VK2809 in an in vivo model of glycogen storage disease 1a (GSD 1a) and announced funding of initial clinical development of VK2809 for treatment of GSD 1a with plans to file and IND in the second half of 2017.
•
Aldeyra provided an update on its Phase 3 clinical program of ADX-102 in noninfectious anterior uveitis and anticipates beginning the Phase 3 trial in the second quarter of 2017.
•
Aldeyra announced that it had enrolled the first patient in a Phase 2b clinical trial of ADX-102 for the treatment of allergic conjunctivitis and also presented results of a Phase 2 clinical trial of ADX-102 topical ophthalmic solution in a challenge model of allergic conjunctivitis.
•
Merck KGaA announced it licensed rights to develop Captisol-enabled VX-970 from Vertex Pharmaceuticals. Economic terms of the original agreement between Ligand and Vertex remained unchanged.
•
Takeda presented clinical data on Captisol-enabled pevonedistat in older patients with acute myeloid leukemia at ASH (Free ASH Whitepaper) 2016.
•
XTL Biopharmaceuticals announced the company intends to pursue Sjögren-Larsson Syndrome as the second indication for its lead drug candidate hCDR1.
•
Oncobiologics presented final data from the Phase 1 trial evaluating bioequivalence of ONS-3010 (Humira biosimilar) and the U.S. and European originator versions of Humira (adalimumab).
•
Gilead Sciences highlighted Captisol-enabled GS-5734 for the treatment of Ebola virus infection at JP Morgan’s healthcare conference.

New Licensing Deals

•
Ligand announced a worldwide license agreement with Ono Pharmaceutical to use the OmniAb platform technologies to discover fully human antibodies. Ligand is eligible to receive annual access payments, milestone payments and royalties on future net sales of any antibodies discovered under these licenses.
•
Ligand announced global license and supply agreements with Novartis for the development and commercialization of a Captisol-enabled oral liquid formulation of trametinib, a kinase inhibitor currently indicated as a single agent or in combination with dabrafenib, for the treatment of patients with unresectable or metastatic melanoma with BRAF V600 mutation. Ligand will be eligible to receive royalties on future net sales and revenue from Captisol material sales. Novartis will be responsible for all costs related to the program.
•
Ligand entered into a Captisol Clinical Use/Supply Agreement with Eisai.

Internal Glucagon Receptor Antagonist (GRA) Program

•
Ligand announced its GRA program was featured in an article published in Nature Reviews Drug Discovery entitled Targeting hepatic glucose metabolism in the treatment of type 2 diabetes.

Adjusted Financial Measures

The Company reports adjusted results for diluted net income per share and net income, in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. The Company’s financial measures under GAAP include stock-based compensation expense, amortization of debt-related costs, amortization related to acquisitions, changes in contingent liabilities, net losses of Viking Therapeutics, mark-to-market adjustment for amounts owed to licensors, fair value adjustments to Viking Therapeutics convertible note receivable and warrants, unissued shares relating to the Senior Convertible Note, unissued shares relating to the anti-dilutive effect of fourth quarter and fiscal year 2016 GAAP net loss and adjustments for discontinued operations, and others that are listed in the itemized reconciliations between GAAP and adjusted financial measures included in this press release. However, other than with respect to total revenue, the Company only provides guidance on an adjusted basis and does not provide reconciliations of such forward-looking adjusted measures to GAAP due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation, including adjustments that could be made for changes in contingent liabilities, net losses of Viking Therapeutics, mark-to-market adjustments for amounts owed to licensors and fair value adjustments to Viking Therapeutics convertible note receivable. Management has excluded the effects of these items in its adjusted measures to assist investors in analyzing and assessing the Company’s past and future core operating performance. Additionally, adjusted diluted earnings per share is a key component of the financial metrics utilized by the Company’s board of directors to measure, in part, management’s performance and determine significant elements of management’s compensation.

On February 23, 2017 Integra LifeSciences Holdings Corporation (NASDAQ:IART) reported its financial results for the fourth quarter and full year ending December 31, 2016 (Press release, Integra LifeSciences, FEB 23, 2017, View Source [SID1234517844]).

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Highlights:

Full-year 2016 revenue increased 12.4% to $992.1 million, while organic revenue increased 9.0% over the prior year;
Fourth quarter revenue increased 6.0% over the prior-year quarter to $255.7 million, with organic revenues up 7.0%;
Fourth quarter GAAP gross margin increased to 66.6% or 390 basis over the prior-year period; adjusted gross margin in the fourth quarter reached a record high of 70.2%, a 190 basis point increase over the prior year period;
Fourth quarter GAAP earnings per diluted share (EPS) amounted to $0.35, a 75% increase over the prior year period; adjusted EPS amounted to $0.52, or an increase of 18%;
Full-year 2016 cash flow from operations was $116.4 million, a decrease from $117.1 million over the prior year. Excluding $42.8 million for the accreted interest payment associated with the convertible notes, cash flow from operations was $159.2 million, above the high end of our guidance range.
Total revenues for the full year 2016 were $992.1 million, an increase of $109.3 million, or 12.4%, over the full year 2015. Total revenues for the fourth quarter were $255.7 million, representing an increase of $14.5 million, or 6.0%, over the fourth quarter of 2015.

Organic revenues, computed by adjusting GAAP revenues as set forth in the attached reconciliation, increased over 2015 by 9.0% in the full year, and 7.0% in the fourth quarter.

"We were pleased with our performance in 2016, which resulted in full-year organic revenue growth of 9% and full-year adjusted gross margin of 69.5%," said Peter Arduini, Integra’s President and Chief Executive Officer. "We look forward to a transformative 2017 as we integrate two of the largest acquisitions in the Company’s history."

The Company reported GAAP net income of $74.6 million, or $0.94 per diluted share, for the full year 2016, compared to GAAP net income of $6.9 million, or $0.10 per diluted share in 2015. Results in 2015 included a $35.6 million non-cash tax charge to establish a valuation allowance for certain deferred tax assets associated with the SeaSpine separation. The Company reported GAAP net income of $28.2 million, or $0.35 per diluted share, in the fourth quarter of 2016 compared to GAAP net income of $15.0 million, or $0.20 per diluted share, in the fourth quarter of 2015.

Adjusted measures discussed below are computed with the adjustments to GAAP reporting set forth in the attached reconciliation.

Adjusted EBITDA for the full year 2016 was $231.7 million, or 23.4% of revenue, an increase from $195.6 million, or 22.2% of revenue, in the prior year. Adjusted EBITDA for the fourth quarter of 2016 was $66.5 million, or 26.0% of revenue, an increase from $56.7 million, or 23.5% of revenue, in the fourth quarter of the prior year.

Adjusted net income for the full year 2016 was $135.3 million, or $1.76 per diluted share, compared to $108.6 million, or $1.54 per diluted share in 2015. Adjusted net income for the fourth quarter of 2016 was $40.7 million, or $0.52 per diluted share, compared to adjusted net income of $32.8 million, or $0.44 per diluted share, in the fourth quarter of 2015.

For the year ended December 31, 2016, cash flows from operations totaled $159.2 million, excluding a $42.8 million accreted interest payment. Cash invested in capital expenditures was $47.3 million. Adjusted free cash flow conversion for the trailing twelve months ended December 31, 2016 was 82.7% versus 77.0% for the twelve months ended December 31, 2015. Integra generated $49.3 million of cash flows from operations, excluding a $42.8 million accreted interest payment, and invested $21.2 million in capital expenditures in the fourth quarter of 2016.

Outlook for 2017

The Company expects full year 2017 revenues to be between $1.12 billion and $1.14 billion, including the Derma Sciences acquisition, and organic sales growth to be between 7% and 8.5%. The Company expects its GAAP EPS for the full year to be between $0.49 and $0.55, and adjusted EPS to be between $1.88 and $1.94.

"In 2016, faster growth in higher margin products resulted in meeting or exceeding the high-end of our earnings and operating cash flow targets," said Glenn Coleman, Chief Financial Officer. "The Derma Sciences tender offer has been completed and we expect the transaction to close shortly. We are now including Derma Sciences into our 2017 guidance, while the assumptions underlying our base business remain unchanged."

Full-year 2017 revenue and EPS guidance includes the expected financial impact of Derma Sciences. Our GAAP EPS and cash flow guidance also reflect the estimated expense and cash impact of estimates for pre-close costs associated with the Codman Neurosurgery acquisition. The post-closing financial impact of the Codman Neurosurgery acquisition is excluded from guidance and will be updated later in the year.

In the future, the Company may record, or expect to record, certain additional revenues, gains, expenses or charges as described in the Discussion of Adjusted Financial Measures below that it will exclude in the calculation of organic revenue growth, adjusted EBITDA and adjusted EPS for historical periods and in providing adjusted EPS guidance.