On February 22, 2017 United Therapeutics Corporation (NASDAQ: UTHR) reported its financial results for the fourth quarter and year ended December 31, 2016 (Press release, United Therapeutics, FEB 22, 2017, View Source [SID1234517829]).

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“Our annual 2016 financial results reflect continued growth as net revenues reached $1.6 billion and earnings exceeded $700 million,” said Martine Rothblatt, Ph.D., United Therapeutics’ Chairman and Chief Executive Officer. “These financial results strengthen our ability to develop and advance our growing product pipeline, which includes seven phase III programs and multiple second generation Remodulin drug delivery systems.”

Key financial highlights include (in millions, except per share data):

Three Months Ended
December 31,

Year Ended
December 31,

2016

2015

2016

2015

Revenues

$
409.0

$
404.9

$
1,598.8

$
1,465.8

Net income

$
110.3

$
104.6

$
713.7

$
651.6

Non-GAAP earnings(1)

$
187.2

$
189.1

$
748.6

$
631.7

Net income, per diluted share

$
2.43

$
2.10

$
15.25

$
12.72

Non-GAAP earnings, per diluted share(1)

$
4.12

$
3.80

$
16.00

$
12.33

(1)
See definition of non-GAAP earnings, a non-GAAP financial measure, and a reconciliation of net income to non-GAAP earnings below.
Revenues

The table below summarizes the components of total revenues (dollars in millions):

Three Months Ended
December 31,

Percentage

Year Ended
December 31,

Percentage

2016

2015

Change

2016

2015

Change

Net product sales:

Remodulin

$
151.2

$
140.5

7.6%

$
602.3

$
572.8

5.2%

Tyvaso

93.6

119.2

(21.5)%

404.6

470.1

(13.9)%

Adcirca

112.7

91.5

23.2%

372.2

278.8

33.5%

Orenitram

38.3

37.2

3.0%

157.2

118.4

32.8%

Unituxin

13.2

15.8

(16.5)%

62.5

20.5

204.9%

Other

—

0.7

(100.0)%

—

5.2

(100.0)%

Total revenues

$
409.0

$
404.9

1.0%

$
1,598.8

$
1,465.8

9.1%

Revenues for the quarter ended December 31, 2016 increased by $4.1 million as compared to the same period in 2015. The growth in revenues primarily resulted from: (1) a $21.2 million increase in Adcirca net product sales; (2) a $10.7 million increase in Remodulin net product sales; and (3) a $1.1 million increase in Orenitram net product sales, partially offset by: (1) a $25.6 million decrease in Tyvaso net product sales; and (2) a $2.6 million decrease in Unituxin net product sales.

Revenues for the year ended December 31, 2016 increased by $133.0 million as compared to the same period in 2015. The growth in revenues primarily resulted from the following: (1) a $93.4 million increase in Adcirca net product sales; (2) a $42.0 million increase in Unituxin net product sales; (3) a $38.8 million increase in Orenitram net product sales; and (4) a $29.5 million increase in Remodulin net product sales, partially offset by a $65.5 million decrease in Tyvaso net product sales.

Expenses

Cost of product sales. The table below summarizes cost of product sales by major category (dollars in millions):

Three Months Ended
December 31,

Percentage

Year Ended
December 31,

Percentage

2016

2015

Change

2016

2015

Change

Category:

Cost of product sales

$
19.5

$
19.3

1.0%

$
72.1

$
60.2

19.8%

Share-based compensation expense(1)

8.9

6.0

48.3%

0.6

8.8

(93.2)%

Total cost of product sales

$
28.4

$
25.3

12.3%

$
72.7

$
69.0

5.4%

(1)
Refer to Share-based compensation expense below for discussion.
Cost of product sales. The increase in cost of product sales of $11.9 million for the year ended December 31, 2016, as compared to the same period in 2015, was primarily attributable to increased sales.

Research and development expense. The table below summarizes research and development expense by major category (dollars in millions):

Three Months Ended
December 31,

Percentage

Year Ended
December 31,

Percentage

2016

2015

Change

2016

2015

Change

Project and non-project:

Research and development expense

$
46.6

$
45.6

2.2%

$
157.6

$
157.4

0.1%

Share-based compensation expense (benefit)(1)

20.3

30.3

(33.0)%

(10.0)

87.7

(111.4)%

Total research and development expense

$
66.9

$
75.9

(11.9)%

$
147.6

$
245.1

(39.8)%

(1)
Refer to Share-based compensation expense below for discussion.
Selling, general and administrative expense. The table below summarizes selling, general and administrative expense by major category (dollars in millions):

Three Months Ended
December 31,

Percentage

Year Ended
December 31,

Percentage

2016

2015

Change

2016

2015

Change

Category:

General and administrative

$
45.9

$
42.9

7.0%

$
210.7

$
174.6

20.7%

Sales and marketing

17.5

24.7

(29.1)%

84.6

94.3

(10.3)%

Share-based compensation expense(1)

76.1

81.1

(6.2)%

21.5

183.8

(88.3)%

Total selling, general and administrative expense

$
139.5

$
148.7

(6.2)%

$
316.8

$
452.7

(30.0)%

(1)
Refer to Share-based compensation expense below for discussion.
General and administrative. The increase in general and administrative expenses of $36.1 million for the year ended December 31, 2016, as compared to the same period in 2015, primarily resulted from: (1) a $20.0 million increase in grants to a non-affiliated, non-profit organization that provides financial assistance to patients with PAH; and (2) $9.3 million in expenses in connection with the disposition and write-down of various properties.

Share-based compensation expense. The table below summarizes share-based compensation expense (benefit) by major category (dollars in millions):

Three Months Ended
December 31,

Percentage

Year Ended
December 31,

Percentage

2016

2015

Change

2016

2015

Change

Category:

Share tracking awards plan

$
101.3

$
114.6

(11.6)%

$
(15.2)

$
274.2

(105.5)%

Stock options

3.1

2.4

29.2%

24.8

4.9

406.1%

Other(1)

0.9

0.4

125.0%

2.5

1.2

108.3%

Total share-based compensation expense

$
105.3

$
117.4

(10.3)%

$
12.1

$
280.3

(95.7)%

(1)
Includes expense related to restricted stock units for the year ended December 31, 2016 and employee stock purchase plan for the years ended December 31, 2016 and 2015.
Share-based compensation. The decrease of $12.1 million and $268.2 million, respectively, during the quarter and year ended December 31, 2016, as compared to the same periods in 2015, was primarily due to changes in our stock price and number of share tracking awards and stock options outstanding during the periods.

Gain on Sale of Intangible Asset

In September 2015, we sold for $350.0 million in cash the Rare Pediatric Priority Review Voucher (PPRV) that we received from the U.S. Food and Drug Administration in connection with the approval of Unituxin. The proceeds from the sale of the PPRV were recognized as a gain on the sale of an intangible asset, as the PPRV did not have a carrying value on our consolidated balance sheet at the time of sale.

Income Taxes

The provision for income taxes was $346.5 million for the year ended December 31, 2016 compared to $392.8 million for the same period in 2015. The decrease in the provision for income taxes corresponded primarily to a decrease in non-deductible compensation related to our share tracking awards plan, which in turn resulted from the decrease in our stock price. For the years ended December 31, 2016 and 2015, the effective tax rates were approximately 33 percent and 38 percent, respectively.

Non-GAAP Earnings

Non-GAAP earnings is defined as net income, adjusted for: (1) interest expense; (2) license fees; (3) depreciation and amortization; (4) impairment charges; (5) share-based compensation expense (benefit), net (including expenses relating to stock options, share tracking awards, restricted stock units and our employee stock purchase plan); and (6) tax impact on non-GAAP earnings adjustments. For 2015, we also adjusted non-GAAP earnings to eliminate the gain resulting from the sale of the PPRV in September 2015.

A reconciliation of net income to non-GAAP earnings is presented below (in millions, except per share data):

Three Months Ended
December 31,

Year Ended December 31,

2016

2015

2016

2015

Net income, as reported

$
110.3

$
104.6

$
713.7

$
651.6

Adjust for the following charges:

Interest expense

2.2

0.5

3.9

4.7

Depreciation and amortization

7.8

8.0

31.6

32.9

Impairment charges

4.3

—

4.3

—

Share-based compensation expense

105.3

117.4

12.1

280.3

Gain on sale of intangible asset

—

—

—

(350.0)

Tax (benefit) expense(1)

(42.7)

(41.4)

(17.0)

12.2

Non-GAAP earnings

$
187.2

$
189.1

$
748.6

$
631.7

Non-GAAP earnings per share:

Basic

$
4.44

$
4.14

$
17.09

$
13.73

Diluted

$
4.12

$
3.80

$
16.00

$
12.33

Weighted average number of common shares outstanding:

Basic

42.2

45.7

43.8

46.0

Diluted

45.4

49.7

46.8

51.2

(1)
Non-GAAP earnings adjustments are presented net of the impact of our actual effective income tax rates of approximately 36
percent and 33 percent for the quarters ended December 31, 2016 and 2015, respectively and 33 percent and 38 percent for the
years ended December 31, 2016 and 2015, respectively. We changed the presentation of our non-GAAP earnings in the first
quarter of 2015 for all periods presented to reflect the impact of our estimated effective income tax rates on each component.
The sum of non-GAAP earnings in each of the quarters in 2016 and 2015, respectively, will not equal non-GAAP earnings for
the full year if there are differences between the estimated effective income tax rate applied to each quarter and the actual
effective tax rate for the full year.

On February 22, 2017 bluebird bio, Inc. (Nasdaq: BLUE), a clinical-stage company committed to developing potentially transformative gene therapies for severe genetic diseases and T cell-based immunotherapies for cancer, reported business highlights and financial results for the fourth quarter and full year ended December 31, 2016 (Press release, bluebird bio, FEB 22, 2017, View Source [SID1234517796]).

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"We ended 2016 with momentum to drive progress in 2017 and cash to fund the business well into 2019," said Nick Leschly, chief bluebird. "2017 is a critical year for bluebird, with data readouts across all four of our clinical programs, including proof-of-concept data on manufacturing improvements for LentiGlobin; proof-of-concept data for the changes to the HGB-206 study protocol; additional data from our anti-BCMA CAR T program, bb2121; and full data from the first 17 patients in the Starbeam study of Lenti-D. Execution will also be a key theme for 2017, with a focus on laying the groundwork for future MAA and BLA filings and engagement with payors. All of these activities are building to the 2022 vision we laid out in January: to have multiple products on the market with dramatic patient impact and a deep pipeline driven by a sustainable innovation engine."

Recent Highlights

FIRST CLINICAL DATA FOR ANTI-BCMA CAR T PROGRAM REPORTED – In November, bluebird bio announced interim phase 1 dose escalation data for its anti-BCMA CAR T product candidate in patients with relapsed/refractory multiple myeloma. 100% of patients in the second and third dose cohorts (n=6) achieved an objective response; two patients were MRD-negative. The overall response rate (ORR) was 78%. Two patients in the study achieved stringent complete responses, with 6 and 4 months follow-up. Among all dosed patients (n=11), no dose-limiting toxicities were observed as of the November data cut-off date, and no Grade 3 or Grade 4 cytokine release syndrome or Grade 3 or Grade 4 neurotoxicity were observed as of the data cut-off.
LENTIGLOBIN DATA AT ASH (Free ASH Whitepaper) – At the American Society of Hematology (ASH) (Free ASH Whitepaper) Annual Meeting, bluebird provided updates across its ongoing studies of LentiGlobin in transfusion-dependent β-thalassemia (TDT) and severe sickle cell disease (SCD). Updated interim clinical data from the Northstar (HGB-204) study of LentiGlobin drug product in TDT confirmed that all patients with non-β0/β0 genotypes and ≥12 months of follow-up have stopped regular transfusions; patients with β0/β0 genotypes and ≥12 months of follow-up had a median reduction in transfusion volume of 63% as of the September 16, 2016 data cut-off. In the HGB-205 study, the first patient with SCD treated with gene therapy remains free of clinical symptoms 21 months after receiving LentiGlobin drug product, and ongoing transfusion independence and sustained production of HbAT87Q were reported in patients with TDT as of the September 9, 2016 data cut-off. Updated interim clinical data from seven subjects in the HGB-206 study of LentiGlobin drug product in SCD underscore the need for recently implemented protocol amendments seeking to improve HbAT87Q production in this population.
STUDIES OF LENTIGLOBIN DRUG PRODUCT MANUFACTURED WITH NEW PROCESS UNDERWAY – In December, the first patient was treated with LentiGlobin drug product in the Northstar-2 (HGB-207) phase 3 clinical study of patients with TDT and non-β0/β0 genotypes. A LentiGlobin drug product vector copy number (DP VCN) of 2.9 copies/diploid genome was observed, with 77% of cells lentiviral vector sequence positive (LVV+). In February of 2017, the first patient was treated under the amended study protocol for the HGB-206 phase 1 clinical study of patients with SCD. A LentiGlobin DP VCN of 3.3 copies/diploid genome was observed, with 83% of cells LVV+ for this patient.
MANUFACTURING AGREEMENT WITH APCETH – In December, bluebird and apceth Biopharma announced that they have entered into a strategic manufacturing agreement providing for the future European commercial production of bluebird bio’s Lenti-D product candidate for cerebral adrenoleukodystropy (CALD) and its LentiGlobin product candidate for TDT. This agreement follows a successful multi-year clinical manufacturing relationship and provides bluebird bio with European commercial manufacturing capabilities, including dedicated production suites within apceth Biopharma’s state-of-the-art GMP facility.
KEY MANAGEMENT APPOINTMENTS – Susanna High was named chief operating officer and Andrew Obenshain was named senior vice president and head of Europe.
FULLY ENROLLED HGB-205 STUDY – In February of 2017, the final patient with SCD in the HGB-205 single-center study in TDT and SCD was infused with LentiGlobin drug product.
REOPENED STARBEAM STUDY – In December, bluebird bio announced plans to expand enrollment by up to eight additional patients in the ongoing Starbeam Phase 2/3 clinical study of Lenti-D drug product in patients less than 18 years of age with cerebral adrenoleukodystrophy (CALD). The expansion of the study is intended to enable the first manufacture of Lenti-D in Europe and subsequent treatment of subjects in Europe, and to bolster the overall clinical data package for potential future regulatory filings in the United States and Europe.
STRENGTHENED BALANCE SHEET – In December, bluebird raised $234.7 million in net proceeds in an equity financing. The company’s cash, cash equivalents and marketable securities are sufficient to fund operations into the second half of 2019 based on the company’s current business plan. Proceeds from the equity financing will fund the advancement of bb2121 and other anti-BCMA product candidates for the treatment of relapsed/refractory multiple myeloma; the initiation of HGB-212, a phase 3 clinical study of LentiGlobin in patients with TDT and the β0/β0 genotype; the expansion of manufacturing capabilities to support product development efforts and in anticipation of a potential commercial launch; and the growth of commercial infrastructure to support conditional commercial launch of LentiGlobin in Europe pending marketing authorization in Europe.
Upcoming Anticipated Milestones:

Presentation of updated bb2121 clinical data from the CRB-401 study at the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) Annual Meeting
Presentation of early LentiGlobin clinical data from the HGB-207 study at the European Hematology Association (EHA) (Free EHA Whitepaper) Annual Meeting
Initiation of a phase 1 clinical study of bb21217 anti-BCMA CAR T product candidate
Initiation of HGB-212, phase 3 clinical study of LentiGlobin in patients with TDT and the β0/β0 genotype in the second half of 2017
Presentation of full data from the initial 17 patients treated in the Starbeam clinical study of Lenti-D in CALD by year end 2017
Presentation of early LentiGlobin clinical data from the HGB-206 study conducted under the amended study protocol at ASH (Free ASH Whitepaper)
Fourth Quarter and Full Year 2016 Financial Results and Financial Guidance

Cash Position: Cash, cash equivalents and marketable securities as of December 31, 2016 were $884.8 million, compared to $865.8 million as of December 31, 2015, an increase of $19.0 million, which was primarily driven by the December 2016 equity financing partially offset by cash used to fund operations.
Revenues: Collaboration revenue was $1.6 million for the fourth quarter of 2016 and $6.2 million for the year ended December 31, 2016, compared to $1.5 million and $14.1 million in the comparable periods in 2015. The decrease for the full year is a result of a change in revenue recognition associated with an amendment to our collaboration agreement with Celgene in the second quarter of 2015.
R&D Expenses: Research and development expenses were $57.1 million for the fourth quarter of 2016 and $204.8 million for the year ended December 31, 2016, compared to $35.7 million and $134.0 million in the comparable periods in 2015. The increase in research and development expenses was primarily attributable to increased manufacturing costs for our ongoing clinical and pre-clinical studies, increased employee compensation expense and increased information technology and facilities costs to support our overall growth.
G&A Expenses: General and administrative expenses were $16.2 million for the fourth quarter of 2016 and $65.1 million for the year ended December 31, 2016, compared to $14.4 million and $46.2 million in the comparable periods in 2015. The increase in general and administrative expenses was primarily attributable to increased employee compensation expense and consulting costs to support our overall growth and pre-commercial efforts.
Net Loss: Net loss was $71.4 million for the fourth quarter of 2016 and $263.5 million for the year ended December 31, 2016, compared to $47.3 million and $166.8 million in the comparable periods in 2015.
Financial guidance: bluebird bio expects that its cash, cash equivalents and marketable securities of $884.8 million as of December 31, 2016 will be sufficient to fund its current operations into the second half of 2019.

On February 22, 2017 Cellectar Biosciences, Inc. (Nasdaq: CLRB), an oncology-focused clinical stage biotechnology company, reported the successful completion of Cohort 3 and initiation of Cohort 4 in the company’s Phase I clinical study of CLR 131 in patients with relapsed and refractory multiple myeloma (Press release, Cellectar Biosciences, FEB 22, 2017, View Source [SID1234517792]).

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The fourth cohort of the Phase 1 study will consist of at least three patients with relapsed or refractory multiple myeloma that have been treated previously with at least one proteasome inhibitor and one immunomodulatory agent. Per protocol, Cohort 4 patients will receive 31.25 mCi/m2 of CLR 131 as a single dose infusion, a 25 percent increase in the 25 mCi/m2 dose from the third cohort and a 150 percent increase from Cohort 1, all of which were demonstrated to be safe and well tolerated. It is important to note that a key objective of this Phase I clinical trial includes the establishment of the maximum tolerated single dose of CLR 131 as defined by the occurrence of dose limiting toxicities.

Initiation of the fourth cohort occurs well ahead of the company’s guidance, which called for initiation to occur at the end of the second quarter of 2017. Further, the company continues to follow all 12 evaluable patients in each of the three previously completed cohorts, which include eight patients from Cohorts 1 and 2 who continue to extend median overall survival. Cellectar expects to provide a detailed data update on these patients by the end of the second quarter of 2017.

"Our enthusiasm for CLR 131’s potential in multiple myeloma patients continues to grow given the positive safety, efficacy markers, progression-free survival and median overall survival results that we have observed to date in the Phase I trial, particularly given such a heavily pretreated patient population," said Jim Caruso, president and CEO of Cellectar Biosciences. "We will explore the potential enhanced clinical benefits of a two-dose regimen in our imminent Phase II study, and look forward to updating investors on results of the fourth cohort when available."

The primary study objective of this multi-center, open label Phase I dose escalation study is to characterize the safety and tolerability of CLR 131 administered as a single dose, 30-minute infusion in patients with relapsed or refractory multiple myeloma. Secondary study objectives include establishment of a recommended single dose for Phase II, both with and without dexamethasone, as well as an assessment of therapeutic activity.

In addition, the company recently brought forward guidance for the initiation of its NCI-supported Phase II trial in multiple myeloma and other selected hematologic cancers to the first quarter of 2017. The company expects that all patients will receive a single dose of CLR 131 at 25 mCi/m2 infused over approximately 30 minutes, with the option of a second 25 mCi/m2 dose 75-180 days later, based upon physician assessment. The Phase II study will be conducted in up to 15 centers across the United States and Cellectar anticipates initial efficacy data as early as the second half of 2017.

About CLR 131
CLR 131 is an investigational compound under development for a range of hematologic malignancies. It is currently being evaluated in a Phase I clinical trial in patients with relapsed or refractory multiple myeloma. The company plans to initiate a Phase II clinical study to assess efficacy in a range of B-cell malignancies in the first quarter of 2017. Based upon pre-clinical and interim Phase I study data, treatment with CLR 131 provides a novel approach to treating hematological diseases and may provide patients with therapeutic benefits, including overall response rate (ORR), an improvement in progression-free survival (PFS) and overall quality of life. CLR 131 utilizes the company’s patented PDC tumor targeting delivery platform to deliver a cytotoxic radioisotope, iodine-131 directly to tumor cells. The FDA has granted Cellectar an orphan drug designation for CLR 131 in the treatment of multiple myeloma.

About Phospholipid Drug Conjugates (PDCs)
Cellectar’s product candidates are built upon its patented cancer cell-targeting delivery and retention platform of optimized phospholipid ether-drug conjugates (PDCs). The company deliberately designed its phospholipid ether (PLE) carrier platform to be coupled with a variety of payloads to facilitate both therapeutic and diagnostic applications. The basis for selective tumor targeting of our PDC compounds lies in the differences between the plasma membranes of cancer cells compared to those of normal cells. Cancer cell membranes are highly enriched in lipid rafts, which are glycolipoprotein microdomains of the plasma membrane of cells that contain high concentrations of cholesterol and sphingolipids, and serve to organize cell surface and intracellular signaling molecules. PDCs have been tested in more than 80 different xenograft models of cancer.