On April 28, 2016 United Therapeutics Corporation (NASDAQ: UTHR) reported its financial results for the first quarter ended March 31, 2016 (Press release, United Therapeutics, APR 28, 2016, View Source [SID:1234511548]).

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"Our total revenues increased as compared to the same period in the prior year, which shows that our medicines are continuing to reach an increasing number of patients suffering from pulmonary arterial hypertension (PAH) and other life threatening diseases," said Martine Rothblatt, Ph.D., United Therapeutics’ Chairman and Co-Chief Executive Officer. "Within our PAH product franchise, Orenitram continues to be prescribed to a growing number of patients and this momentum underscores our belief in the increasing clinical support for the use of our orally-administered prostacyclin analogues."

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

Three Months Ended
March 31,

Selected
Percentage

2016

2015

Changes

Revenues

$
369.0

$
327.5

12.7
%
Net income (loss)

$
235.5

$
(16.6)

NM
(2)
Non-GAAP earnings(1)

$
147.3

$
135.0

9.1
%
Net income (loss), per diluted share

$
4.84

$
(0.36)

NM
(2)
Non-GAAP earnings, per diluted share(1)

$
3.02

$
2.55

18.4
%

(1) See definition of non-GAAP earnings, a non-GAAP financial measure, and a reconciliation of net income to non-GAAP earnings
below.
(2) Calculation is not meaningful.

Financial Results for the Three Months Ended March 31, 2016
Revenues
The table below summarizes the components of total revenues (dollars in millions):

Three Months Ended
March 31,

Percentage

2016

2015

Change

Net product sales:

Remodulin

$
139.8

$
146.3

(4.4)
%
Tyvaso


102.2

113.4

(9.9)
%
Adcirca


72.6

45.3

60.3
%
Orenitram


40.2

20.9

92.3
%
Unituxin


14.2

—

N/A

Other

—

1.6

(100.0)
%
Total revenues


$
369.0

$
327.5

12.7
%


Revenues for the three months ended March 31, 2016 increased by $41.5 million compared to the same period in 2015. The growth in revenues primarily resulted from: (1) a $27.3 million increase in Adcirca net product sales; (2) a $19.3 million increase in Orenitram net product sales; and (3) a $14.2 million increase in Unituxin net product sales. These revenue increases were partially offset by: (1) an $11.2 million decrease in Tyvaso net product sales; and (2) a $6.5 million decrease in Remodulin net product sales.

Expenses

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

Three Months Ended
March 31,

Percentage

2016

2015

Change

Category:

Cost of product sales

$
12.6

$
11.2

12.5
%
Share-based compensation (benefit) expense


(11.9)

9.6

(224.0)
%
Total cost of product sales

$
0.7

$
20.8

(96.6)
%
Share-based compensation. The decrease in share-based compensation of $21.5 million for the three months ended March 31, 2016, as compared to the same period in 2015, corresponded to a 29 percent decrease in the price of our common stock during the three months ended March 31, 2016, compared to a 33 percent increase in the price of our common stock during the same period in 2015.

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

Three Months Ended
March 31,

Percentage

2016

2015

Change

Category:

Research and development expense

$
36.8

$
35.2

4.5
%
Share-based compensation (benefit) expense

(37.2)

75.0

(149.6)
%
Total research and development expense

$
(0.4)

$
110.2

(100.4)
%
Share-based compensation. The decrease in share-based compensation of $112.2 million for the three months ended March 31, 2016, as compared to the same period in 2015, corresponded to a 29 percent decrease in the price of our common stock during the three months ended March 31, 2016, compared to a 33 percent increase in the price of our common stock during the same period in 2015.

Selling, general and administrative expense. The table below summarizes selling, general and administrative expense by major categories (dollars in millions):

Three Months Ended
March 31,

Percentage

2016

2015

Change

Category:

General and administrative

$
78.2

$
37.7

107.4
%
Sales and marketing

22.3

23.7

(5.9)
%
Share-based compensation (benefit) expense

(95.5)

149.9

(163.7)
%
Total selling, general and administrative expense


$
5.0

$
211.3

(97.6)
%
General and administrative. The increase in general and administrative expense of $40.5 million for the three months ended March 31, 2016, as compared to the same period in 2015, was primarily attributable to $37.0 million of charitable donations to a non-affiliated, non-profit organization that provides financial assistance to patients with PAH. These donations were made during the first quarter of 2016 and represent the full extent of our funding to this non-affiliated, non-profit organization for 2016. Our donations to the same non-affiliated, non-profit organization in 2015 totaled $17.0 million, all of which were paid during the second quarter of that year. We expense these types of grant payments in the period they are made.

Share-based compensation. The decrease in share-based compensation of $245.4 million for the three months ended March 31, 2016, as compared to the same period in 2015, corresponded to a 29 percent decrease in the price of our common stock during the three months ended March 31, 2016, compared to a 33 percent increase in the price of our common stock during the same period in 2015.

Income Tax Expense

The provision for income tax expense is based on an estimated annual effective tax rate that is subject to adjustment in subsequent quarterly periods if components used to estimate the annual effective tax rate are updated or revised. The estimated annual effective tax rates as of March 31, 2016 and March 31, 2015 were approximately 35 percent and approximately 38 percent, respectively. Our 2016 estimated annual effective tax rate decreased compared to the 2015 estimated annual effective tax rate primarily due to a decrease in non-deductible share-based compensation expense as compared to the prior year, which was driven largely by a decrease in our stock price.

Share Repurchases

In the first quarter of 2016, we repurchased approximately 1.0 million shares of our common stock at a total cost of $123.2 million. These purchases were made pursuant to our $500 million stock repurchase program, which is effective during calendar year 2016.

Non-GAAP Earnings

Non-GAAP earnings is defined as net income, adjusted for the following charges, which are presented net of our annual effective income tax rate, as applicable: (1) interest expense; (2) license fees; (3) depreciation and amortization; (4) impairment charges; and (5) share-based compensation expense (stock option, share tracking award and employee stock purchase plan).

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

Three Months Ended
March 31,

2016

2015

Net income (loss), as reported

$
235.5

$
(16.6)

Adjust for the following charges(1):

Interest expense

0.4

1.3

Depreciation and amortization

5.0

5.1

Share-based compensation (benefit) expense

(93.6)

145.2

Non-GAAP earnings

$
147.3

$
135.0

Non-GAAP earnings per share:

Basic


$
3.24

$
2.89

Diluted


$
3.02

$
2.55

Weighted average number of common shares outstanding:

Basic

45.4

46.7

Diluted

48.7

53.0

(1) Non-GAAP earnings adjustments are presented net of the impact of our estimated effective income tax rates of approximately 35
percent and approximately 38 percent for the three months ended March 31, 2016 and 2015, respectively.

On April 28, 2016 Celgene Corporation (NASDAQ:CELG) reported net product sales of $2,495 million for the first quarter of 2016 (Press release, Celgene, APR 28, 2016, View Source [SID:1234511547]).

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Net product sales grew 21 percent from the same period in 2015, including a 2 percent negative impact from currency exchange effects. First quarter total revenue increased 21 percent to $2,512 million compared to $2,081 million in the first quarter of 2015. Adjusted net income for the first quarter of 2016 increased 19 percent to $1,064 million compared to $891 million in the first quarter of 2015. For the same period, adjusted diluted earnings per share (EPS) increased 23 percent to $1.32 from $1.07.

Based on U.S. GAAP (Generally Accepted Accounting Principles), Celgene reported first quarter of 2016 net income of $801 million or $0.99 per diluted share. For the first quarter of 2015, net income was $719 million or $0.86 per diluted share.

"Our global teams generated excellent first quarter results and our strong operating momentum makes us confident that we will achieve or exceed our ambitious 2016 goals," said Mark Alles, Chief Executive Officer of Celgene. "We are driving long-term value creation through the continued advancement of our innovative pipeline with significant clinical data expected over the next two years."

First Quarter 2016 Financial Highlights

Unless otherwise stated, all comparisons are for the first quarter of 2016 compared to the first quarter of 2015. The adjusted operating expense categories presented below exclude share-based employee compensation expense and upfront collaboration expense. Please see the attached Reconciliation of GAAP to Adjusted Net Income for further information.

Net Product Sales Performance

REVLIMID sales for the first quarter increased 17 percent to $1,574 million. Growth was driven by increased market share in newly diagnosed multiple myeloma and increases in duration. U.S. sales of $997 million and international sales of $577 million increased 23 percent and 8 percent, respectively.
POMALYST/IMNOVID sales were $274 million, a 38 percent increase year-over-year. U.S. sales of $171 million and international sales of $103 million increased 33 percent and 47 percent, respectively. POMALYST/IMNOVID sales were driven by increases in market share and duration trends.
ABRAXANE sales for the first quarter were $225 million, a 1 percent increase year-over-year. U.S. sales of $144 million and international sales of $81 million decreased 10 percent and increased 26 percent, respectively. The decrease in sales in the U.S. reflects quarterly customer buying patterns and increased competition in breast cancer and lung cancer from new market entrants.
OTEZLA sales in the first quarter were $196 million, a 224 percent increase year-over-year. Growth was driven by market share gains in the U.S. and Europe. U.S. sales were $175 million and international sales were $21 million.
In the first quarter, all other product sales, which include THALOMID, ISTODAX, VIDAZA and an authorized generic version of VIDAZA drug product in the U.S., were $226 million compared to $230 million in the first quarter of 2015.
Research and Development (R&D)

Adjusted R&D expenses were $591 million for the first quarter of 2016 compared to $431 million for the first quarter of 2015. The difference was primarily due to an increase in clinical trial activity across the portfolio and includes $65 million of milestones achieved by collaboration partners in the first quarter of 2016 while there were none in the first quarter of 2015. On a GAAP basis, R&D expenses were $733 million for the first quarter of 2016 and $506 million for the same period in 2015, also reflecting an increase in upfront collaboration expenses.

Selling, General, and Administrative (SG&A)

Adjusted SG&A expenses were $468 million for the first quarter of 2016 compared to $463 million for the first quarter of 2015. On a GAAP basis, SG&A expenses were $543 million for the first quarter of 2016 compared to $529 million for the same period in 2015.

Cash, Cash Equivalents, and Marketable Securities

Operations generated cash flow of $975 million in the first quarter of 2016, an increase of 14 percent year-over-year. In the first quarter, Celgene purchased approximately $1,410 million of its shares. As of March 31, 2016, Celgene had $2,481 million remaining under the existing share repurchase program. Celgene ended the quarter with $5,707 million in cash and marketable securities.

2016 Guidance Updated


Previous 2016
Guidance

Updated 2016
Guidance
Net Product Sales:
Total $10.5B-$11.0B $10.75B-$11.0B
REVLIMID $6.6B-$6.7B Approximately $6.7B
POMALYST/IMNOVID
Greater than $1.0B
Greater than $1.0B
ABRAXANE Greater than $1.0B $950M-$1.0B
OTEZLA Greater than $1.0B Greater than $1.0B
Adjusted operating margin Approximately 53.5% Approximately 53.5%
GAAP operating margin Approximately 42% Approximately 42%
Adjusted diluted EPS $5.50 to $5.70 $5.60 to $5.70
GAAP diluted EPS $4.26 to $4.64 $4.26 to $4.56
Weighted average diluted shares 825M 811M

2017 Targets Updated

Updated targets reflect current exchange rates, inclusive of existing hedging contracts
Total net product sales are expected to be in the range of $12.7 billion to $13.0 billion versus the previous range of $13.0 billion to $14.0 billion
REVLIMID net sales are expected to be approximately $8.0 billion versus the previous target of $7.0 billion
ABRAXANE net sales are expected to be approximately $1.0 billion versus the previous range of $1.5 billion to $2.0 billion
Adjusted diluted EPS is expected to be in the range of $6.75 to $7.00 versus the previous target of $7.25
Weighted average diluted shares expected to be 825 million versus the previous target of 830 million
2020 Net Product Sales and Adjusted Diluted EPS Targets On-Track

Updated targets reflect current exchange rates
Total net product sales are expected to be more than $21.0 billion
Adjusted diluted EPS expected to be more than $13.00
Product and Pipeline Updates

Hematology/Oncology

In collaboration with our partner Agios Pharmaceuticals Inc., enrollment began in a phase III trial with AG-221 in IDH-2 mutated relapsed and/or refractory acute myeloid leukemia (AML). In collaboration with our partner Acceleron Pharma Inc., enrollment began in a phase III trial evaluating luspatercept in patients with anemia due to low- or intermediate-risk myelodysplastic syndromes and a phase III trial in regularly transfused beta-thalassemia patients is initiating.

During the quarter, several early- and mid-stage clinical trials began enrollment. These include:

The phase I/II ENHANCETM trial evaluating CC-122 in combination with ibrutinib and obinutuzumab in patients with relapsed and/or refractory chronic lymphocytic leukemia (CLL)
A phase II trial evaluating luspatercept in patients with anemia due to low- or intermediate-risk myelodysplastic syndromes who are ring sideroblasts negative or are eligible but have not yet received an erythropoiesis-stimulating agent
A safety trial with AG-120 or AG-221 in combination with standard chemotherapy in patients with newly diagnosed AML with an IDH-1 and/or IDH-2 mutation
A phase Ib trial from the FUSIONTM program combining durvalumab and POMALYST/IMNOVID in patients with relapsed and refractory multiple myeloma
The phase III apact trial evaluating ABRAXANE in combination with gemcitabine as adjuvant therapy in patients with surgically resected pancreatic cancer completed enrollment. Data from this trial are expected in 2017.

At the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) annual meeting in June 2016, expected presentations include:

A meta-analysis of overall survival in patients treated with REVLIMID maintenance after high-dose melphalan and autologous stem cell transplant
Data on combinations with REVLIMID or POMALYST/IMNOVID with novel agents in relapsed and/or refractory multiple myeloma
Data from the ETNA (Evaluating Treatment with Neoadjuvant Abraxane) phase III trial comparing neoadjuvant ABRAXANE to paclitaxel in patients with HER2-negative high-risk breast cancer
Inflammation & Immunology (I&I)

In March, a New Drug Application in Japan was submitted for OTEZLA for the treatment of psoriasis and psoriatic arthritis. A decision from the Japan Pharmaceuticals and Medical Devices Agency is now expected by year-end.

At the American Academy of Dermatology in March, an analysis of pooled 182-week (3.5-year) safety data from the ESTEEM 1 and 2 trials of patients with moderate to severe plaque psoriasis who are candidates for phototherapy or systemic therapy and pooled 3-year safety data from the PALACE 1-3 trials of patients with active psoriatic arthritis were presented.

The phase IIIb PSA-006 trial evaluating OTEZLA in psoriatic arthritis patients with early disease met the primary endpoint of ACR 20 response rate. The data will be presented at a future medical congress.

The registration-enabling endoscopy trial (CD-001) with GED-0301 in patients with active Crohn’s disease completed enrollment. Data from the trial are expected to be presented at a major medical meeting in 2017.

Data from the phase II TOUCHSTONE trial with ozanimod showing the histologic improvement in patients with ulcerative colitis were presented at the Congress of the European Crohn’s and Colitis Organization (ECCO) in March 2016. Data from the enrolling phase III TRUE NORTH trial of ozanimod in patients with ulcerative colitis are expected in 2018.

Data at 72-weeks from the phase II portion of the RADIANCE trial evaluating ozanimod in patients with multiple sclerosis were presented at the ACTRIMS (Americas Committee for Treatment & Research in Multiple Sclerosis) meeting in February 2016.

In February, data from the phase II portion of the RADIANCE trial evaluating ozanimod in patients with relapsing multiple sclerosis were published in Lancet Neurology. The phase III trials with ozanimod in multiple sclerosis (SUNBEAM and RADIANCE) have completed enrollment and are ongoing with data analysis expected in 2017.

The phase II trial evaluating RPC4046 in eosinophilic esophagitis met the primary endpoint of reduction of mean eosinophil count. Celgene is evaluating the data to determine next steps with the program. AbbVie, Inc. has a co-development option on RPC4046. The study results will be presented at a future medical meeting.

Business Update

In February, Celgene exercised its option to exclusively license bb2121, bluebird bio’s therapy targeting B cell maturation antigen (BCMA). Celgene will be responsible for worldwide development and commercialization of bb2121 after the phase I trial is completed.

At the end of February, Celgene closed on the sale to Human Longevity, Inc. of Celgene Cellular Therapeutics’ (CCT) biobanking business known as LifebankUSA and CCT’s biomaterials portfolio of assets including Biovance.

In April, Celgene exercised its option to develop and commercialize the Juno Therapeutics, Inc. CD19 program outside North America and China. Both companies will now share global development expenses for products in the CD19 program. Celgene has commercial rights outside of North America and China and will pay Juno a royalty at a percentage in the mid-teens on any future net sales of therapeutic products developed through the CD19 program in Celgene’s territories.

First Quarter 2016 Conference Call and Webcast Information

Celgene will host a conference call to discuss the first quarter of 2016 operating and financial performance on Thursday, April 28, 2016, at 9 a.m. ET. The conference call will be available by webcast at www.celgene.com. An audio replay of the call will be available from noon April 28, 2016, until midnight ET May 5, 2016. To access the replay in the U.S., dial (855) 859-2056; outside the U.S. dial (404) 537-3406. The participant passcode is 79676290.

About REVLIMID

In the U.S., REVLIMID (lenalidomide) in combination with dexamethasone is indicated for the treatment of patients with multiple myeloma. REVLIMID is indicated for patients with transfusion-dependent anemia due to Low- or Intermediate-1-risk myelodysplastic syndromes (MDS) associated with a deletion 5q cytogenetic abnormality with or without additional cytogenetic abnormalities. REVLIMID is approved in the U.S. for the treatment of patients with mantle cell lymphoma (MCL) whose disease has relapsed or progressed after two prior therapies, one of which included bortezomib. Limitations of Use: REVLIMID is not indicated and is not recommended for the treatment of chronic lymphocytic leukemia (CLL) outside of controlled clinical trials.

About ABRAXANE

In the U.S., ABRAXANE for Injectable Suspension (paclitaxel protein-bound particles for injectable suspension) (albumin-bound) is indicated for the treatment of metastatic breast cancer after failure of combination chemotherapy for metastatic disease or relapse within six months of adjuvant chemotherapy. Prior therapy should have included an anthracycline unless clinically contraindicated. ABRAXANE is indicated for the first-line treatment of locally advanced or metastatic non-small cell lung cancer, in combination with carboplatin, in patients who are not candidates for curative surgery or radiation therapy. ABRAXANE is also indicated for the first-line treatment of metastatic adenocarcinoma of the pancreas in combination with gemcitabine.

About POMALYST

In the U.S., POMALYST (pomalidomide) is indicated for patients with multiple myeloma who have received at least two prior therapies including lenalidomide and a proteasome inhibitor and have demonstrated disease progression on or within 60 days of completion of the last therapy.

About OTEZLA

In the U.S., OTEZLA (apremilast) is indicated for the treatment of adult patients with active psoriatic arthritis. OTEZLA is indicated in the U.S. for the treatment of patients with moderate to severe plaque psoriasis who are candidates for phototherapy or systemic therapy.

About VIDAZA

In the U.S., VIDAZA (azacitidine for injection) is indicated for treatment of patients with the following French-American-British (FAB) myelodysplastic syndrome subtypes: refractory anemia (RA) or refractory anemia with ringed sideroblasts (RARS) (if accompanied by neutropenia or thrombocytopenia or requiring transfusions), refractory anemia with excess blasts (RAEB), refractory anemia with excess blasts in transformation (RAEB-T), and chronic myelomonocytic leukemia (CMMoL).

On April 28, 2016 Aduro Biotech, Inc. (Nasdaq:ADRO) reported the publication of a pivotal paper elucidating the roles of B cell maturation antigen (BCMA) and its ligand A PRoliferation-Inducing Ligand (APRIL) in multiple myeloma, highlighting the potential of its proprietary monoclonal antibody (mAb) BION-1301 targeting APRIL (Press release, Aduro BioTech, APR 28, 2016, View Source [SID:1234511546]).

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The authors demonstrated through in vivo and in vitro preclinical studies that the APRIL/BCMA ligand/receptor pair drives multiple myeloma tumor growth and survival, and activates immunosuppressive mechanisms that allow the tumor to thrive. Importantly, the studies demonstrated that BION-1301 halts tumor growth and overcomes drug resistance to chemotherapeutic agents lenalidomide and bortezomib in preclinical models.

The study, entitled "APRIL and BCMA promote human multiple myeloma growth, chemoresistance, and immunosuppression in the bone marrow microenvironment," was published by Kenneth Anderson, M.D. Ph.D., and Yu-Tzu Tai, Ph.D. of the Dana-Farber Cancer Institute. The article appears online ahead of print in the peer-reviewed journal Blood.

"For the first time, we have identified several different molecular mechanisms by which APRIL activates BCMA to promote multiple myeloma progression in vivo," said Dr. Anderson, program director of the Jerome Lipper Multiple Myeloma Center and LeBow Institute for Myeloma Therapeutics at Dana-Farber and Kraft Family Professor of Medicine at Harvard Medical School. "Understanding the mechanism of tumor progression and resistance allowed us to test a novel approach to potentially combat disease advancement by using an anti-APRIL antibody. BION-1301 blocks the APRIL-induced signal cascade at a critical juncture, and represents a new potential mechanism to both achieve disease response and restore immune function, even in patients with myeloma resistant to current therapies."

The researchers also identified a novel and important role for APRIL and BCMA to induce immune suppression in multiple myeloma. They further developed a comprehensive understanding of APRIL as a strong driver of multiple features of tumor development even in the presence of protective bone marrow myeloid cells such as osteoclasts, macrophages, and dendritic cells. In contrast, introducing an anti-APRIL mAb blocked interaction with both BCMA and a second TNF receptor TACI to inhibit multiple myeloma tumor growth, adhesion to bone marrow cells and immune suppression. In addition, the introduction of BION-1301 allowed tumor cells to be susceptible to standard chemotherapy regimens of lenalidomide and bortezomib.

"Current therapies for patients with multiple myeloma have significantly improved patient survival, however a need for new treatments exists as drug resistance develops in the majority of the cases," said Andrea van Elsas, Ph.D., chief scientific officer of Aduro Biotech Europe. "With the recent elucidation of the important role of the tumor microenvironment, we believe that blocking APRIL using our proprietary monoclonal anti-APRIL antibody BION-1301 could allow for a highly targeted immunotherapy approach to treat multiple myeloma, particularly when added to standard of care chemotherapy. Based on these promising preclinical data, we intend to initiate a clinical trial of BION-1301 next year."

About Multiple Myeloma
Lymphocytes (B cells and T cells) are the primary cell types within the immune system that work together to fight infection and disease. As B cells respond to normal infection in the body, they mature and change into plasma cells, which in turn make antibodies that help the body attack infection. While lymphocytes circulate throughout the body, plasma cells remain primarily in the bone marrow. Multiple myeloma is a blood cancer that occurs when malignant plasma cells proliferate uncontrollably. Approximately 50,000 new cases of multiple myeloma will be diagnosed in the United States and Europe each year. While many new therapies have become available in recent years, multiple myeloma remains incurable and significant unmet needs exist among patients who relapse following, are resistant to, or cannot tolerate currently available agents.

About APRIL and BION-1301
APRIL is a member of the tumor necrosis factor (TNF) superfamily and is primarily secreted by bone marrow and/or myeloid cells. APRIL is overproduced in patients with multiple myeloma and binds to BCMA to stimulate a wide variety of responses that promote multiple myeloma growth and suppress the immune system so that the tumor cells are allowed to proliferate. The team at Aduro Biotech Europe, in collaboration with Jan Paul Medema, Ph.D. of the Amsterdam Medical Center, developed BION-1301, a humanized antibody that blocks APRIL from binding to its receptors, using Aduro’s B-select monoclonal antibody platform. In preclinical studies, BION-1301 eliminated malignant cells and reduced resistance to therapy in models of multiple myeloma. In addition to multiple myeloma, APRIL’s role in other cancers and in B cell dependent autoimmune and inflammatory diseases indicate that BION-1301 may also be useful in treating chronic lymphocytic leukemia, colorectal cancer and Berger’s disease (caused by IgA antibody lodging in the kidneys).

On April 28, 2016 Advaxis, Inc. (NASDAQ:ADXS), a clinical stage biotechnology company developing cancer immunotherapies, reported that the Food and Drug Administration (FDA) has granted Fast Track Designation for the company’s immunotherapy product candidate ADXS-HER2 for patients with newly-diagnosed, non-metastatic, surgically-resectable osteosarcoma (Press release, Advaxis, APR 28, 2016, View Source [SID:1234511535]).

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Advaxis’ investigational immunotherapies, including ADXS-HER2, are designed to capitalize on the body’s ability to recognize and attack bacterial infections. Advaxis’ core technology – Lm Technology – alters a live strain of Listeria monocytogenes (Lm) bacteria to generate cancer fighting T-cells directed against a cancer antigen and neutralizing factors that protect the tumor microenvironment from immunologic attack and contribute to tumor growth.

The FDA established the Fast Track Drug Development Program under the FDA Modernization Act of 1997. The program is designed to facilitate the development and expedite the review of therapies intended to treat serious or life-threatening conditions and that demonstrate the potential to address unmet medical needs. The advantages of Fast Track designation include actions to expedite development, including opportunities for frequent interactions with the FDA review team to discuss all aspects of development to support approval and eligibility for accelerated approval and priority review depending on clinical data at the time of Biologics License Application (BLA) submission.

"We are pleased that the FDA has granted this important designation for ADXS-HER2," said Daniel O’Connor, Chief Executive Officer of Advaxis. "Currently, there are limited therapeutic treatment options available for this patient population, with no new treatments approved in over 20 years. ADXS-HER2 received orphan drug designation in 2015 from the FDA and EMA for the treatment of osteosarcoma. We believe that with these FDA implemented incentive programs, like Fast Track designation, patients are truly the benefactors."

About ADXS-HER2

ADXS-HER2 is an Lm Technology immunotherapy product candidate being developed by Advaxis to target HER2 expressing cancers. ADXS-HER2 has received orphan drug designation by the U.S. Food and Drug Administration (FDA) and the European Medicines Agency (EMA) for the treatment of osteosarcoma. Advaxis is developing ADXS-HER2 for both human and animal health, and has seen encouraging data in canine osteosarcoma, which is considered a model for human osteosarcoma.

Dr. Nicola Mason, PhD, BVetMed, Associate Professor of Medicine at the University of Pennsylvania School of Veterinary Medicine, evaluated the immunogenicity, safety, and impact of attenuated, recombinant Listeria monocytogenes (Lm) transformed with a HER2/Neu fusion protein (ADXS-HER2) on survival in 18 dogs with surgically treated osteosarcoma. In the study, 18 dogs received either 2×108, 5×108, 1×109 or 3.3×109 CFU of ADXS–HER2 post-completion of surgery and adjuvant chemotherapy with 15 dogs showing an induced antigen-specific response within 6 months of immunotherapy administration. Additionally, treatment with ADXS-HER2 reduced the incidence of metastatic disease and prolonged survival relative to a historical control group. The median survival time for the ADXS-HER2 treated dogs was 956 days which was significantly longer than the 423 day median survival time of the historical control group (p=0.014, HR 0.33; 95% CI 0.136-0.802).

Advaxis has licensed ADXS-HER2 to Aratana Therapeutics, Inc. for the development of pet therapeutics and expects that the HER2 construct will be conditionally approved in 2016.

About HER2 Expressing Solid Tumor Cancers

Human epidermal growth factor receptor 2 (HER2) is overexpressed in a percentage of solid tumors such as breast, gastric, bladder, brain, pancreatic, ovarian and pediatric bone cancer (osteosarcoma). The American Cancer Society estimates that in 2015 in the United States alone there will be 231,840 new cases of invasive breast cancer; 24,590 new cases of gastric cancer; 74,000 new cases of bladder cancer; 22,850 new cases of brain/spinal cancer; 48,960 new cases of pancreatic cancer; 21,290 new cases of ovarian cancer; and 207 new cases of pediatric osteosarcoma. HER2 expression is associated with more aggressive disease, increased risk of relapse and decreased overall survival, and is an important target for immunotherapy.

On April 28, 2016 Bristol-Myers Squibb Company (NYSE:BMY) reported results for the first quarter of 2016, which were highlighted by strong sales for Opdivo, Eliquis and our hepatitis C franchise along with significant regulatory milestones and key data in Immuno-Oncology (Press release, Bristol-Myers Squibb, APR 28, 2016, View Source [SID:1234511529]).

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"We had a very good first quarter highlighted by strong sales growth and significant progress in bringing the promise of Immuno-Oncology across multiple types of cancer to patients," said Giovanni Caforio, M.D., chief executive officer, Bristol-Myers Squibb. "The launch of Opdivo continues to accelerate with data in new cancers, additional indications and continued rapid market adoption. By growing our business and advancing our pipeline, we are successfully executing our growth strategy."

First Quarter
$ amounts in millions, except per share amounts
2016
2015
Change
Total Revenues $4,391 $4,041 9%
GAAP Diluted EPS 0.71 0.71 −
Non-GAAP Diluted EPS 0.74 0.71 4%

FIRST QUARTER FINANCIAL RESULTS

Bristol-Myers Squibb posted first quarter 2016 revenues of $4.4 billion, an increase of 9% compared to the same period a year ago. Global revenues increased 11% adjusted for foreign exchange impact. Excluding Abilify and Erbitux, global revenues increased 31% or 34% adjusted for foreign exchange impact.

U.S. revenues increased 24% to $2.5 billion in the quarter compared to the same period a year ago. International revenues decreased 7%. When adjusted for foreign exchange impact, international revenues decreased 2%.

Gross margin as a percentage of revenues was 76.0% in the quarter compared to 79.0% in the same period a year ago.

Marketing, selling and administrative expenses increased 4% to $1.1 billion in the quarter.

Research and development expenses increased 12% to $1.1 billion in the quarter.

The effective tax rate was 27.1% in the quarter, compared to 17.2% in the first quarter last year.

The company reported net earnings attributable to Bristol-Myers Squibb of $1.2 billion, or $0.71 per share, in the quarter compared to net earnings of $1.2 billion, or $0.71 per share, a year ago.

The company reported non-GAAP net earnings attributable to Bristol-Myers Squibb of $1.2 billion, or $0.74 per share, in the first quarter, compared to $1.2 billion, or $0.71 per share, for the same period in 2015. An overview of specified items is discussed under the "Use of Non-GAAP Financial Information" section.

Cash, cash equivalents and marketable securities were $8.0 billion, with a net cash position of $1.3 billion, as of March 31, 2016.

FIRST QUARTER PRODUCT AND PIPELINE UPDATE

Global revenues for the first quarter of 2016, compared to the first quarter of 2015, were driven by Opdivo, which grew by $664 million; Eliquis, which grew by $379 million; Hepatitis C Franchise, which grew 62%; Orencia, which grew 19%; and Sprycel, which grew 9%.

Opdivo

In April, the U.S. Food and Drug Administration (FDA) granted Breakthrough Therapy Designation to Opdivo for the potential indication of recurrent or metastatic squamous cell carcinoma of the head and neck (SCCHN) after platinum based therapy. The designation is based on results of CheckMate -141, a Phase 3, open-label, randomized trial evaluating Opdivo versus investigator’s choice of therapy in patients with recurrent or metastatic SCCHN with tumor progression within six months of platinum therapies in the adjuvant, primary, recurrent or metastatic setting. This trial was stopped early in January 2016 because an assessment conducted by the independent Data Monitoring Committee concluded that the study met its primary endpoint of overall survival (OS).

In April, the FDA accepted for filing and review a Supplemental Biologics License Application (sBLA) for Opdivo which seeks to expand use to patients with classical Hodgkin lymphoma (cHL) after prior therapies. The application included CheckMate -205 data, which evaluated Opdivo in cHL patients who have received autologous stem cell transplant and brentuximab vedotin.

In April, the European Commission (EC) approved Opdivo monotherapy for locally advanced or metastatic non-small cell lung cancer (NSCLC) after prior chemotherapy in adults. The approval expands Opdivo’s existing lung cancer indication in previously treated metastatic squamous NSCLC to include the non-squamous patient population. Opdivo is the only approved PD-1 immune checkpoint inhibitor to demonstrate superior OS in two separate Phase 3 trials in previously treated metastatic NSCLC, regardless of PD-L1 expression; one trial in squamous NSCLC (CheckMate -017) and the other in non-squamous NSCLC (CheckMate -057), which were the basis of this approval. The approval allows for the expanded marketing of Opdivo in previously treated metastatic NSCLC in all 28 Member States of the European Union.

In April, the EC approved Opdivo monotherapy for advanced renal cell carcinoma (RCC) after prior therapy in adults. Opdivo is the first and only PD-1 immune checkpoint inhibitor approved in Europe to demonstrate an OS benefit versus a standard of care in this patient population. The approval is based on the results of the Phase 3 study CheckMate -025, which evaluated Opdivo in patients with advanced clear-cell RCC who received prior anti-angiogenic therapy compared to everolimus. This approval allows for the expanded marketing of Opdivo in previously treated advanced RCC in all 28 Member States of the European Union.

In April, the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) recommended the approval of Opdivo in combination with Yervoy for the treatment of advanced (unresectable or metastatic) melanoma in adults. This CHMP recommendation will now be reviewed by the EC, which has the authority to approve medicines for the European Union.

In April, the company announced results from three studies for Opdivo and the Opdivo + Yervoy Regimen:
CheckMate -141: In this Phase 3 open-label, randomized trial, evaluating Opdivo in patients with recurrent or metastatic SCCHN after platinum therapy compared to investigator’s choice of therapy, Opdivo met the primary endpoints and demonstrated statistically significant OS versus three standards of care (cetuximab, docetaxel, or methotrexate). In the trial, patients treated with Opdivo had a one-year survival rate of 36% compared to 16.6% for investigator’s choice, and experienced a 30% reduction in the risk of death. Median OS was 7.5 months for Opdivo compared to 5.1 months for investigator’s choice. The safety profile of Opdivo in CheckMate -141 was consistent with prior studies, with no new safety signals identified.

CheckMate -069: In this Phase 2 trial, which is the first randomized study to evaluate the Opdivo + Yervoy combination regimen in patients with previously untreated advanced melanoma, the combination regimen demonstrated a two-year OS rate of 69% compared to 53% for Yervoy alone in patients with BRAF wild-type advanced melanoma. Similar results were observed in the overall study population, with an OS rate of 64% at two years for the combination regimen compared to 54% for Yervoy alone. A change in tumor burden was also seen with the combination regimen, with a median change of 70% compared to 5% for Yervoy alone. Overall survival was an exploratory endpoint in this trial. The safety profile of the Opdivo + Yervoy combination regimen in this study was consistent with previously reported studies.

CA209-003: In this Phase 1 study, evaluating Opdivo monotherapy in heavily pretreated advanced melanoma, the company reported extended follow-up, including five-year OS rates. This data represents the longest survival follow-up of patients who received an anti-PD-1 therapy in a clinical trial. At five years, Opdivo demonstrated a durable and consistent survival benefit with an OS rate of 34%, with an evident plateau in survival at approximately 4 years. The safety profile of Opdivo in Study 003 was similar to previously reported studies, with no new safety signals identified.

In March, the EMA validated a type II variation application, which seeks to extend the current indications for Opdivo to include the treatment of patients with cHL after prior therapies. The application included data from CheckMate -205, a Phase 2 study which evaluated Opdivo in cHL patients who have received autologous stem cell transplant and brentuximab vedotin. Validation of the application confirms the submission is complete and begins the EMA’s centralized review process.
Empliciti

In January, the company and its partner, AbbVie, Inc., announced the CHMP adopted a positive opinion recommending Empliciti, an investigational immunostimulatory antibody, be granted approval for the treatment of multiple myeloma as combination therapy with Revlimid and dexamethasone in patients who have received at least one prior therapy. The application will now be reviewed by the EC, which has the authority to approve medicines for the European Union. The CHMP positive opinion is based on data from the Phase 3, open-label ELOQUENT-2 study, which evaluated Empliciti in combination with lenalidomide and dexamethasone (ERd) versus lenalidomide and dexamethasone (Rd) alone.
Daklinza

In February, the FDA approved Daklinza, an NS5A replication complex inhibitor, in combination with sofosbuvir (with or without ribavirin) in genotypes 1 and 3. The expanded label includes data in three additional challenging-to-treat patient populations: chronic hepatitis C virus (HCV) patients with HIV-1 (human immunodeficiency virus) coinfection, advanced cirrhosis, or post-liver transplant recurrence of HCV. The Daklinza plus sofosbuvir regimen is also available for the treatment of chronic HCV genotype 3, and is currently the only 12-week, once-daily all-oral treatment option for these patients. The approval is based on data evaluating the Daklinza regimens from the Phase 3 ALLY-1 and ALLY-2 clinical trials.

In February, the company announced results from the first completed all-oral chronic HCV regimen Phase 3 trial that includes a Chinese patient population. In the study, which evaluated Daklinza in combination with asunaprevir for 24 weeks in Asian (non-Japanese) patients with genotype 1b HCV, 91% of patients from China achieved sustained virologic response at post-treatment week 24 (SVR24), which rose to 98% of patients without NS5A resistance-associated variants (RAVs) at baseline. SVR24 results were similarly high across all subgroups with genotype 1b HCV, including those with cirrhosis, and patients from Korea and Taiwan. SVR24 rates were also higher in all patients without baseline NS5A RAVs, regardless of the presence or absence of cirrhosis, and lower in patients with baseline NS5A RAVs. Results were presented at the Asian Pacific Association for the Study of the Liver Conference in Tokyo.

In January, the EC approved Daklinza for the treatment of chronic HCV in three new patient populations which provides additional treatment options for multiple HCV patient populations, including difficult-to-treat patients with decompensated cirrhosis. The expanded label allows for the use of Daklinza in combination with sofosbuvir (with or without ribavirin, depending on the indication and HCV genotype) in HCV patients with decompensated cirrhosis, HIV-1 coinfection, and post-liver transplant recurrence of HCV. The approval is based on data from the Phase 3 ALLY-2 and ALLY-2 clinical trials.
Revlimid is a trademark of Celgene Corporation.

BUSINESS DEVELOPMENT UPDATE

In April, the company acquired Padlock Therapeutics, Inc. (Padlock), a private, Cambridge, Massachusetts-based biotechnology company dedicated to creating new medicines to treat destructive autoimmune diseases. The acquisition gives the company full rights to Padlock’s Protein/Peptidyl Arginine Deiminase (PAD) inhibitor discovery program focused on the development of potentially transformational treatment approaches for patients with rheumatoid arthritis. Padlock’s PAD discovery program may have additional utility in treating systemic lupus erythematosus and other autoimmune diseases.

In March, the company entered into an agreement with LabCentral, an innovative, shared laboratory space designed as a launch pad for life-sciences and biotech startup companies, to become a LabCentral platinum sponsor. The company can nominate up to two innovative life-sciences and biotech startup companies per year to take up residence in LabCentral’s Kendall Square facilities.
In February, the company and its partner, Pfizer Inc., announced a collaboration agreement with Portola Pharmaceuticals Inc. to develop and commercialize the investigational agent andexanet alfa in Japan. Andexanet alfa, which is in Phase 3 clinical development in the U.S. and Europe, is designed to reverse the anticoagulant activity of Factor Xa inhibitors, including Eliquis. This agreement builds on the companies’ existing clinical collaboration to develop andexanet alfa in the U.S. and Europe.

In February, the company entered into a research collaboration agreement with the Dana-Farber Cancer Institute as part of the Immuno-Oncology Rare Population Malignancy (I-O RPM) program in the U.S. As part of the I-O RPM program, the company and the Dana-Farber Cancer Institute will conduct a range of early phase clinical studies and Bristol-Myers Squibb will support the training of young investigators who contribute to the I-O RPM program at Dana-Farber.

In February, the company completed the previously announced sale of its HIV R&D portfolio to ViiV Healthcare. The sale included a number of programs at different stages of discovery, preclinical and clinical development. The agreements with ViiV Healthcare do not impact the company’s marketed HIV medicines, including Reyataz, Evotaz, Sustiva and Atripla.
2016 FINANCIAL GUIDANCE

Bristol-Myers Squibb is increasing its 2016 GAAP EPS guidance range from $2.30 – $2.40 to $2.37 – $2.47. The company is also increasing its non-GAAP EPS guidance range from $2.30 – $2.40 to $2.50 – $2.60. Both GAAP and non-GAAP guidance assume current exchange rates. Key revised 2016 non-GAAP guidance assumptions include:

Worldwide revenues increasing in the low-double digit range.
Marketing, sales and administrative expenses decreasing in the low-single digit range.
Research and development expenses increasing in the low-double digit range.
The financial guidance for 2016 excludes the impact of any potential future strategic acquisitions and divestitures, and any specified items that have not yet been identified and quantified. The non-GAAP 2016 guidance also excludes other specified items as discussed under "Use of Non-GAAP Financial Information." Details reconciling adjusted non-GAAP amounts with the amounts reflecting specified items are provided in supplemental materials available on the company’s website.

Use of Non-GAAP Financial Information

This press release contains non-GAAP financial measures, including non-GAAP earnings and related earnings per share information. These measures are adjusted to exclude certain costs, expenses, significant gains and losses and other specified items. Among the items in GAAP measures but excluded for purposes of determining adjusted earnings and other adjusted measures are: restructuring and other exit costs; accelerated depreciation charges; IPRD and asset impairments; charges and recoveries relating to significant legal proceedings; charges related to licenses and acquisitions of investigational compounds that have not achieved regulatory approval which are immediately expensed; pension charges; and significant tax events. This information is intended to enhance an investor’s overall understanding of the company’s past financial performance and prospects for the future. Non-GAAP financial measures provide the company and its investors with an indication of the company’s baseline performance before items that are considered by the company not to be reflective of the company’s ongoing results. The company uses non-GAAP gross profit, non-GAAP marketing, selling and administrative expense, non-GAAP research and development expense, and non-GAAP other income and expense measures to set internal budgets, manage costs, allocate resources, and plan and forecast future periods. Non-GAAP effective tax rate measures are primarily used to plan and forecast future periods. Non-GAAP earnings and earnings per share measures are primary indicators the company uses as a basis for evaluating company performance, setting incentive compensation targets, and planning and forecasting of future periods. This information is not intended to be considered in isolation or as a substitute for financial measures prepared in accordance with GAAP.