On October 27, 2016 Onxeo S.A. (Euronext Paris, Nasdaq Copenhagen: ONXEO), a biopharmaceutical company specializing in the development of innovative drugs for the treatment of orphan diseases, in particular in oncology, reported promising results from preclinical studies evaluating the potential of its already PTCL (peripheral T-cell lymphoma)-approved Beleodaq (belinostat), in combination with checkpoint inhibitors as a potential treatment option for other tumor indications (Press release, Onxeo, OCT 27, 2016, View Source [SID1234516106]). The studies were conducted as the second step of Onxeo’s ongoing preclinical development program in partnership with leading European research institution the University of Navarra’s University Clinic and Center for Applied Medical Research in Spain under the leadership of Prof. Bruno Sangro and Dr. Pablo Sarobe.

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The preclinical studies were performed in an immune-competent mouse syngeneic HCC (hepatocellular carcinoma) model, in which responses to a combination of Beleodaq and checkpoint inhibitors were compared to responses from treatment with checkpoint inhibitors alone. The studies demonstrated a complete cessation of tumor growth in all mice (100%) treated with the combination of Beleodaq and checkpoint inhibitors. The tumor cessation effect continued for approximately one week after the final dose of belinostat was administered. By comparison, checkpoint inhibitors alone inhibited tumor growth in only about 30 percent of mice which received the treatment for the same period.

In addition, mechanistic studies performed on the spleens of the mice demonstrated the generation of an underlying immune response that correlated with the observed therapeutic effect of the combination treatment, showing an increase in production of interleukines (signaling proteins for regulating immune responses) by activated T-cells and a decrease in the number of regulatory T-cells, when compared to mice treated only with checkpoint inhibitors.

Graham Dixon, PhD, Chief Scientific Officer of Onxeo, commented, "These data represent promising findings for the continued evaluation of Beleodaq in cancers beyond peripheral T-cell lymphoma (PTCL) when used as a combination with immuno-oncology agents in various tumor indications such as for example HCC. Approximately 20 percent of cancer patients currently treated with checkpoint inhibitors alone are responding and thus, if translated into the clinic, the positive outcomes from the combination therapy would account for a significant improvement in the number of patients exhibiting high treatment responses. As a next step in our collaboration with Prof. Bruno Sangro and Dr. Pablo Sarobe, we are conducting follow-up studies to fully characterize these preclinical findings demonstrating the potential of Beleodaq in combination with checkpoint inhibitors in various tumor indications, and in particular, are evaluating the immune response in the tumor microenvironment in order to improve the translation of the response into human patients."

On October 27, 2016 amcure, a biopharmaceutical company developing first-in-class cancer therapeutics, reported the initiation and first patient treated in a Phase I/Ib clinical study of their lead program, AMC303, in cancer patients (Press release, amcure, OCT 27, 2016, View Source [SID1234516103]). AMC303 has been developed to target CD44v6, a key molecule in molecular pathways of several receptor-tyrosine-kinases, such as c-MET, VEGFR-2 and RON which are involved in both tumor growth and metastases. This approach provides a potential novel mechanism for the treatment of patients with advanced and solid tumors that have already begun to spread throughout the body.

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"The initiation of the Phase I/Ib study is an important step in amcure’s mission to provide a therapeutic option for patients suffering from cancer when other standard of care treatments have not been effective"
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The study, which will be initially conducted in Belgium and Spain, is designed to assess the safety, tolerability and pharmacokinetics of multiple and increasing doses of AMC303 as a monotherapy in patients with advanced metastatic malignant solid tumors of epithelial origin, for example pancreatic, head and neck, colorectal, gastric and lung cancer, among others. The trial will also seek to determine whether responses to AMC303 correlate with the expression of CD44v6, a cell surface protein that acts as a co-receptor for the activation of several receptor-tyrosine-kinases.

"The initiation of the Phase I/Ib study is an important step in amcure’s mission to provide a therapeutic option for patients suffering from cancer when other standard of care treatments have not been effective," said Klaus Dembowsky, CEO of amcure GmbH. "We believe AMC303 holds great potential because by targeting one specific co-receptor, three relevant oncological pathways are blocked, thus diminishing the means for tumor growth and metastases in patients. We look forward to seeing the results of this initial trial."

In a February 2016 publication in the peer-reviewed journal Gastroenterology, entitled "Inhibition of Tumor Growth and Metastasis in Pancreatic Cancer Models by interference with CD44v6 Signaling," by the co-founder of amcure, Alexandra Matzke-Ogi et al., the ability of the early lead compound AM001 was clearly demonstrated to reduce the primary tumor and metastases. The data suggest a central role for CD44v6 signaling in tumor growth, metastatic spreading and maintenance of metastases in distant organs as well as the regression of already established metastases, making it a very promising tool for cancer therapy.

About AMC303
amcure’s lead compound, AMC303, has been developed as a potential treatment for patients with advanced and metastatic epithelial tumors, e.g. pancreatic cancer, head and neck cancer, gastric cancer, colorectal cancer, breast cancer and lung cancer. AMC303 has a high specificity for inhibiting CD44v6, a co-receptor required for signaling through multiple cellular pathways (c-Met, VEGFR-2, RON) involved in tumor growth, angiogenesis and the development and regression of metastases. AMC303 has also demonstrated strong effects in various in vitro and in vivo assays.

On October 27, 2016 TESARO, Inc. (NASDAQ:TSRO), an oncology-focused biopharmaceutical company, reported that the Marketing Authorisation Application (MAA) for niraparib has been submitted to and accepted for review by the European Medicines Agency (EMA) for the maintenance treatment of patients with platinum-sensitive, recurrent ovarian cancer who are in response to platinum-based chemotherapy (Press release, TESARO, OCT 27, 2016, View Source [SID1234516083]). With this acceptance, the review of the niraparib marketing authorisation application in the Centralised Procedure will now begin.

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"TESARO is committed to improving the lives of patients with cancer by responsible development and commercialization, and the validation of the niraparib MAA represents a significant milestone for the Company," said Mary Lynne Hedley, Ph.D., President and COO of TESARO. "We believe niraparib could become an important new treatment option for patients. We look forward to working with the EMA during the review process and expect to complete our rolling NDA submission to the FDA for niraparib imminently."

The niraparib MAA is supported by data from the ENGOT-OV16/NOVA trial, which is a double-blind, placebo-controlled, international Phase 3 study of niraparib that enrolled 553 patients with recurrent ovarian cancer who were in a response to their most recent platinum-based chemotherapy. The full results of the NOVA trial were presented in detail at the European Society for Medical Oncology (ESMO) (Free ESMO Whitepaper) 2016 Congress in Copenhagen on October 8, 2016 and were published at the same time in The New England Journal of Medicine.

"The validation of our MAA for niraparib today marks an important step towards globalizing our mission of providing transformative therapies to people bravely facing cancer," said Orlando Oliveira, Senior Vice President and General Manager of TESARO International. "With the MAA for oral rolapitant already under review by the EMA, we are well positioned for two potential product launches in Europe in 2017."

About Niraparib
Niraparib is an oral, once-daily PARP inhibitor that is currently being evaluated in four ongoing pivotal trials. TESARO is building a robust niraparib franchise by assessing activity across multiple tumor types and by evaluating several potential combinations of niraparib with other therapeutics. The ongoing development program for niraparib includes a Phase 3 trial in patients with platinum-sensitive, recurrent ovarian cancer (the NOVA trial); a Phase 3 trial in patients with first-line ovarian cancer (the PRIMA trial); a registrational Phase 2 treatment trial in patients with ovarian cancer (the QUADRA trial); and a Phase 3 trial for the treatment of patients with BRCA-positive breast cancer (the BRAVO trial). Several combination studies are also underway, including trials of niraparib plus pembrolizumab and niraparib plus bevacizumab. Janssen Biotech has licensed rights to develop and commercialize niraparib specifically for patients with prostate cancer worldwide, except in Japan.

Niraparib is an investigational agent and, as such, has not been approved by the U.S. Food and Drug Administration, EMA, or any other regulatory agencies.

About Ovarian Cancer
Approximately 22,000 women are diagnosed each year with ovarian cancer in the United States, and more than 65,000 women are diagnosed annually in Europe. Ovarian cancer is the fifth most frequent cause of cancer death among women. Despite high response rates to platinum-based chemotherapy in the second-line advanced treatment setting, approximately 85% of patients will experience recurrence within two years. If approved, niraparib may address the difficult "watchful waiting" periods experienced by patients with recurrent ovarian cancer in between cycles of platinum-based chemotherapy.

On October 27, 2016 Amgen (NASDAQ:AMGN) reported financial results for the third quarter of 2016 (Press release, Amgen, OCT 27, 2016, View Source [SID1234516053]).

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Key results include:

Revenues increased 2 percent versus the third quarter of 2015 to $5.8 billion.
Strong unit volume growth from Sensipar (cinacalcet), Prolia (denosumab), Vectibix (panitumumab), XGEVA (denosumab) and Nplate (romiplostim).
GAAP earnings per share (EPS) increased 10 percent to $2.68 driven by higher revenues and higher operating margins.
GAAP operating income increased 8 percent to $2,527 million and GAAP operating margin improved by 3.4 percentage points to 45.8 percent.
Non-GAAP EPS increased 11 percent to $3.02 driven by higher revenues and higher operating margins.
Non-GAAP operating income increased 9 percent to $2,916 million and non-GAAP operating margin improved by 4.2 percentage points to 52.9 percent.
2016 total revenues guidance increased to $22.6-$22.8 billion; EPS guidance increased to $9.94-$10.11 on a GAAP basis and $11.40-$11.55 on a non-GAAP basis.
The Company generated $2.5 billion of free cash flow.
"Our business is performing well and our double-digit earnings per share growth reflects the progress we have made through our transformation efforts," said Robert A. Bradway, chairman and chief executive officer. "We are focused on growing several newly launched products and advancing the pipeline globally."

$Millions, except EPS and percentages

Q3’16

Q3’15

YOY Δ







Total Revenues

$ 5,811

$ 5,723

2%
GAAP Operating Income

$ 2,527

$ 2,339

8%
GAAP Net Income

$ 2,017

$ 1,863

8%
GAAP EPS

$ 2.68

$ 2.44

10%
Non-GAAP Operating Income

$ 2,916

$ 2,686

9%
Non-GAAP Net Income

$ 2,276

$ 2,081

9%
Non-GAAP EPS

$ 3.02

$ 2.72

11%

References in this release to "non-GAAP" measures, measures presented "on a non-GAAP basis" and to "free cash flow" (computed by subtracting capital expenditures from operating cash flow) refer to non-GAAP financial measures. Adjustments to the most directly comparable GAAP financial measures and other items are presented on the attached reconciliations.


Product Sales Performance

Total product sales were flat for the third quarter of 2016 versus the third quarter of 2015.
Enbrel (etanercept) sales were flat as higher net selling price was offset by the impact of competition and unfavorable changes in inventory levels.
Neulasta (pegfilgrastim) sales decreased 5 percent driven by lower unit demand.
Aranesp (darbepoetin alfa) sales increased 8 percent driven mainly by higher unit demand due to a shift by some U.S. dialysis customers from EPOGEN (epoetin alfa) to Aranesp.
Sensipar/Mimpara sales increased 18 percent driven by net selling price and higher unit demand.
XGEVA sales increased 4 percent driven by higher unit demand.
Prolia sales increased 18 percent driven by higher unit demand.
EPOGEN sales decreased 31 percent driven by the impact of competition, abnormally high purchases by a large end customer in the year ago period and a shift by some U.S. dialysis customers to Aranesp.
KYPROLIS (carfilzomib) sales increased 34 percent driven by higher unit demand.
NEUPOGEN (filgrastim) sales decreased 36 percent driven mainly by the impact of competition in the U.S.
Vectibix sales increased 24 percent driven by higher unit demand.
Nplate sales increased 10 percent driven by higher unit demand and net selling price.
Repatha (evolocumab) sales growth was driven by higher unit demand.
BLINCYTO (blinatumomab) sales increased 26 percent driven by higher unit demand.
Product Sales Detail by Product and Geographic Region

$Millions, except percentages

Q3’16

Q3’15

YOY Δ


US
ROW
TOTAL

TOTAL

TOTAL









Enbrel

$1,388
$64
$1,452

$1,459

0%
Neulasta

1,024
176
1,200

1,267

(5%)
Aranesp

275
256
531

493

8%
Sensipar / Mimpara

329
86
415

353

18%
XGEVA

296
98
394

378

4%
Prolia

249
130
379

320

18%
EPOGEN

335
0
335

489

(31%)
KYPROLIS

140
43
183

137

34%
NEUPOGEN

127
56
183

284

(36%)
Vectibix

64
100
164

132

24%
Nplate

92
59
151

137

10%
Repatha
31
9
40

3

*
BLINCYTO
19
10
29

23

26%
Other**

14
46
60

41

46%









Total product sales

$4,383
$1,133
$5,516

$5,516

0%









* Change in excess of 100%
** Other includes Bergamo, MN Pharma, IMLYGIC and Corlanor


Operating Expense, Operating Margin and Tax Rate Analysis

On a GAAP basis:

Cost of Sales margin improved by 0.1 percentage points driven primarily by manufacturing efficiencies and higher net selling price, offset partially by product mix. Research & Development (R&D) expenses decreased 12 percent driven primarily by lower spending required to support certain later-stage clinical programs and transformation and process improvement efforts. Selling, General & Administrative (SG&A) expenses were flat. Total Operating Expenses decreased 3 percent, with all expense categories reflecting savings from our transformation and process improvement efforts.
Operating Margin improved by 3.4 percentage points to 45.8 percent.
Tax Rate increased by 1.6 percentage points due primarily to changes in the geographic mix of earnings.
On a non-GAAP basis:

Cost of Sales margin improved by 0.5 percentage points driven primarily by manufacturing efficiencies and higher net selling price, offset partially by product mix. R&D expenses decreased 11 percent driven primarily by lower spending required to support certain later-stage clinical programs and transformation and process improvement efforts. SG&A expenses increased 1 percent. Total Operating Expenses decreased 5 percent, with all expense categories reflecting savings from our transformation and process improvement efforts.
Operating Margin improved by 4.2 percentage points to 52.9 percent.
Tax Rate increased by 0.9 percentage points due primarily to changes in the geographic mix of earnings.
$Millions, except percentages




GAAP

Non-GAAP




Q3’16

Q3’15

YOY Δ

Q3’16

Q3’15

YOY Δ















Cost of Sales
$1,027

$1,034

(1%)

$715

$745

(4%)

% of product sales
18.6%

18.7%

(0.1) pts.

13.0%

13.5%

(0.5) pts.
Research & Development
$990

$1,119

(12%)

$963

$1,086

(11%)

% of product sales
17.9%

20.3%

(2.4) pts.

17.5%

19.7%

(2.2) pts.
Selling, General & Administrative
$1,244

$1,244

0%

$1,217

$1,206

1%

% of product sales
22.6%

22.6%

0 pts.

22.1%

21.9%

0.2 pts.
Other
$23

($13)

*

$0

$0

0%
TOTAL Operating Expenses
$3,284

$3,384

(3%)

$2,895

$3,037

(5%)















Operating Margin












operating income as a % of product sales
45.8%

42.4%

3.4 pts.

52.9%

48.7%

4.2 pts.















Tax Rate
16.6%

15.0%

1.6 pts.

18.9%

18.0%

0.9 pts.















* Change in excess of 100%





pts: percentage points







Cash Flow and Balance Sheet

The Company generated $2.5 billion of free cash flow in the third quarter of 2016 versus $2.8 billion in the third quarter of 2015.
The Company’s fourth quarter 2016 dividend of $1.00 per share declared on Oct. 14, 2016, will be paid on Dec. 8, 2016, to all stockholders of record as of Nov. 16, 2016.
During the third quarter, the Company repurchased 4.4 million shares of common stock at a total cost of $747 million. In October 2016, the Company’s Board of Directors approved an increase in the remaining share repurchase authorization for an aggregate authorization of $5 billion.
$Billions, except shares

Q3’16

Q3’15

YOY Δ









Operating Cash Flow
$2.7

$2.9

($0.2)
Capital Expenditures
0.2

0.1

0.0
Free Cash Flow
2.5

2.8

(0.3)
Dividends Paid
0.7

0.6

0.1
Share Repurchase
0.7

0.7

0.0
Avg. Diluted Shares (millions)
753

764

(11)









Cash and Investments
38.0

31.1

6.9
Debt Outstanding
35.3

31.6

3.7
Stockholders’ Equity
30.8

28.0

2.8











Note: Numbers may not add due to rounding








2016 Guidance

For the full year 2016, the Company now expects:

Total revenues in the range of $22.6 billion to $22.8 billion.
Previously, the Company expected total revenues in the range of $22.5 billion to $22.8 billion.
On a GAAP basis, EPS in the range of $9.94 to $10.11 and a tax rate in the range of 16.5 percent to 17.5 percent.
Previously, the Company expected GAAP EPS in the range of $9.55 to $9.90. Tax rate guidance is unchanged.
On a non-GAAP basis, EPS in the range of $11.40 to $11.55 and a tax rate in the range of 19.0 percent to 20.0 percent.
Previously, the Company expected non-GAAP EPS in the range of $11.10 to $11.40. Tax rate guidance is unchanged.
Capital expenditures to be approximately $700 million.
Third Quarter Product and Pipeline Update
Key development milestones:

Clinical Program
Indication
Projected Milestone
Repatha
Hyperlipidemia
Phase 3 CV outcomes data Q1 2017*
Omecamtiv mecarbil
Chronic heart failure
Phase 3 CV outcomes study initiation*
KYPROLIS
Relapsed and
refractory multiple
myeloma
Phase 3 weekly administration data 2017
Romosozumab
Postmenopausal
osteoporosis
U.S. regulatory review
Active controlled Phase 3 fracture data H1 2017*
Erenumab (AMG 334)
Migraine prophylaxis
Phase 3 episodic migraine data Q4 2016
Parsabiv (etelcalcetide)†
Secondary
hyperparathyroidism
Global regulatory reviews
ABP 215
(biosimilar bevacizumab)
Oncology
Global regulatory submissions
ABP 501
(biosimilar adalimumab)
Inflammatory diseases
Ex-U.S. regulatory reviews
ABP 980
(biosimilar trastuzumab)
Breast cancer
Global regulatory submissions

*Event driven study; †Trade name provisionally approved by FDA; CV = cardiovascular


The Company provided the following updates on selected product and pipeline programs:

Repatha

In September, the Phase 3 GLAGOV study evaluating the effect of Repatha on coronary artery disease met its primary and secondary endpoints. The results will be presented Nov. 15, 2016, at the American Heart Association Scientific Sessions 2016.
Data from an event driven Phase 3 study evaluating the effects of Repatha on cardiovascular outcomes are expected in Q1 2017.
Omecamtiv mecarbil

Agreement was reached with the U.S. Food and Drug Administration (FDA) on key elements of an omecamtiv mecarbil Phase 3 cardiovascular outcomes study in chronic heart failure through a Special Protocol Assessment. Details of the protocol are being finalized with regulators and enrollment in the study is anticipated to begin in Q1 2017.
KYPROLIS

In September, a Phase 3 study evaluating an investigational regimen of KYPROLIS, melphalan and prednisone versus Velcade (bortezomib), melphalan and prednisone for 54 weeks in newly diagnosed, transplant ineligible multiple myeloma patients did not meet the primary endpoint of superiority in progression-free survival.
A Phase 3 study of once weekly KYPROLIS administration in relapsed and refractory multiple myeloma patients has completed enrollment. The results are expected in 2017.
XGEVA

In October, a Phase 3 study evaluating XGEVA for the prevention of skeletal-related events in multiple myeloma patients met the primary endpoint of non-inferiority to zoledronic acid in delaying the time to first on-study skeletal-related event.
BLINCYTO

In August, FDA approved BLINCYTO for the treatment of pediatric patients with Philadelphia chromosome‑negative relapsed or refractory B-cell precursor acute lymphoblastic leukemia.
Prolia

In August, a Phase 3 study evaluating Prolia compared with risedronate in patients receiving glucocorticoid treatment met primary and secondary endpoints at 12 months.
Romosozumab

In September, a Biologics License Application for the treatment of osteoporosis in postmenopausal women at increased risk for fracture was accepted for review by FDA, with a Prescription Drug User Fee target action date of July 19, 2017.
Results from an event driven active controlled Phase 3 fracture study in postmenopausal women with osteoporosis are expected in H1 2017.
Erenumab

In September, a Phase 3 study in episodic migraine prevention met its primary endpoint. Results from a second Phase 3 study in this population are expected in Q4 2016.
Parsabiv

In August, FDA issued a Complete Response Letter for the New Drug Application for the treatment of secondary hyperparathyroidism (sHPT) in adult patients with chronic kidney disease (CKD) on hemodialysis.
In September, the Committee for Medicinal Products for Human Use of the European Medicines Agency adopted a positive opinion for the Marketing Authorization of Parsabiv, recommending approval for the treatment of sHPT in adult patients with CKD on hemodialysis.
AMJEVITA (adalimumab-atto)*

In September, FDA approved AMJEVITA across all eligible indications of the reference product, HUMIRA (adalimumab), including treatment of psoriatic arthritis, ankylosing spondylitis and moderate-to-severe rheumatoid arthritis, polyarticular juvenile idiopathic arthritis (patients 4 years of age or older), chronic plaque psoriasis, adult Crohn’s disease and ulcerative colitis. AMJEVITA is the Company’s first biosimilar to receive regulatory approval in the U.S.
ABP 798 (biosimilar rituximab)

Phase 3 studies in Non-Hodgkin lymphoma and rheumatoid arthritis are currently enrolling patients.
ABP 710 (biosimilar infliximab)

A Phase 3 study in rheumatoid arthritis is currently enrolling patients.
Erenumab is developed in collaboration with Novartis
Omecamtiv mecarbil is developed in collaboration with Cytokinetics and Servier
Romosozumab is developed in collaboration with UCB globally, as well as Astellas in Japan
Velcade is a registered trademark of Millennium Pharmaceuticals, Inc.
Humira is a registered trademark of AbbVie Inc.
*Formerly ABP 501

Non-GAAP Financial Measures
In this news release, management has presented its operating results for the third quarters of 2016 and 2015 in accordance with U.S. Generally Accepted Accounting Principles (GAAP) and on a non-GAAP basis. In addition, management has presented its full year 2016 EPS and tax rate guidance in accordance with GAAP and on a non-GAAP basis. These non-GAAP financial measures are computed by excluding certain items related to acquisitions, restructuring and certain other items from the related GAAP financial measures. Reconciliations for these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the news release. Management has also presented Free Cash Flow (FCF), which is a non-GAAP financial measure, for the third quarters of 2016 and 2015. FCF is computed by subtracting capital expenditures from operating cash flow, each as determined in accordance with GAAP.

The Company believes that its presentation of non-GAAP financial measures provides useful supplementary information to and facilitates additional analysis by investors. The Company uses certain non-GAAP financial measures to enhance an investor’s overall understanding of the financial performance and prospects for the future of the Company’s ongoing business activities by facilitating comparisons of results of ongoing business operations among current, past and future periods. The Company believes that FCF provides a further measure of the Company’s liquidity.

The Company uses the non-GAAP financial measures set forth in the news release in connection with its own budgeting and financial planning internally to evaluate the performance of the business, including to allocate resources and to evaluate results relative to incentive compensation targets. The non-GAAP financial measures are in addition to, not a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.

On October 27, 2016 Bristol-Myers Squibb Company (NYSE:BMY) reported results for the third quarter of 2016 which were highlighted by strong sales and operating performance, and continued growth for key products including Opdivo and Eliquis (Press release, Bristol-Myers Squibb, OCT 27, 2016, View Source [SID1234516034]).

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The company raised full-year guidance for 2016 and provided guidance expectations for 2017, announced a new $3 billion share repurchase authorization, and announced an evolution of the company’s operating model to focus resources behind the company’s highest priorities, accelerate its pipeline and simplify infrastructure.

"Our third quarter was marked by strong commercial execution and solid trends across our products and geographies," said Giovanni Caforio, M.D., chief executive officer, Bristol-Myers Squibb. "While we are disappointed with the results of CheckMate -026, a setback in first-line lung in the short term, our overall strategic focus does not change. Going forward, we see growth in both the near and long term to continue to be driven by Opdivo, Eliquis and Orencia , and by an exciting pipeline of specialty medicines over time. As we focus on the future, we are evolving our operating model to more effectively focus resources on key priorities and simplify execution to deliver sustainable growth and to speed transformational medicines to patients."



Third Quarter
$ amounts in millions, except per share amounts
2016
2015
Change
Total Revenues $4,922 $4,069 21%
GAAP Diluted EPS 0.72 0.42 71%
Non-GAAP Diluted EPS 0.77 0.39 97%

THIRD QUARTER FINANCIAL RESULTS

Bristol-Myers Squibb posted third quarter 2016 revenues of $4.9 billion, an increase of 21% compared to the same period a year ago. Global revenues increased 22% adjusted for foreign exchange impact. Excluding Erbitux , global revenues increased 26% or 27% adjusted for foreign exchange impact.
U.S. revenues increased 36% to $2.8 billion in the quarter compared to the same period a year ago. International revenues increased 5%. When adjusted for foreign exchange impact, international revenues increased 7%.
Gross margin as a percentage of revenues was 73.5% in the quarter compared to 73.0% in the same period a year ago.
Marketing, selling and administrative expenses decreased 3% to $1.1 billion in the quarter.
Research and development expenses increased 1% to $1.1 billion in the quarter.
The effective tax rate was 22.1% in the quarter, compared to 26.0% in the third quarter last year.
The company reported net earnings attributable to Bristol-Myers Squibb of $1.2 billion, or $0.72 per share, in the quarter compared to $706 million, or $0.42 per share, a year ago.
The company reported non-GAAP net earnings attributable to Bristol-Myers Squibb of $1.3 billion, or $0.77 per share, in the third quarter, compared to $648 million, or $0.39 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 $8.6 billion, with a net cash position of $1.8 billion, as of September 30, 2016.
THIRD QUARTER PRODUCT AND PIPELINE UPDATE

Global revenues for the third quarter of 2016, compared to the third quarter of 2015, were driven by Opdivo, which grew by $615 million; Eliquis, which grew 90%; Yervoy , which grew 19%; Orencia, which grew 18%; and Sprycel , which grew 15%.

Opdivo

In October, the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) recommended the approval of Opdivo for the treatment of adult patients with relapsed or refractory classical Hodgkin lymphoma (cHL) after autologous stem cell transplant (ASCT) and treatment with brentuximab vedotin, making Opdivo the first PD-1 inhibitor in a hematologic malignancy to receive positive CHMP opinion. The decision was based on overall response rate demonstrated by data from two trials, CheckMate -205 and CheckMate -039. The CHMP recommendation will now be reviewed by the European Commission (EC), which has the authority to approve medicines for the European Union (EU).
In October, the U.S. Food and Drug Administration (FDA) accepted a supplemental Biologics License Application (sBLA), which seeks to expand the use of Opdivo to adult patients with locally advanced unresectable or metastatic urothelial carcinoma (mUC) after failure of prior platinum-containing therapy. The FDA granted the application a priority review and previously granted Opdivo Breakthrough Therapy Designation for mUC in June 2016. The FDA action date is March 2, 2017.
In September, the EMA validated the company’s type II variation application, seeking to extend the current indications for Opdivo to include the treatment of mUC in adults after failure of prior platinum-containing therapy. Validation of the application confirms the submission is complete and begins the EMA’s centralized review process. The application primarily included data from CheckMate -275, a Phase 2, open-label, single-arm study assessing the safety and efficacy of Opdivo in patients with locally advanced unresectable or mUC that has progressed after a platinum-containing therapy.
In October, during the European Society for Medical Oncology Congress in Copenhagen, Denmark, the company announced results from eight studies for Opdivo and the Opdivo + Yervoy regimen:
CheckMate -057 and CheckMate -017: Updated results from these two pivotal Phase 3 studies showed more than one-third of previously treated metastatic non-small cell lung cancer (NSCLC) patients experienced ongoing responses with Opdivo, compared to no ongoing responses in the docetaxel arm. The median duration of response (DOR) with Opdivo versus docetaxel in CheckMate -057 was 17.2 months and 5.6 months, respectively, and in CheckMate -017 it was 25.2 months and 8.4 months, respectively. In CheckMate -057, patients with PD-L1 ≥1% had a median DOR of 17.2 months and in patients with PD-L1 <1%, it was 18.3 months. In both studies, durability of response was observed in both PD-L1 expressors and non-expressors, and in CheckMate -057, one out of the four complete responses occurred in a patient with <1% PD-L1 expression. There were no new safety signals identified for Opdivo in the pooled safety analysis from both studies.
CheckMate -016: Updated results from this Phase 1 trial evaluating the safety and tolerability of the Opdivo + Yervoy regimen in previously treated and treatment-naïve patients with metastatic renal cell carcinoma showed a confirmed objective response rate (ORR) for the combination regimen of 40%. In the updated analysis, durable responses were observed with the combination regimen. The safety profile of the Opdivo + Yervoy combination in metastatic renal cell carcinoma patients is consistent with previous reports of the regimen in other studies.
CheckMate -026: The final primary analysis from this trial investigating the use of Opdivo monotherapy as first-line therapy in patients with advanced NSCLC whose tumors expressed PD-L1 ≥1% showed it did not meet the primary endpoint of superior progression-free survival (PFS) compared to chemotherapy. In patients with ≥5% PD-L1 expression, the median PFS was 4.2 months with Opdivo and 5.9 months with platinum-based doublet chemotherapy (stratified hazard ratio [HR]=1.15 [95% CI: 0.91, 1.45, p=0.25]). The topline results from this study were disclosed on August 5, 2016.
CheckMate -141: New patient-centered quality-of-life data from an exploratory endpoint in this pivotal Phase 3 trial evaluating Opdivo in patients with recurrent or metastatic squamous cell carcinoma of the head and neck after platinum therapy compared to investigator’s choice of therapy showed Opdivo stabilized patients’ symptoms and functioning, including physical, role and social functioning across three separate instruments. Both PD-L1 expressors and non-expressors treated with investigator’s choice of therapy experienced statistically significant worsening of patient-reported outcomes from baseline to week 15 versus Opdivo. In addition, Opdivo more than doubled the time to deterioration for most functional domains measured and significantly delayed the time to worsening symptoms of fatigue, dyspnea and insomnia, compared to investigator’s choice of therapy.
CheckMate -275: In results from the trial, Opdivo had a confirmed ORR, the primary endpoint, of 19.6% in platinum-refractory patients with metastatic urothelial carcinoma. Responses were observed in both PD-L1 expressors and non-expressors. The confirmed ORR in patients expressing PD-L1 ≥1% was 23.8% and 16.1% in patients expressing PD-L1 <1%. In patients expressing PD-L1 ≥5%, the confirmed ORR was 28.4% and 15.8% in patients expressing PD-L1 <5%. The safety profile of Opdivo in this study was consistent with the safety profile of Opdivo in other tumor types.
Two Phase 1 Studies: In these two Phase 1 studies testing lirilumab in combination with Opdivo or Yervoy, respectively, in patients with advanced refractory solid tumors, the safety profile of the combination of lirilumab and Opdivo therapy was similar to that of Opdivo monotherapy, with the exception of an increased frequency of low grade infusion-related reactions in patients treated with the lirilumab combinations. Based on these data, further evaluation of lirilumab in combination with Opdivo is warranted.
In October, during the International Symposium on Hodgkin Lymphoma in Cologne, Germany, the company announced new results from CheckMate -205, a multi-cohort, single-arm, Phase 2 trial evaluating Opdivo in patients with cHL. These results from cohort C of the trial included patients with cHL who had received brentuximab vedotin before and/or after autologous hematopoietic stem cell transplantation (auto-HSCT). After a median follow-up of 8.8 months, Opdivo demonstrated an ORR as assessed by an independent radiologic review committee of 73% overall and median progression-free survival of 11.2 months. The safety profile of Opdivo was consistent with previously reported data in this tumor type, and no new clinically meaningful safety signals were identified.
Yervoy

In October, during the European Society for Medical Oncology Congress in Copenhagen, Denmark, the company announced results of CA184-029 (EORTC 18071), a Phase 3 trial evaluating stage III melanoma patients who are at high risk of recurrence following complete surgical resection. Yervoy 10 mg/kg compared with placebo significantly improved overall survival (OS) (HR=0.72), a secondary endpoint, with five-year OS rates at 65.4% in the Yervoy group and 54.4% in the placebo group. In this updated five-year analysis, the recurrence-free survival (primary endpoint) benefit observed previously with Yervoy was maintained. The safety profile remained consistent with the initial analysis with no new safety signals.
Orencia

In September, the EC approved Orencia intravenous (IV) infusion and subcutaneous (SC) injection, in combination with methotrexate (MTX), for the treatment of highly active and progressive disease in adult patients with rheumatoid arthritis (RA) not previously treated with MTX. Orencia is the first biologic therapy with an indication in the EU specifically applicable to the treatment of MTX-naive RA patients with highly active and progressive disease. The approval allows for the expanded marketing of Orencia in all 28 Member States of the EU.
BUSINESS DEVELOPMENT UPDATE

In September, the company entered into a clinical collaboration to evaluate Nektar Therapeutics investigational medicine, NKTR-214 as a potential combination treatment regimen with Opdivo in five tumor types and seven potential indications. The Phase 1/2 clinical trials will evaluate the potential for the combination of Opdivo and NKTR-214 to show improved and sustained efficacy and tolerability above the current standard of care in melanoma, kidney, colorectal, bladder and NSCLC. An initial dose-escalation trial is underway with Opdivo and NKTR-214.
NEW SHARE REPURCHASE

Bristol-Myers Squibb reported its Board of Directors approved a new $3 billion repurchase authorization for the Company’s common stock. This is incremental to the current repurchase program, announced in June 2012, under which the Company has approximately $1.1 billion remaining.

The stock repurchase program does not have an expiration date. The repurchases may be made either in the open market or through private transactions and may be suspended or discontinued at any time.

The decision reflects the Company’s strong financial position and its balanced approach to capital allocation, including a commitment to its dividend and a disciplined approach to business development.

OPERATING MODEL

Bristol-Myers Squibb announced an evolution of its operating model to drive the company’s continued success in the near and long term through a more focused investment in commercial opportunities against key brands and markets, a competitive and more agile R&D organization that can accelerate the pipeline, streamlined operations and realigned manufacturing capabilities that broaden biologics capabilities to reflect current and future portfolio. The new operating model will enable the company to deliver the strategic, financial and operational flexibility necessary to invest in the highest priorities across the company.

Although GAAP operating expenses may increase initially as charges are incurred related to this evolution, the company expects non-GAAP operating expenses to be roughly flat with 2016 levels through 2020.

2016 & 2017 FINANCIAL GUIDANCE

Bristol-Myers Squibb is increasing its 2016 GAAP EPS guidance range from $2.43 – $2.53 to $2.62 – $2.72. The company is increasing its non-GAAP EPS guidance range from $2.55 – $2.65 to $2.80 – $2.90. Both GAAP and non-GAAP guidance assume current exchange rates. Revised 2016 GAAP and non-GAAP line-item guidance assumptions include:

Worldwide revenues increasing in the high-teens.
Gross margin as a percentage of revenues to be approximately 75%.
Marketing, selling and administrative expenses to remain flat.
Research and development expenses decreasing 30% to 35% for GAAP and increasing in the high-single digit range for non-GAAP.
An effective tax rate between 25% to 26% for GAAP and 22% to 23% for non-GAAP.
Bristol-Myers Squibb expects 2017 GAAP EPS between $2.47 and $2.67 and non-GAAP EPS between $2.85 and $3.05.

The financial guidance 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 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 EPS information, that are adjusted to exclude certain costs, expenses, gains and losses and other specified items that are evaluated on an individual basis. These items are adjusted after considering their quantitative and qualitative aspects and typically have one or more of the following characteristics, such as being highly variable, difficult to project, unusual in nature, significant to the results of a particular period or not indicative of future operating results. Similar charges or gains were recognized in prior periods and will likely reoccur in future periods including restructuring costs, accelerated depreciation and impairment of property, plant and equipment and intangible assets, R&D charges in connection with the acquisition or licensing of third party intellectual property rights, divestiture gains or losses, pension, legal and other contractual settlement charges and debt redemption gains or losses, among other items. Deferred and current income taxes attributed to these items are also adjusted for considering their individual impact to the overall tax expense, deductibility and jurisdictional tax rates. Non-GAAP information is intended to portray the results of our baseline performance, supplement or enhance management, analysts and investors overall understanding of our underlying financial performance and facilitate comparisons among current, past and future periods. For example, non-GAAP earnings and EPS information is an indication of our baseline performance before items that are considered by us to not be reflective of our ongoing results. In addition, this information is among the primary indicators we use as a basis for evaluating performance, allocating resources, setting incentive compensation targets and planning and forecasting for future periods. This information is not intended to be considered in isolation or as a substitute for net earnings or diluted EPS prepared in accordance with GAAP.

Statement on Cautionary Factors

This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding, among other things, statements relating to goals, plans and projections regarding the company’s financial position, results of operations, market position, product development and business strategy. These statements may be identified by the fact that they use words such as "anticipate", "estimates", "should", "expect", "guidance", "project", "intend", "plan", "believe" and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. Such forward-looking statements are based on current expectations and involve inherent risks and uncertainties, including factors that could delay, divert or change any of them, and could cause actual outcomes and results to differ materially from current expectations. These factors include, among other things, effects of the continuing implementation of governmental laws and regulations related to Medicare, Medicaid, Medicaid managed care organizations and entities under the Public Health Service 340B program, pharmaceutical rebates and reimbursement, market factors, competitive product development and approvals, pricing controls and pressures (including changes in rules and practices of managed care groups and institutional and governmental purchasers), economic conditions such as interest rate and currency exchange rate fluctuations, judicial decisions, claims and concerns that may arise regarding the safety and efficacy of in-line products and product candidates, changes to wholesaler inventory levels, variability in data provided by third parties, changes in, and interpretation of, governmental regulations and legislation affecting domestic or foreign operations, including tax obligations, changes to business or tax planning strategies, difficulties and delays in product development, manufacturing or sales including any potential future recalls, patent positions and the ultimate outcome of any litigation matter. These factors also include the company’s ability to execute successfully its strategic plans, including its business development strategy, the expiration of patents or data protection on certain products, including assumptions about the company’s ability to retain patent exclusivity of certain products, and the impact and result of governmental investigations. There can be no guarantees with respect to pipeline products that future clinical studies will support the data described in this release, that the compounds will receive necessary regulatory approvals, or that they will prove to be commercially successful; nor are there guarantees that regulatory approvals will be sought, or sought within currently expected timeframes, or that contractual milestones will be achieved. For further details and a discussion of these and other risks and uncertainties, see the company’s periodic reports, including the annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, filed with or furnished to the Securities and Exchange Commission. The company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.