On April 27, 2017 The Bayer Group reported that it has gotten off to a very successful start to 2017 and generated strong sales and earnings growth in the first quarter (Press release, Bayer, APR 27, 2017, View Source [SID1234518739]).

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

                  Schedule Your 30 min Free Demo!

“At Pharmaceuticals, we once again benefited from the very good performance of our key growth products,” CEO Werner Baumann said when he presented the interim report for the first quarter on Thursday. Consumer Health, Crop Science and Animal Health also registered increases in sales and EBITDA before special items. Covestro posted substantial growth in sales and earnings. Driven by Covestro’s performance, Bayer has raised its Group outlook for 2017.

Sales of the Bayer Group increased by 11.7 percent to EUR 13,244 million (Q1 2016: EUR 11,854 million) in the first quarter. Adjusted for currency and portfolio effects (Fx & portfolio adj.), sales advanced by 9.4 percent. Sales of the Life Science businesses amounted to EUR 9,680 million, up by 4.9 percent (Fx & portfolio adj.) year on year. Group EBITDA before special items improved by 14.9 percent to EUR 3,893 million (Q1 2016: EUR 3,387 million). EBIT climbed by a substantial 34.3 percent to EUR 3,116 million (Q1 2016: EUR 2,320 million) after special charges of EUR 85 million (Q1 2016: EUR 272 million). These mainly resulted from expenses related to efficiency improvement programs, impairment losses on intangible assets, and costs in connection with the agreed acquisition of Monsanto. EBIT before special items moved ahead by 23.5 percent to EUR 3,201 million (Q1 2016: EUR 2,592 million). Net income climbed by 37.9 percent to EUR 2,083 million (Q1 2016: EUR 1,511 million), and core earnings per share from continuing operations by 11.5 percent to EUR 2.62 (Q1 2016: EUR 2.35).

Cash flow provided by operating activities from continuing operations climbed by a substantial 49.6 percent to EUR 826 million (Q1 2016: 552 million) due to the improvement in EBITDA. Net financial debt of the Bayer Group declined by EUR 1.4 billion to EUR 10.4 billion between December 31, 2016, and March 31, 2017, due mainly to cash inflows from the sale of Covestro shares.

Strong gains at Pharmaceuticals

Sales of prescription medicines (Pharmaceuticals) rose in the first quarter by an encouraging 7.4 percent (Fx & portfolio adj.) to EUR 4,263 million (Q1 2016: EUR 3,889 million). “Our key growth products were once again especially successful, registering combined growth of 20 percent on a currency-adjusted basis,” Baumann said. The oral anticoagulant Xarelto, the eye medicine Eylea, the cancer drugs Xofigo and Stivarga, and the pulmonary hypertension treatment Adempas posted total combined sales of EUR 1,445 million (Q1 2016: EUR 1,187 million). Sales of Xarelto climbed by 19.6 percent on a currency-adjusted basis (Fx adj.), due primarily to higher volumes in Europe and Japan. In addition, Bayer once again significantly expanded its business with the eye medicine Eylea (Fx adj.: plus 19.3 percent), with performance driven by higher sales volumes in Europe. Encouraging sales were also achieved in Canada and Japan.

Sales of the hormone-releasing intrauterine devices of the Mirena product family increased by a substantial 22.7 percent (Fx adj.), primarily due to the performance of the U.S. business, which also benefited from the successful market launch of the new Kyleena intrauterine device. Bayer also recorded substantial sales increases for its diabetes treatment Glucobay (Fx adj.: plus 14.6 percent), its Aspirin Cardio product for the secondary prevention of heart attacks (Fx adj.: plus 13.8 percent) and its X-ray contrast agent Ultravist (Fx adj.: plus 18.0 percent), primarily as a result of the positive development of business in China. On the other hand, business with the Kogenate/ Kovaltry blood-clotting medicines was down overall (Fx adj.: minus 8.5 percent), largely due to fluctuations in the order volumes placed by Bayer’s distribution partner for these products. As expected, sales of the multiple sclerosis product Betaferon/Betaseron were also lower than in the prior-year quarter due to reduced demand in Europe and the United States (Fx adj.: minus 12.1 percent). Overall, the Pharmaceuticals business grew in all regions on a currency-adjusted basis.

EBITDA before special items of Pharmaceuticals increased by a substantial 19.1 percent to EUR 1,502 million (Q1 2016: EUR 1,261 million). While sales rose, selling expenses and research and development expenditures were at around the same level as the prior-year quarter.

Growth in sales and earnings at Consumer Health

Adjusted for currency and portfolio effects, sales of self-care products advanced by 2.6 percent to EUR 1,601 million (Q1 2016: EUR 1,520 million) in the first quarter. “We achieved double-digit percentage sales gains for several products at Consumer Health as well,” Baumann noted. The division registered encouraging growth in Europe/Middle East/Africa and in Asia/Pacific. Sales in North America were level year on year on a currency-adjusted basis, while business declined substantially in Latin America.

The sunscreen product Coppertone delivered positive performance (Fx adj.: plus 21.3 percent), primarily in the United States and China where Bayer built inventories in the distribution channel ahead of the summer season. Encouraging sales gains were also recorded for Canesten skin and intimate health products (Fx adj.: plus 11.5 percent), in part due to the expansion of the product portfolio last year. Sales of the Alka-Seltzer family of products to treat gastric complaints and cold symptoms advanced significantly (Fx adj.: plus 19.6 percent), especially in the United States due to a strong cold season and as a result of a product line extension. The One A Day vitamin product achieved double-digit growth (Fx adj.: plus 19.1 percent), as did the Elevit prenatal vitamin (Fx adj.: plus 13.4 percent). By contrast, sales of Dr. Scholl’s foot care products declined substantially (Fx adj.: minus 33.6 percent), primarily due to the reduction of inventories in distribution channels ahead of a change in product lines and a weak market environment in the United States. Business with the antihistamine Claritin was down slightly (Fx adj.: minus 2.4 percent), mainly because of a slow start to the allergy season in the United States. Gains in Europe and China only partially offset this effect.

EBITDA before special items of Consumer Health advanced by 2.3 percent to EUR 392 million (Q1 2016: EUR 383 million). This increase resulted from the positive development of sales as well as from one-time gains of around EUR 20 million, primarily from the sale of brands. A higher cost of goods sold, in part due to write-downs on inventories, had an opposing effect.

Crop Science: business expanded in North America

Sales of the agriculture business increased by 3.2 percent (Fx & portfolio adj.) to EUR 3,120 million (Q1 2016: EUR 2,936 million). “Crop Science benefited primarily from encouraging performance in North America,” Baumann said. Sales in that region grew by 8.9 percent (Fx adj.). Business development was also positive in Europe/Middle East/ Africa (Fx adj.: plus 2.0 percent) and in Asia/Pacific (Fx adj.: plus 2.9 percent), while sales in Latin America declined by 9.8 percent (Fx adj.).

Sales at Seeds (which also includes the traits business) rose by 8.0 percent (Fx and portfolio adj.). At Crop Protection, gains were primarily recorded at SeedGrowth (seed treatment products) and Herbicides, which posted increases of 7.1 percent and 5.3 percent (both Fx and portfolio adj.), respectively. Business at Insecticides expanded by 3.9 percent (Fx and portfolio adj.), while sales at Fungicides were 6.2 percent lower (Fx and portfolio adj.) than in the prior-year quarter. Sales growth of 20.5 percent (Fx and portfolio adj.) at Environmental Science was based on the delivery of products to the company that acquired the consumer business in October 2016.

EBITDA before special items of Crop Science increased by 2.4 percent to EUR 1,115 million (Q1 2016: EUR 1,089 million). Positive earnings effects resulted primarily from higher volumes. These stood against an increase in the cost of goods sold and in research and development expenses.

Substantial earnings growth at Animal Health

Sales of the Animal Health business rose by 2.9 percent (Fx and portfolio adj.) to EUR 440 million (Q1 2016: EUR 408 million). The development of business in the Asia/Pacific region in particular was encouraging. Business in North America benefited from the sales generated by the Cydectin product portfolio that Bayer acquired from Boehringer Ingelheim Vetmedica, Inc. in the United States. Bayer once again significantly expanded business with its Seresto flea and tick collar (Fx adj.: plus 38.2 percent), primarily as the result of higher volumes in the United States and Europe. By contrast, sales of the Advantage family of flea, tick and worm control products were considerably lower than in the prior-year quarter (Fx adj.: minus 10.0 percent), partly due to intensified competitive pressure and shifts in demand patterns. EBITDA before special items increased by 10.7 percent to EUR 135 million (Q1 2016: EUR 122 million). Positive earnings contributions resulted from both price increases as well as the Cydectin business that Bayer acquired. These stood against an increase in selling expenses and research and development expenditures.

Covestro records substantial expansion in volumes and prices

Sales of Covestro advanced by 23.6 percent (Fx & portfolio adj.) in the first quarter compared with the prior-year period, to EUR 3,564 million (Q1 2016: EUR 2,850 million). Selling prices were much higher overall, especially at Polyurethanes, while volumes increased substantially in all business units. EBITDA before special items improved by 66.5 percent to EUR 839 million (Q1 2016: EUR 504 million). Substantially higher selling prices more than offset the effect of a slight increase in raw material prices. In addition, higher volumes had a positive effect on earnings.

Group outlook for 2017 raised

For 2017, Covestro is now budgeting a substantial sales increase (previously: increase) and a significant improvement in EBITDA after adjustment for special items (previously: on or above the prior-year level).

This development leads to the following changes for the Bayer Group. Sales are now expected to increase to around EUR 51 billion (previously: more than EUR 49 billion). This now corresponds to a mid- to high-single-digit (previously: low- to mid-single-digit) percentage increase on a currency- and portfolio-adjusted basis. EBITDA before special items is now expected to improve by a low-teens percentage (previously: mid-single-digit percentage). Bayer now aims to grow core earnings per share from continuing operations by a mid- to high-single-digit percentage (previously: mid-single-digit percentage). Bayer’s interest in Covestro amounts to only 53 percent as of March 2017 (previously: 64 percent for the full year). Excluding capital and portfolio measures, net financial debt is targeted to be around EUR 8 billion at the end of 2017 (previously: around EUR 10 billion).

Taking into account the potential opportunities and risks, at this point in time Bayer is not adjusting the forecasts issued for its Life Science businesses in February 2017 and refers to its Annual Report 2016 for further information. This forecast is based on the exchange rates as of March 31, 2017. There were no significant changes in this regard compared with December 31, 2016.

On April 27, 2017 The Bayer Group reported that it has gotten off to a very successful start to 2017 and generated strong sales and earnings growth in the first quarter (Press release, Bayer, APR 27, 2017, View Source [SID1234518739]).

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

                  Schedule Your 30 min Free Demo!

"At Pharmaceuticals, we once again benefited from the very good performance of our key growth products," CEO Werner Baumann said when he presented the interim report for the first quarter on Thursday. Consumer Health, Crop Science and Animal Health also registered increases in sales and EBITDA before special items. Covestro posted substantial growth in sales and earnings. Driven by Covestro’s performance, Bayer has raised its Group outlook for 2017.

Sales of the Bayer Group increased by 11.7 percent to EUR 13,244 million (Q1 2016: EUR 11,854 million) in the first quarter. Adjusted for currency and portfolio effects (Fx & portfolio adj.), sales advanced by 9.4 percent. Sales of the Life Science businesses amounted to EUR 9,680 million, up by 4.9 percent (Fx & portfolio adj.) year on year. Group EBITDA before special items improved by 14.9 percent to EUR 3,893 million (Q1 2016: EUR 3,387 million). EBIT climbed by a substantial 34.3 percent to EUR 3,116 million (Q1 2016: EUR 2,320 million) after special charges of EUR 85 million (Q1 2016: EUR 272 million). These mainly resulted from expenses related to efficiency improvement programs, impairment losses on intangible assets, and costs in connection with the agreed acquisition of Monsanto. EBIT before special items moved ahead by 23.5 percent to EUR 3,201 million (Q1 2016: EUR 2,592 million). Net income climbed by 37.9 percent to EUR 2,083 million (Q1 2016: EUR 1,511 million), and core earnings per share from continuing operations by 11.5 percent to EUR 2.62 (Q1 2016: EUR 2.35).

Cash flow provided by operating activities from continuing operations climbed by a substantial 49.6 percent to EUR 826 million (Q1 2016: 552 million) due to the improvement in EBITDA. Net financial debt of the Bayer Group declined by EUR 1.4 billion to EUR 10.4 billion between December 31, 2016, and March 31, 2017, due mainly to cash inflows from the sale of Covestro shares.

Strong gains at Pharmaceuticals

Sales of prescription medicines (Pharmaceuticals) rose in the first quarter by an encouraging 7.4 percent (Fx & portfolio adj.) to EUR 4,263 million (Q1 2016: EUR 3,889 million). "Our key growth products were once again especially successful, registering combined growth of 20 percent on a currency-adjusted basis," Baumann said. The oral anticoagulant Xarelto, the eye medicine Eylea, the cancer drugs Xofigo and Stivarga, and the pulmonary hypertension treatment Adempas posted total combined sales of EUR 1,445 million (Q1 2016: EUR 1,187 million). Sales of Xarelto climbed by 19.6 percent on a currency-adjusted basis (Fx adj.), due primarily to higher volumes in Europe and Japan. In addition, Bayer once again significantly expanded its business with the eye medicine Eylea (Fx adj.: plus 19.3 percent), with performance driven by higher sales volumes in Europe. Encouraging sales were also achieved in Canada and Japan.

Sales of the hormone-releasing intrauterine devices of the Mirena product family increased by a substantial 22.7 percent (Fx adj.), primarily due to the performance of the U.S. business, which also benefited from the successful market launch of the new Kyleena intrauterine device. Bayer also recorded substantial sales increases for its diabetes treatment Glucobay (Fx adj.: plus 14.6 percent), its Aspirin Cardio product for the secondary prevention of heart attacks (Fx adj.: plus 13.8 percent) and its X-ray contrast agent Ultravist (Fx adj.: plus 18.0 percent), primarily as a result of the positive development of business in China. On the other hand, business with the Kogenate/ Kovaltry blood-clotting medicines was down overall (Fx adj.: minus 8.5 percent), largely due to fluctuations in the order volumes placed by Bayer’s distribution partner for these products. As expected, sales of the multiple sclerosis product Betaferon/Betaseron were also lower than in the prior-year quarter due to reduced demand in Europe and the United States (Fx adj.: minus 12.1 percent). Overall, the Pharmaceuticals business grew in all regions on a currency-adjusted basis.

EBITDA before special items of Pharmaceuticals increased by a substantial 19.1 percent to EUR 1,502 million (Q1 2016: EUR 1,261 million). While sales rose, selling expenses and research and development expenditures were at around the same level as the prior-year quarter.

Growth in sales and earnings at Consumer Health

Adjusted for currency and portfolio effects, sales of self-care products advanced by 2.6 percent to EUR 1,601 million (Q1 2016: EUR 1,520 million) in the first quarter. "We achieved double-digit percentage sales gains for several products at Consumer Health as well," Baumann noted. The division registered encouraging growth in Europe/Middle East/Africa and in Asia/Pacific. Sales in North America were level year on year on a currency-adjusted basis, while business declined substantially in Latin America.

The sunscreen product Coppertone delivered positive performance (Fx adj.: plus 21.3 percent), primarily in the United States and China where Bayer built inventories in the distribution channel ahead of the summer season. Encouraging sales gains were also recorded for Canesten skin and intimate health products (Fx adj.: plus 11.5 percent), in part due to the expansion of the product portfolio last year. Sales of the Alka-Seltzer family of products to treat gastric complaints and cold symptoms advanced significantly (Fx adj.: plus 19.6 percent), especially in the United States due to a strong cold season and as a result of a product line extension. The One A Day vitamin product achieved double-digit growth (Fx adj.: plus 19.1 percent), as did the Elevit prenatal vitamin (Fx adj.: plus 13.4 percent). By contrast, sales of Dr. Scholl’s foot care products declined substantially (Fx adj.: minus 33.6 percent), primarily due to the reduction of inventories in distribution channels ahead of a change in product lines and a weak market environment in the United States. Business with the antihistamine Claritin was down slightly (Fx adj.: minus 2.4 percent), mainly because of a slow start to the allergy season in the United States. Gains in Europe and China only partially offset this effect.

EBITDA before special items of Consumer Health advanced by 2.3 percent to EUR 392 million (Q1 2016: EUR 383 million). This increase resulted from the positive development of sales as well as from one-time gains of around EUR 20 million, primarily from the sale of brands. A higher cost of goods sold, in part due to write-downs on inventories, had an opposing effect.

Crop Science: business expanded in North America

Sales of the agriculture business increased by 3.2 percent (Fx & portfolio adj.) to EUR 3,120 million (Q1 2016: EUR 2,936 million). "Crop Science benefited primarily from encouraging performance in North America," Baumann said. Sales in that region grew by 8.9 percent (Fx adj.). Business development was also positive in Europe/Middle East/ Africa (Fx adj.: plus 2.0 percent) and in Asia/Pacific (Fx adj.: plus 2.9 percent), while sales in Latin America declined by 9.8 percent (Fx adj.).

Sales at Seeds (which also includes the traits business) rose by 8.0 percent (Fx and portfolio adj.). At Crop Protection, gains were primarily recorded at SeedGrowth (seed treatment products) and Herbicides, which posted increases of 7.1 percent and 5.3 percent (both Fx and portfolio adj.), respectively. Business at Insecticides expanded by 3.9 percent (Fx and portfolio adj.), while sales at Fungicides were 6.2 percent lower (Fx and portfolio adj.) than in the prior-year quarter. Sales growth of 20.5 percent (Fx and portfolio adj.) at Environmental Science was based on the delivery of products to the company that acquired the consumer business in October 2016.

EBITDA before special items of Crop Science increased by 2.4 percent to EUR 1,115 million (Q1 2016: EUR 1,089 million). Positive earnings effects resulted primarily from higher volumes. These stood against an increase in the cost of goods sold and in research and development expenses.

Substantial earnings growth at Animal Health

Sales of the Animal Health business rose by 2.9 percent (Fx and portfolio adj.) to EUR 440 million (Q1 2016: EUR 408 million). The development of business in the Asia/Pacific region in particular was encouraging. Business in North America benefited from the sales generated by the Cydectin product portfolio that Bayer acquired from Boehringer Ingelheim Vetmedica, Inc. in the United States. Bayer once again significantly expanded business with its Seresto flea and tick collar (Fx adj.: plus 38.2 percent), primarily as the result of higher volumes in the United States and Europe. By contrast, sales of the Advantage family of flea, tick and worm control products were considerably lower than in the prior-year quarter (Fx adj.: minus 10.0 percent), partly due to intensified competitive pressure and shifts in demand patterns. EBITDA before special items increased by 10.7 percent to EUR 135 million (Q1 2016: EUR 122 million). Positive earnings contributions resulted from both price increases as well as the Cydectin business that Bayer acquired. These stood against an increase in selling expenses and research and development expenditures.

Covestro records substantial expansion in volumes and prices

Sales of Covestro advanced by 23.6 percent (Fx & portfolio adj.) in the first quarter compared with the prior-year period, to EUR 3,564 million (Q1 2016: EUR 2,850 million). Selling prices were much higher overall, especially at Polyurethanes, while volumes increased substantially in all business units. EBITDA before special items improved by 66.5 percent to EUR 839 million (Q1 2016: EUR 504 million). Substantially higher selling prices more than offset the effect of a slight increase in raw material prices. In addition, higher volumes had a positive effect on earnings.

Group outlook for 2017 raised

For 2017, Covestro is now budgeting a substantial sales increase (previously: increase) and a significant improvement in EBITDA after adjustment for special items (previously: on or above the prior-year level).

This development leads to the following changes for the Bayer Group. Sales are now expected to increase to around EUR 51 billion (previously: more than EUR 49 billion). This now corresponds to a mid- to high-single-digit (previously: low- to mid-single-digit) percentage increase on a currency- and portfolio-adjusted basis. EBITDA before special items is now expected to improve by a low-teens percentage (previously: mid-single-digit percentage). Bayer now aims to grow core earnings per share from continuing operations by a mid- to high-single-digit percentage (previously: mid-single-digit percentage). Bayer’s interest in Covestro amounts to only 53 percent as of March 2017 (previously: 64 percent for the full year). Excluding capital and portfolio measures, net financial debt is targeted to be around EUR 8 billion at the end of 2017 (previously: around EUR 10 billion).

Taking into account the potential opportunities and risks, at this point in time Bayer is not adjusting the forecasts issued for its Life Science businesses in February 2017 and refers to its Annual Report 2016 for further information. This forecast is based on the exchange rates as of March 31, 2017. There were no significant changes in this regard compared with December 31, 2016.

On April 27, 2017 AstraZeneca, a global, innovation-driven biopharmaceutical business that focuses on the discovery, development and commercialisation of prescription medicines, primarily for the treatment of diseases in three main therapy areas – respiratory, inflammation, autoimmune disease (RIA), cardiovascular and metabolic disease (CVMD) and oncology – as well as in infection and neuroscience reported financial results for the first quarter ended March 31, 2017 (Press release, AstraZeneca, APR 27, 2017, View Source [SID1234518737]).

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

                  Schedule Your 30 min Free Demo!

Financial Summary

$m
% change
Actual1
CER2
Total Revenue
5,405
(12)
(10)
Product Sales
4,843
(13)
(12)
Externalisation Revenue
562
2
3

Reported Operating Profit
917
(12)
(23)
Core3 Operating Profit
1,667
5
(2)

Reported Earnings Per Share (EPS)
$0.42
(17)
(35)
Core EPS
$0.99
4
(4)

● The Product Sales performance mainly reflected the residual impact of the US Crestor patent expiry
● One third of Externalisation Revenue was represented by sustainable and ongoing income4
● Continued good progress on cost control, reflecting the evolving shape of the business:
– Reported R&D costs declined by 2% (up by 2% at CER) to $1,453m; Core R&D costs declined by 6% (3% at CER) to $1,338m
– Reported SG&A costs declined by 11% (8% at CER) to $2,300m; Core SG&A costs declined by 14% (12% at CER) to $1,829m
● Reported EPS declined by 17% (35% at CER); Core EPS increased by 4% (down by 4% at CER)
● Financial guidance for 2017 confirmed

Commercial Highlights
The Growth Platforms grew by 4% (5% at CER) and represented 66% of Total Revenue:
● Emerging Markets: 7% growth (9% at CER), becoming AstraZeneca’s largest sales region
● Respiratory: A decline of 2% (stable at CER), with growth offset by the performance of Symbicort in the US
● New CVMD5: Growth of 5% (6% at CER), with competitive pressures in the US continuing
● Japan: Growth of 5% (3% at CER), partly reflecting the ongoing successful launch of Tagrisso and the performance of Symbicort
● New Oncology6: Sales of $236m (Q1 2016: $99m), accompanied by regulatory approval for Tagrisso in China

Achieving Scientific Leadership
The table below highlights the number of successes in the late-stage pipeline since the last results announcement:

Regulatory Approvals
Tagrisso – lung cancer (US, EU; full approval)
Tagrisso – lung cancer (CN)
Forxiga – type-2 diabetes (CN)
Qtern – type-2 diabetes (US)
Siliq – psoriasis (US; by partner)
Regulatory Submission Acceptances
Lynparza – ovarian cancer (2nd line) (US) (Priority Review)
Bydureon – type-2 diabetes (autoinjector) (US)
Symbicort – COPD exacerbations (US)
benralizumab – severe, uncontrolled asthma (JP)
Phase III or Major Data Readouts
Lynparza – breast cancer
Farxiga – type-2 diabetes (CVD-REAL real-world study)
Other Key Developments
Orphan Drug Designation: Lynparza – ovarian cancer (JP)
Complete Response Letter: ZS-9 (sodium zirconium cyclosilicate) – hyperkalaemia (US)
Orphan designation: inebilizumab – neuromyelitis optica spectrum disorder (EU)

Pascal Soriot, Chief Executive Officer, commenting on the results said:
"Our good start to the year supported our guidance for 2017. Notably, Emerging Markets became our largest region, representing 32% of sales. The pipeline continued to deliver in what we expect will be a pivotal year for AstraZeneca as we announced important developments, in particular in Oncology. In addition to the availability of positive data for Lynparza in ovarian and breast cancer, we also received full approvals in the US and Europe for Tagrisso in lung cancer and launched this important medicine in record time in China. While we were disappointed to receive the Complete Response Letter for ZS-9, we remain confident in this treatment for hyperkalaemia.

"The Total Revenue performance reflected the transitional impact of recent patent expiries, which is expected to recede in the second half of the year. Importantly, we anticipate the significant progress of the pipeline to continue, including our Immuno-Oncology and targeted treatments. We will also maintain our commitment to drive efficiency across the company to support our efforts to bring new medicines to patients."

FY 2017 Guidance: Confirmed
The Company provides guidance on Total Revenue and Core EPS only. All commentary in this section is at CER and is unchanged from the prior results announcement:

Total Revenue
A low to mid single-digit percentage decline
Core EPS
A low to mid teens percentage decline*
*The Core EPS guidance anticipates a normalised effective Core tax rate in FY 2017 of 16-20% (FY 2016: 11%)

Guidance is subject to base-case assumptions of the progression of the pipeline and the extensive level of news flow listed on the following page. Variations in performance between quarters can be expected to continue, with year-on-year comparisons expected to ease in H2 2017, when the impact of the entry in July 2016 of multiple Crestor generic medicines in the US will annualise.

The Company presents Core EPS guidance only at CER. It is unable to provide guidance on a Reported/GAAP basis because the Company cannot reliably forecast material elements of the Reported/GAAP result, including the fair value adjustments arising on acquisition-related liabilities, intangible asset impairment charges and legal settlement provisions. Please refer to the section ‘Cautionary Statements Regarding Forward-Looking Statements’ at the end of this announcement.

In addition to the unchanged guidance above, the Company also provides indications in other areas of the Income Statement. The sum of Externalisation Revenue and Other Operating Income in FY 2017 is anticipated to be ahead of that in FY 2016. Sustainable and ongoing income is expected to increase further as a proportion of total Externalisation Revenue in FY 2017. Core R&D costs are expected to be broadly in line with those in FY 2016 and the Company anticipates a further reduction in Core SG&A costs in FY 2017, reflecting the evolving shape of the business. A full explanation of these items is listed in the Operating & Financial Review.

FY 2017 Currency Impact
Based only on average exchange rates in Q1 2017 and the Company’s published currency sensitivities, the Company expects a low single-digit percentage adverse impact from currency movements on Total Revenue and a minimal impact on Core EPS. Further details on currency sensitivities are contained within the Operating and Financial Review.

Notes

1. All growth rates are shown at actual exchange rates, unless stated otherwise.
2. Constant exchange rates. These are non-GAAP measures because they remove the effects of currency movements from Reported results.
3. Core financial measures. These are non-GAAP measures because, unlike Reported performance, they cannot be derived directly from the information in the Group Financial Statements. See the Operating and Financial Review for a definition of Core financial measures and a reconciliation of Core to Reported financial measures.
4. Sustainable and ongoing income is defined as Externalisation Revenue, excluding upfront receipts.
5. New Cardiovascular and Metabolic Diseases, incorporating Brilinta and Diabetes.
6. New Oncology comprises Tagrisso, Lynparza and Iressa (US).

Pipeline: Forthcoming Major News Flow
Innovation is critical to addressing unmet patient needs and is at the heart of the Company’s growth strategy. The focus on research and development is designed to yield strong results from the pipeline.

Q2 2017
Faslodex – breast cancer (1st line): Regulatory decision (JP)
Lynparza – ovarian cancer (2nd line): Regulatory submission (EU)durvalumab (durva) – bladder cancer: Regulatory decision (US)
acalabrutinib – blood cancer: Data readout, regulatory submission (US) (Phase II)#
Bevespi – COPD: Regulatory submission (EU)
Mid-2017
durva +/- tremelimumab (treme) – lung cancer (MYSTIC): Data readout
H2 2017
Faslodex – breast cancer (1st line): Regulatory decision (US, EU)
Lynparza – ovarian cancer (2nd line): Regulatory decision (US)
Lynparza – breast cancer: Regulatory submission
Lynparza – ovarian cancer (1st line): Data readout
Tagrisso – lung cancer (1st line): Data readout
durvalumab – lung cancer (PACIFIC): Data readout, regulatory submission (US)durva +/- treme – lung cancer (ARCTIC): Data readout, regulatory submission
durva +/- treme – lung cancer (MYSTIC): Regulatory submission
durva +/- treme – head & neck cancer (KESTREL): Data readout
moxetumomab – leukaemia: Data readout

Bydureon – cardiovascular (CV) outcomes trial: Data readout, regulatory submission

benralizumab – severe, uncontrolled asthma: Regulatory decision (US)
tralokinumab – severe, uncontrolled asthma: Data readout
2018
Lynparza – ovarian cancer (1st line): Regulatory submission
Tagrisso – lung cancer (1st line): Regulatory submission
durva + treme – lung cancer (NEPTUNE): Data readout
durva +/- treme – head & neck cancer (KESTREL): Regulatory submission
durva +/- treme ­ head & neck cancer (EAGLE): Data readout, regulatory submission
durva +/- treme – bladder cancer (DANUBE): Data readout, regulatory submission
moxetumomab – leukaemia: Regulatory submission
selumetinib – thyroid cancer: Data readout, regulatory submission

Bydureon – autoinjector: Regulatory decision (US)
roxadustat – anaemia: Data readout (AstraZeneca-sponsored trials), regulatory submission

Duaklir – COPD: Regulatory submission (US)benralizumab – severe, uncontrolled asthma: Regulatory decision (EU, JP)
benralizumab – COPD: Data readout, regulatory submission
tralokinumab – severe, uncontrolled asthma: Regulatory submission
PT010 – COPD: Data readout, regulatory submission

anifrolumab – lupus: Data readout
The term ‘data readout’ in this section refers to Phase III data readouts, unless specified otherwise.

#Potential fast-to-market opportunity ahead of randomised, controlled trials.

On April 27, 2017 Novocure (NASDAQ: NVCR) reported financial results for the three months ended March 31, 2017, highlighting year-over-year and sequential growth in active patients and net revenues (Press release, NovoCure, APR 27, 2017, View Source [SID1234518736]). Novocure is an oncology company developing a profoundly different approach to cancer treatment utilizing a proprietary therapy called TTFields, the use of electric fields tuned to specific frequencies to disrupt solid tumor cancer cell division.

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

                  Schedule Your 30 min Free Demo!

First quarter 2017 highlights include:


Three months ended March 31,
2017 2016 % Change

Non-financial
Prescriptions received in period(1) 894 755 18%
Active patients at period end(2) 1,266 797 59%

Financial, in millions
Net revenues $ 34.9 $ 13.1 167%
Net loss $ (18.0 ) $ (35.4 ) 49%

Cash and cash equivalents at the end of period $ 84.6 $ 115.9
Short-term investments at the end of period $ 104.7 $ 119.8
(1) A "prescription received" is a commercial order for Optune that is received from a physician certified to treat patients with Optune for a patient not previously on Optune. Orders to renew or extend treatment are not included in this total.
(2) An "active patient" is a patient who is on Optune under a commercial prescription order as of the measurement date, including patients who may be on a temporary break from treatment and who plan to resume treatment in less than 60 days.
"Our growth continued in the first quarter 2017. It was the ninth consecutive quarter of active patient growth since the first presentation of our EF-14 data in newly diagnosed glioblastoma (GBM). At the end of the quarter, we had more than 1,260 active patients on therapy," said Asaf Danziger, Novocure’s Chief Executive Officer. "Our 167% year-over-year revenue growth was driven by an expanding global base of active patients as well as coverage and contracting success in the U.S."

"We are pleased with the progress we made this quarter and remain committed to bringing Optune to all the patients who may benefit from it," continued Mr. Danziger. "The final analyses of our EF-14 phase 3 pivotal trial presented at AACR (Free AACR Whitepaper) showed a consistent improvement in overall survival when Optune was added to standard temozolomide chemotherapy for the treatment of newly diagnosed GBM. The improvement in overall survival was maintained at two, three, four and five years. The four and five year survival rates of Optune-treated patients were more than double those of patients treated with temozolomide alone. We believe that Optune plus temozolomide is an essential combination treatment for patients with newly diagnosed GBM."

"Beyond GBM, our data continue to support that TTFields may be well suited for combination with standard of care treatments for a variety of additional solid tumor types," said William Doyle, Novocure’s Executive Chairman. "As committed as we are to bringing Optune to patients with GBM, we are equally focused on advancing TTFields for additional solid tumor indications."

First Quarter 2017 Operating Statistics and Financial Update

There were 1,266 active patients on Optune at March 31, 2017, an increase of 469 active patients, or 59 percent, compared to March 31, 2016. The increase in active patients was driven both by prescription growth and by an increase in the percentage of newly diagnosed GBM patients who started Optune in prior periods and who typically have a longer duration of treatment with Optune. In the first quarter 2017, more than 55 percent of Optune prescriptions were for newly diagnosed GBM.

In the United States, there were 933 active patients on Optune at March 31, 2017, an increase of 234 active patients, or 33 percent, compared to March 31, 2016.
In Germany and other EMEA markets, there were 331 active patients on Optune at March 31, 2017, an increase of 233 active patients, or 238 percent, compared to March 31, 2016.
Additionally, 894 prescriptions were received in the quarter ended March 31, 2017, an increase of 139 prescriptions, or 18 percent, compared to the same period in 2016. The increase in prescriptions was driven primarily by commercial activities in our currently active markets.

In the United States, 685 prescriptions were received in the quarter ended March 31, 2017, an increase of 1 prescription compared to the same period in 2016.
In Germany and other EMEA markets, 206 prescriptions were received in the quarter ended March 31, 2017, an increase of 135 prescriptions, or 190 percent, compared to the same period in 2016.
In Japan, there were 3 prescriptions received in the quarter ended March 31, 2017.
We continued to work with payers in the United States to expand coverage of Optune for the treatment of both newly diagnosed and recurrent GBM. As of March 31, 2017, payers administering plans for more than 187 million lives had issued positive coverage policies stating that Optune is approved for the treatment of newly diagnosed or recurrent GBM, an increase of approximately 7 million lives since January 1, 2017, including new policies with Highmark Blue Cross Blue Shield, Blue Cross Blue Shield of Idaho, and Dean Health Plan.

For the three months ended March 31, 2017, net revenues increased to $34.9 million compared to $13.1 million for the same period in 2016, representing 167 percent growth. This growth was primarily driven by increased Optune adoption and the transition to accrual-based revenue recognition for a portion of our billings.

For the three months ended March 31, 2017, net revenues included $14.7 million in accrual-based net revenues. For the three months ended March 31, 2017, gross billings totaled $73.2 million, and 23% of first quarter 2017 gross billings qualified for accrual-based net revenue recognition. We continue to recognize revenue on a cash basis for payers with which we do not have contractual arrangements or sufficient history to reliably estimate their individual payment patterns and for which we cannot reliably estimate the amount that would ultimately be collected. We believe there will be an extended period of time during which our revenue will be a mix of cash-based and accrual-based revenue.

For the three months ended March 31, 2017, cost of revenues increased to $11.7 million compared to $8.0 million for the same period in 2016, representing an increase of 46 percent. This was primarily driven by an increase in active Optune patients, resulting in increased transducer array shipments and increased field equipment depreciation expenses, as well as increased personnel costs to establish infrastructure necessary to support an increasing volume of shipments to patients.

Research, development and clinical trials expenses for the three months ended March 31, 2017, were $9.4 million compared to $11.4 million for the same period in 2016, representing a decline of 18 percent. This was primarily due to a decrease in clinical trial expenses resulting from the conclusion of our EF-14 phase 3 pivotal trial in newly diagnosed GBM.

Sales and marketing expenses for the three months ended March 31, 2017, were $14.8 million compared to $13.3 million for the same period in 2016, representing an increase of 11 percent. This was primarily due to increased personnel costs, reflecting our expanding commercial operations in the U.S. and Germany, partially offset by a decrease in advertising and professional services related to the launch of Optune for newly diagnosed GBM.

General and administrative expenses for the three months ended March 31, 2017, were $12.4 million, representing an increase of 1 percent compared to the same period in 2016. This was primarily due to increased headcount partially offset by a decrease in professional services and other expenses.

Personnel costs for the three months ended March 31, 2017, included $4.6 million in non-cash share-based compensation expenses, comprised of $0.1 million in cost of revenues; $0.9 million in research, development and clinical trials; $0.7 million in sales and marketing; and $2.9 million in general and administrative expenses. Total non-cash share-based compensation expenses for the first quarter 2016 were $5.5 million.

Net losses for the three months ended March 31, 2017, were $18.0 million compared to net losses of $35.4 million for the same period in 2016.

At March 31, 2017, we had $84.6 million in cash and cash equivalents and $104.7 million in short-term investments, for a total balance of $189.3 million in cash, cash equivalents and short-term investments. At March 31, 2017, we had $100.0 million of principal indebtedness outstanding under our Loan and Security Agreement with Biopharma Secured Investments III Holdings Cayman LP.

Anticipated clinical milestones

Trial initiations:

Phase 3 pivotal trial in locally advanced pancreatic cancer (2H 2017)
Phase 3 pivotal trial in recurrent ovarian cancer (2018)
Top-line data readouts:

Phase 2 pilot STELLAR trial in mesothelioma (2018)
Phase 3 pivotal METIS trial in brain metastases (2020)
Phase 3 pivotal LUNAR trial in non-small cell lung cancer (2021)

On April 27, 2017 Syndax Pharmaceuticals, Inc. (NASDAQ:SNDX), reported the expansion of ENCORE 601/KEYNOTE 142, the ongoing Phase 2 clinical collaboration with a subsidiary of Merck, known as MSD outside the United States and Canada, to include a cohort of patients with microsatellite stable colorectal cancer (Press release, Syndax, APR 27, 2017, View Source [SID1234518726]). This trial is designed to evaluate the safety, tolerability and efficacy of Syndax’s entinostat, an oral, small molecule that targets immune regulatory cells, in combination with KEYTRUDA (pembrolizumab), Merck’s anti-PD-1 (programmed death receptor-1) therapy.

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

                  Schedule Your 30 min Free Demo!

"Microsatellite stable colorectal cancers comprise approximately 85% of colorectal cancers, have limited treatment options once the disease advances, and have been unresponsive to anti-PD-1 monotherapy," said Briggs W. Morrison, M.D., Chief Executive Officer of Syndax. "This expansion of ENCORE 601/KEYNOTE 142 is based in part on the previously communicated clinical responses we observed for the entinostat-KEYTRUDA combination in advanced melanoma patients that had progressed on prior anti-PD-1 therapy."

ENCORE 601 continues to evaluate the combination of entinostat and KEYTRUDA in patients with advanced melanoma or non-small cell lung cancer (NSCLC) who have experienced disease progression following treatment with an anti-PD-1 therapy, and patients with NSCLC who are naïve to treatment with a PD-1 or PD-L1 antagonist. In March 2017, Syndax announced that the melanoma cohort achieved the pre-specified criteria required to advance to the second stage of the trial, and re-opened enrollment of that cohort. The Company will present results from the first stage of the melanoma cohort at the upcoming American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) Annual Meeting in June. A decision on whether the two NSCLC cohorts can proceed to the second stage of the trial is expected in 2Q17.

Financial and other terms of the initial agreement, as well as the amendment covering the expanded collaboration between Syndax and Merck, were not disclosed.