On August 1, 2017 AstraZeneca and its haematology research and development centre of excellence, Acerta Pharma, reported that the US Food and Drug Administration (FDA) has granted Breakthrough Therapy Designation for acalabrutinib for the treatment of patients with mantle cell lymphoma (MCL) who have received at least one prior therapy (Press release, AstraZeneca, AUG 1, 2017, View Source [SID1234519952]). Acalabrutinib is a highly-selective, potent Bruton tyrosine kinase (BTK) inhibitor in development for the treatment of multiple B-cell cancers.

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The Breakthrough Therapy Designation is designed to expedite the development and regulatory review of new medicines that are intended to treat a serious condition and that have shown encouraging early clinical results, which demonstrate substantial improvement on a clinically-significant endpoint over available medicines and when there is significant unmet medical need.

Sean Bohen, Executive Vice President, Global Medicines Development and Chief Medical Officer at AstraZeneca, said: "New treatments are urgently needed for people with mantle cell lymphoma who relapse or do not respond to current therapy. Breakthrough Therapy Designation for acalabrutinib will help us bring this potential new medicine to appropriate patients as quickly as possible."

The FDA granted Breakthrough Therapy Designation based on the totality of clinical data from the acalabrutinib development programme, including data from the Phase II ACE-LY-004 clinical trial in patients with relapsed or refractory MCL.

Flavia Borellini, PhD, Acerta Pharma Chief Executive Officer, said: "This is an exciting regulatory milestone for our work in haematology. Acalabrutinib is a potent, irreversible BTK inhibitor with a high degree of specificity for its target. If approved, it could be a clinically-meaningful treatment option for patients with this devastating disease."

This is the fifth Breakthrough Therapy Designation that AstraZeneca has received from the FDA for an oncology medicine since 2014 and the first for the Company in haematology. The acalabrutinib development programme includes both monotherapy and combination therapies for a broad range of blood cancers and solid tumours.

About mantle cell lymphoma (MCL)

Mantle cell lymphoma (MCL) is an aggressive B-cell non-Hodgkin lymphoma (NHL) with poor prognosis.[i],[ii],[iii],[iv] MCL accounts for approximately 3% to 6% of new NHL cases in Western countries each year, with an annual incidence of 0.5 per 100,000 persons and an estimated prevalence of 3.5/100,000.2,[v] The median age at diagnosis is 68 years, with a 3:1 male predominance.2

About a­calabrutinib

Acalabrutinib is a highly selective, potent, covalent inhibitor of Bruton tyrosine kinase (BTK) with minimal off-target activity observed in pre-clinical trials.[vi],[vii],[viii] This potential new medicine is in development for the treatment of multiple B-cell and other cancers. The acalabrutinib development programme includes both monotherapy and combination therapy strategies in chronic lymphocytic leukaemia (CLL), MCL, Waldenström macroglobulinemia (WM), follicular lymphoma, diffuse large B-cell lymphoma, and multiple myeloma, as well as monotherapy and combination trials in solid tumours. In total, more than 25 acalabrutinib clinical trials with more than 2,000 patients are underway or have completed. Acalabrutinib was granted Orphan Drug Designation by the FDA for the treatment of patients with MCL in September 2015 and by the European Commission in March 2016 for the treatment of patients with CLL, MCL and WM. Acalabrutinib is a potential new medicine not approved for any current use.

On August 1, 2017 Pfizer Inc. (NYSE:PFE) reported financial results for second-quarter 2017, increased the midpoint of its 2017 financial guidance range for Adjusted diluted EPS(2) and reaffirmed its 2017 financial guidance range for Revenues (Press release, Pfizer, AUG 1, 2017, View Source [SID1234519972]).

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Results for the second quarter and first six months of 2017 and 2016(3) are summarized below.

OVERALL RESULTS

($ in millions, except
per share amounts)
Second-Quarter Six Months
2017 2016 Change 2017 2016 Change
Revenues $ 12,896 $ 13,147 (2 %) $ 25,675 $ 26,152 (2 %)
Reported Net Income(1) 3,073 2,047 50 % 6,194 5,085 22 %
Reported Diluted EPS(1) 0.51 0.33 53 % 1.02 0.82 24 %
Adjusted Income(2) 4,063 3,929 3 % 8,255 8,105 2 %
Adjusted Diluted EPS(2) 0.67 0.64 5 % 1.36 1.31 4 %


REVENUES

($ in millions) Second-Quarter Six Months
2017 2016 % Change 2017 2016 % Change
Total Oper. Total Oper.
Innovative Health $ 7,671 $ 7,105 8 % 9 % $ 15,086 $ 14,139 7 % 8 %
Essential Health 5,226 6,042 (14 %) (12 %) 10,590 12,013 (12 %) (10 %)
Total Company $ 12,896 $ 13,147 (2 %) — $ 25,675 $ 26,152 (2 %) (1 %)

Excluding HIS revenues from all periods:
Total Company $ 12,896 $ 12,852 — 2 % $ 25,578 $ 25,553 — 1 %
Essential Health 5,226 5,746 (9 %) (7 %) 10,493 11,414 (8 %) (6 %)

Acquisitions and divestitures completed in 2016 and the first six months of 2017 impacted financial results in the periods presented.(4) Some amounts in this press release may not add due to rounding. All percentages have been calculated using unrounded amounts. References to operational variances pertain to period-over-period growth rates that exclude the impact of foreign exchange.(5)

2017 FINANCIAL GUIDANCE(6)

The midpoint of the guidance range for Adjusted diluted EPS(2) was increased by $0.02 to an updated range of $2.54 to $2.60, reflecting a $300 million increase to the guidance for Adjusted Other (Income)/Deductions(2) due to lower-than-forecasted net interest expense as well as higher-than-forecasted royalty income from certain products and dividend income from ViiV Healthcare Ltd. (ViiV).

Additionally, the updated financial guidance absorbs $75 million of Adjusted research and development expenses(2) that were recorded in second-quarter 2017 resulting from our May 2017 agreement with Sangamo Therapeutics, Inc. (Sangamo) to develop and commercialize gene therapy programs for Hemophilia A.

Pfizer’s updated 2017 financial guidance is presented below:


Revenues $52.0 to $54.0 billion
Adjusted Cost of Sales(2) as a Percentage of Revenues 20.0% to 21.0%
Adjusted SI&A Expenses(2) $13.7 to $14.7 billion
Adjusted R&D Expenses(2) $7.5 to $8.0 billion
Adjusted Other (Income)/Deductions(2) Approximately $200 million of income
(previously approximately $100 million of deductions)
Effective Tax Rate on Adjusted Income(2) Approximately 23.0%
Adjusted Diluted EPS(2) $2.54 to $2.60
(previously $2.50 to $2.60)

CAPITAL ALLOCATION

During the first six months of 2017, Pfizer returned $8.9 billion directly to shareholders, through a combination of:
$3.9 billion of dividend payments, composed of $0.32 per share of common stock in each of the first and second quarters of 2017; and
a $5.0 billion accelerated share repurchase agreement executed in February 2017 and completed in May 2017, which resulted in a reduction of approximately 150 million shares of Pfizer’s outstanding common stock.
As of August 1, 2017, Pfizer’s remaining share repurchase authorization was approximately $6.4 billion.
EXECUTIVE COMMENTARY

Ian Read, Chairman and Chief Executive Officer, stated, "I am pleased with our second-quarter 2017 results and our year-to-date performance is in line with our expectations. Revenues for the quarter increased 2% operationally, excluding the unfavorable impacts of the HIS divestiture and foreign exchange. Innovative Health revenues grew 9% operationally, driven by the performance of our key growth drivers, notably Ibrance, Eliquis, Xeljanz and Xtandi. While Essential Health revenues for the quarter declined 12% operationally primarily due to continued headwinds from products that recently lost marketing exclusivity, we had solid operational growth in emerging markets and in biosimilars. I believe the continued strength from both businesses’ key growth drivers positions the Company for long-term success.

"We have a strong pipeline with a steady flow of scientific innovation coming from all of our key therapeutic areas. Over the next five years, we project the potential for approximately 25 to 30 approvals of which up to 15 have the potential to be blockbusters, and we believe half of these potential blockbusters could receive approval by 2020. Our strategy remains focused on maximizing in-market opportunities while continuing to advance the pipeline and managing our cost structure to deliver attractive financial performance over time," Mr. Read concluded.

Frank D’Amelio, Executive Vice President, Business Operations and Chief Financial Officer, stated, "Today we raised the midpoint of our Adjusted diluted EPS(2) guidance range by $0.02 to a range of $2.54 to $2.60 to reflect a $300 million increase to the guidance for Adjusted Other (Income)/Deductions(2) as well as our strong operational performance to date and confidence in the business going forward. The midpoint of our new guidance range for Adjusted diluted EPS(2) represents 7% growth compared with last year."

QUARTERLY FINANCIAL HIGHLIGHTS (Second-Quarter 2017 vs. Second-Quarter 2016)

Second-quarter 2017 revenues totaled $12.9 billion, a decline of $251 million, or 2% compared to the prior-year quarter, reflecting a slight operational decline of $48 million and the unfavorable impact of foreign exchange of $202 million, or 2%.

Excluding the revenues for HIS in both periods and the unfavorable impact of foreign exchange, second-quarter 2017 revenues increased by $248 million, or 2%. Second-quarter 2017 revenues excluding the net impact of acquisitions and divestitures completed in 2016 and the first six months of 2017 were flat operationally compared to second-quarter 2016.

Innovative Health Highlights

IH revenues increased 9% operationally in second-quarter 2017, driven by continued growth from key brands including Ibrance and Eliquis globally, the addition of Xtandi revenues in the U.S. resulting from the September 2016 acquisition of Medivation, as well as Xeljanz and Lyrica, both primarily in the U.S. Global Ibrance revenues increased 67% operationally while global operational revenue growth for Eliquis and Xeljanz was 52% and 56%, respectively.
Second-quarter 2017 operational growth was negatively impacted by lower revenues for Enbrel in most developed Europe markets, primarily due to continued biosimilar competition.
Global Prevnar 13/Prevenar 13 revenues declined 7% operationally in second-quarter 2017. In the U.S., Prevnar 13 revenues decreased 16%, primarily due to the unfavorable timing of government purchases for the pediatric indication and the continued decline in revenues for the Adult indication due to a smaller remaining "catch up" opportunity compared to the prior-year quarter. Prevenar 13 revenues in international markets increased 8% operationally, primarily due to the favorable timing of government purchases in certain emerging markets for the pediatric indication.
Essential Health Highlights

Second-quarter 2017 EH revenues declined 12% operationally, of which 5% operationally was due to the February 2017 divestiture of HIS. Second-quarter 2017 EH revenues were also negatively impacted by a 27% operational decline from Peri-LOE Products, including declines in Pristiq in the U.S., which lost marketing exclusivity in the U.S. in March 2017, as well as Vfend and Lyrica, both in developed Europe, and a 3% operational decline from Legacy Established Products (LEP). These declines were partially offset by 60% operational growth from Biosimilars, primarily driven by Inflectra in certain developed Europe markets and in the U.S.
Developed markets revenues declined 18% operationally, of which 5% operationally was due to the February 2017 divestiture of HIS. EH developed markets revenues were also negatively impacted by a 40% operational decline from Peri-LOE Products and a 9% operational decline from the LEP portfolio, partially offset by 63% operational growth from Biosimilars.
Revenues in emerging markets grew 5% operationally, primarily driven by 7% operational growth from the LEP portfolio and 10% operational growth from the SIP portfolio. Excluding HIS from both periods, EH revenues in emerging markets grew 6% operationally.
GAAP Reported(1) Income Statement Highlights

SELECTED TOTAL COMPANY REPORTED COSTS AND EXPENSES(1)

($ in millions)
(Favorable)/Unfavorable
Second-Quarter Six Months
2017 2016 % Change 2017 2016 % Change
Total Oper. Total Oper.
Cost of Sales(1) $ 2,663 $ 3,174 (16 %) (10 %) $ 5,134 $ 6,026 (15 %) (11 %)
Percent of Revenues 20.7 % 24.1 % N/A N/A 20.0 % 23.0 % N/A N/A
SI&A Expenses(1) 3,425 3,471 (1 %) — 6,733 6,856 (2 %) (1 %)
R&D Expenses(1) 1,780 1,748 2 % 3 % 3,487 3,478 — 1 %
Total $ 7,868 $ 8,392 (6 %) (3 %) $ 15,354 $ 16,359 (6 %) (4 %)

Other (Income)/Deductions––net(1) ($66 ) $ 1,068 * * ($68 ) $ 1,398 * *
Effective Tax Rate on Reported Income(1) 19.4 % 14.4 % 20.1 % 14.4 %

* Indicates calculation not meaningful.

Adjusted(2) Income Statement Highlights

SELECTED TOTAL COMPANY ADJUSTED COSTS AND EXPENSES(2)

($ in millions)
(Favorable)/Unfavorable
Second-Quarter Six Months
2017 2016 % Change 2017 2016 % Change
Total Oper. Total Oper.
Adjusted Cost of Sales(2) $ 2,595 $ 3,062 (15 %) (9 %) $ 5,029 $ 5,627 (11 %) (7 %)
Percent of Revenues 20.1 % 23.3 % N/A N/A 19.6 % 21.5 % N/A N/A
Adjusted SI&A Expenses(2) 3,385 3,443 (2 %) — 6,673 6,811 (2 %) (1 %)
Adjusted R&D Expenses(2) 1,771 1,740 2 % 2 % 3,476 3,463 — 1 %
Total $ 7,750 $ 8,246 (6 %) (3 %) $ 15,178 $ 15,901 (5 %) (3 %)

Adjusted Other (Income)/Deductions––net(2) ($170 ) ($230 ) (26 %) (43 %) ($258 ) ($380 ) (32 %) (51 %)
Effective Tax Rate on Adjusted Income(2) 22.9 % 22.7 % 22.6 % 23.1 %

The diluted weighted-average shares outstanding used to calculate Reported(1) and Adjusted(2) diluted EPS declined by 112 million shares compared to the prior-year quarter due to Pfizer’s share repurchase program, reflecting the impact of a $5 billion accelerated share repurchase agreement executed in March 2016 and completed in June 2016 and another $5 billion accelerated share repurchase agreement executed in February 2017 and completed in May 2017.

A full reconciliation of Reported(1) to Adjusted(2) financial measures and associated footnotes can be found starting on page 18 of the press release located at the hyperlink below.

RECENT NOTABLE DEVELOPMENTS (Since May 2, 2017)

Product Developments

Bavencio (avelumab)
In July 2017, Merck KGaA, Darmstadt, Germany (Merck KGaA) and Pfizer announced that the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) recommended the approval of avelumab as a monotherapy for the treatment of adult patients with metastatic Merkel cell carcinoma (mMCC), a rare and aggressive skin cancer. The European Commission (EC) will now review the CHMP’s recommendation, with a decision expected in the third quarter of 2017. Bavencio was previously granted accelerated approval from the U.S. Food and Drug Administration (FDA) for the treatment of adults and pediatric patients 12 years and older with mMCC based on tumor response and duration of response. Continued FDA approval for this indication may be contingent upon verification and description of clinical benefit in confirmatory trials.
In May 2017, EMD Serono Inc., the biopharmaceutical business of Merck KGaA in the U.S. and Canada, and Pfizer announced that the FDA approved Bavencio for the treatment of patients with locally advanced or metastatic urothelial carcinoma who have disease progression during or following platinum-containing chemotherapy, or who have disease progression within 12 months of neoadjuvant or adjuvant treatment with platinum-containing chemotherapy. This indication was approved under accelerated approval based on tumor response and duration of response. Continued approval for this indication may be contingent upon verification and description of clinical benefit in confirmatory trials.
Besponsa (inotuzumab ozogamicin) — In June 2017, Pfizer announced that the EC approved Besponsa as monotherapy for the treatment of adults with relapsed or refractory CD22-positive B-cell precursor acute lymphoblastic leukemia (ALL). This indication includes treatment of adults with Philadelphia chromosome positive (Ph+) as well as Philadelphia chromosome negative (Ph-) relapsed or refractory B-cell precursor ALL. Adults with Ph+ relapsed or refractory CD22-positive B-cell precursor ALL should have failed treatment with at least one tyrosine kinase inhibitor. With this approval, Besponsa became the first and only antibody drug conjugate (ADC) available for patients with this type of leukemia in the European Union (EU). In the U.S., Besponsa received Breakthrough Therapy designation from the FDA in October 2015 for ALL. A Biologics License Application (BLA) for Besponsa for the treatment of adult patients with relapsed or refractory B-cell precursor ALL was accepted for filing and granted Priority Review by the FDA in February 2017. The Prescription Drug User Fee Act (PDUFA) goal date for a decision by the FDA is in August 2017.
Mylotarg (gemtuzumab ozogamicin) — In July 2017, Pfizer announced that the FDA’s Oncologic Drug Advisory Committee (ODAC) voted 6-1 that Mylotarg in combination with chemotherapy has a favorable risk-benefit profile for patients with newly-diagnosed CD33-positive acute myeloid leukemia (AML). The role of the ODAC is to provide recommendations to the FDA. The PDUFA goal date for a decision by the FDA is in September 2017.
Retacrit (proposed epoetin alpha biosimilar) — In June 2017, Pfizer announced that it received a Complete Response Letter (CRL) from the FDA regarding the Company’s BLA for its proposed epoetin alfa biosimilar. This CRL relates to matters noted in a Warning Letter issued in February 2017 following a routine FDA inspection of Pfizer’s manufacturing facility in McPherson, Kansas in 2016. This facility was listed as the potential manufacturing site in the BLA for the proposed epoetin alfa biosimilar. The issues noted in the Warning Letter do not relate specifically to the manufacture of epoetin alfa. No additional clinical data was requested in the CRL. An ODAC voted in May 2017 to recommend this proposed biosimilar for approval.
Sutent (sunitinib malate) — In May 2017, Pfizer announced that a supplemental New Drug Application (sNDA) for Sutent was accepted for filing by the FDA. If approved, the sNDA would expand the approved use of Sutent to include use as an adjuvant treatment in adult patients at high risk of recurrent renal cell carcinoma (RCC) following nephrectomy (surgical removal of the cancer-containing kidney). In addition, the EMA has validated for review a Type II Variation application for Sutent in the same patient population. The PDUFA goal date for a decision by the FDA is in January 2018.
Trumenba (Meningococcal Serogroup B Bivalent Recombinant Lipoprotein vaccine) — In May 2017, Pfizer announced that the EC approved Trumenba for the prevention of invasive meningococcal disease caused by Neisseria meningitidis serogroup B in individuals 10 years of age and older.
Vyndaqel (tafamidis) — In June 2017, Pfizer announced that the FDA granted Fast Track designation to tafamidis, the Company’s investigational treatment for transthyretin cardiomyopathy (TTR-CM). This rare disease is associated with progressive heart failure and is universally fatal. Currently in Phase 3 clinical development for TTR-CM, tafamidis is being evaluated for its potential to reduce mortality and cardiovascular-related hospitalizations. The FDA’s Fast Track approach is a process designed to facilitate the development and expedite the review of new drugs and vaccines intended to treat or prevent serious conditions and address an unmet medical need. Vyndaqel was first approved in 2011 in the EU for the treatment of transthyretin familial amyloid polyneuropathy (TTR-FAP) in adult patients with early-stage symptomatic polyneuropathy to delay peripheral neurologic impairment and is currently approved for TTR-FAP in 40 countries. Pfizer received a CRL from the FDA on its application to approve tafamidis for TTR-FAP in 2012; tafamidis is not approved in the U.S.
Xeljanz (tofacitinib citrate)
In July 2017, Pfizer announced that the FDA accepted for review a sNDA for Xeljanz for the treatment of adult patients with moderately to severely active ulcerative colitis. The PDUFA goal date for a decision by the FDA is in March 2018.
In May 2017, Pfizer announced that the FDA accepted for review a sNDA for Xeljanz 5 mg twice daily for the treatment of adult patients with active psoriatic arthritis (PsA). A separate sNDA was also accepted for Xeljanz XR extended release 11 mg once daily use in PsA. The PDUFA goal date for a decision by the FDA is in December 2017. The FDA’s Arthritis Advisory Committee is scheduled to meet on August 3, 2017 to discuss the efficacy and safety data as well as benefit-risk considerations for these sNDAs.
Xtandi (enzalutamide) — In June 2017, Astellas Pharma Inc. (Astellas) and Pfizer announced the amendment of the protocol for the registrational PROSPER trial, a multi-national, randomized, double-blind, placebo-controlled study evaluating the efficacy and safety of Xtandi in patients with non-metastatic castration-resistant prostate cancer (CRPC). The primary endpoint of the PROSPER trial remains the same: metastasis-free survival. The main purpose of the amendment is to revise the plan for the analyses of the primary and several secondary endpoints, which allows for a reduction in the target sample size to approximately 1,440 from 1,560 patients. The companies now anticipate PROSPER top-line results will be disclosed later this year. Previously the expected primary completion date for PROSPER was June 2019. Xtandi is currently approved by the FDA for the treatment of patients with metastatic CRPC.
Pipeline Developments

A comprehensive update of Pfizer’s development pipeline was published today and is now available at www.pfizer.com/science/drug-product-pipeline. It includes an overview of Pfizer’s research and a list of compounds in development with targeted indication and phase of development, as well as mechanism of action for some candidates in Phase 1 and all candidates from Phase 2 through registration.

Ertugliflozin (PF-04971729) — In June 2017, Merck, known as MSD outside the U.S. and Canada, in partnership with Pfizer, announced that two Phase 3 studies (VERTIS MET and VERTIS SITA) of ertugliflozin, an investigational oral SGLT-2 inhibitor in development to help improve glycemic control in adults with type 2 diabetes, met their primary endpoints. In the studies, both doses of ertugliflozin tested (5 mg and 15 mg daily) achieved statistically significant reductions in A1C, a measure of average blood glucose over a two- to three-month timeframe, when added to metformin or in initial co-administration with sitagliptin. The results of these studies, along with 52-week extension data from three other studies in the VERTIS clinical development program of ertugliflozin, were presented at the 77th Scientific Sessions of the American Diabetes Association.
PF-06439535 (proposed biosimilar bevacizumab) — In July 2017, Pfizer announced that the REFLECTIONS B7391003 study, a comparative, confirmatory safety and efficacy study of PF-06439535 versus Avastin(7) (bevacizumab), met its primary endpoint, demonstrating equivalence of objective response rate of PF-06439535 versus Avastin(7), both taken in combination with carboplatin/paclitaxel, for the first line treatment of patients with advanced non-squamous non-small cell lung cancer.
Talazoparib (MDV3800) — In June 2017, Pfizer announced Phase 2 data showing that its investigational, dual-mechanism poly ADP ribose polymerase (PARP) inhibitor, talazoparib, demonstrated anti-tumor activity in patients with germline (inherited) BRCA1/2-positive (gBRCA+) advanced breast cancer. Results from the Phase 2 ABRAZO trial were presented during an oral session at the 53rd Annual Meeting of the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper). ABRAZO is an open-label Phase 2, two-stage, single arm, parallel cohort study that investigated the clinical efficacy and safety of single-agent talazoparib in 83 evaluable, heavily pretreated gBRCA+ advanced breast cancer patients. The primary endpoint was objective response rate (ORR) by independent radiology review. Cohort 1 consisted of 49 patients who previously responded to platinum-based chemotherapy and subsequently developed disease progression. A 21% ORR (95% CI: 10-35) was observed in this group of patients. Cohort 2 consisted of 35 patients who developed disease progression following at least three lines of non-platinum-based therapy. This group of patients had a 37% ORR (95% CI: 22-55). Talazoparib is also being assessed in the open-label Phase 3 randomized, parallel, two-arm EMBRACA trial. EMBRACA is evaluating talazoparib vs. protocol-specific physician’s choice of chemotherapy in patients with advanced and/or metastatic gBRCA+ breast cancer who have received zero to three prior chemotherapy regimens for advanced disease. The EMBRACA trial has completed enrollment and top-line results are expected by January 2018.
Tanezumab (PF-4383119) — In June 2017, Pfizer and Eli Lilly and Company (Lilly) announced that the FDA granted Fast Track designation for tanezumab for the treatment of chronic pain in patients with osteoarthritis and chronic low back pain. Tanezumab is an investigational humanized monoclonal antibody that selectively targets, binds to and inhibits nerve growth factor (NGF). It is the first and only NGF inhibitor to receive Fast Track designation. In 2013, Pfizer and Lilly entered into a worldwide co-development and co-commercialization agreement for the advancement of tanezumab.
Corporate Developments

In July 2017, Pfizer and Basilea Pharmaceutica Ltd. (Basilea) completed a licensing agreement whereby Pfizer obtained the exclusive commercialization rights in Europe to Cresemba (isavuconazole), a novel anti-fungal treatment for adult patients with diagnosed invasive aspergillosis and mucormycosis, two serious infections associated with high morbidity and mortality among immunocompromised patients. Under the terms of the agreement, Pfizer will have exclusive rights to distribute and commercialize Cresemba in Europe, including Austria, France, Germany, Italy and the United Kingdom, where it is currently available. These rights do not extend to the Nordic countries (Denmark, Finland, Norway, Sweden and Iceland). In addition, Pfizer will be responsible for additional Cresemba launches, predominantly in Europe, which are expected throughout 2017 and 2018. Basilea will remain the marketing authorization holder for the EU.
In May 2017, Sangamo and Pfizer announced an exclusive, global collaboration and license agreement for the development and commercialization of gene therapy programs for Hemophilia A, including SB-525, one of Sangamo’s four lead product candidates. Under the terms of the agreement, Pfizer recorded $75 million in research and development expenses in the second quarter of 2017, which included an upfront payment of $70 million to Sangamo. Sangamo will be responsible for conducting the SB-525 Phase 1/2 clinical study and certain manufacturing activities. Pfizer will be operationally and financially responsible for subsequent research, development, manufacturing and commercialization activities for SB-525 and additional products, if any. Sangamo is eligible to receive potential milestone payments of up to $475 million, including up to $300 million for the development and commercialization of SB-525 and up to $175 million for additional Hemophilia A gene therapy product candidates that may be developed under the agreement. Sangamo will also receive tiered double-digit royalties on net sales. Additionally, Sangamo will be collaborating with Pfizer on manufacturing and technical operations utilizing viral delivery vectors.
Pfizer announced in February 2017 that it had entered into an accelerated share repurchase agreement with Citibank N.A. (Citibank) to repurchase $5 billion of Pfizer’s common stock. Pursuant to the terms of the agreement, on February 6, 2017, Pfizer paid $5 billion to Citibank and received an initial delivery of approximately 126 million shares of Pfizer common stock from Citibank. Upon settlement of the agreement in May 2017 and pursuant to the agreement’s settlement terms, Citibank delivered approximately 24 million additional shares of Pfizer common stock to Pfizer. After giving effect to the accelerated share repurchase agreement, Pfizer’s remaining share-purchase authorization was approximately $6.4 billion as of August 1, 2017.

On August 1, 2017 Incyte Corporation (Nasdaq: INCY) reported 2017 second-quarter financial results, highlighting strong revenue growth driven by increased sales of Jakafi (ruxolitinib) in the U.S. and Iclusig (ponatinib) in Europe, and royalties from ex-U.S. sales of Jakavi (ruxolitinib) by Novartis and Olumiant (baricitinib) by Lilly (Press release, Incyte, AUG 1, 2017, View Source [SID1234519968]).

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Recent highlights also include the initiation of two pivotal studies (ruxolitinib for treatment-refractory chronic graft versus host disease (GVHD); itacitinib for steroid-naïve acute GVHD), and the presentation of multiple data sets at ASCO (Free ASCO Whitepaper) 2017 supporting the expansion of the pivotal trial program for epacadostat.

"Revenue growth from Jakafi and Iclusig continues to be very robust, driven by strong demand, and we have also made significant progress across our clinical portfolio. As we look forward to the second half of 2017, we anticipate the publication of important data from our development candidates, as well as the initiation of multiple additional pivotal combination studies with epacadostat," stated Hervé Hoppenot, Chief Executive Officer, Incyte. "Investment in innovation has created significant value for Incyte, our stakeholders and for the patients that our products treat. With strong revenue growth, a broad clinical development portfolio, comprehensive drug discovery capabilities and an expanded geographic footprint which now includes the U.S., Europe and Japan, we believe that we are well positioned for long-term value creation."

Portfolio Update
Cancer – Targeted Therapies
In July, the latest National Comprehensive Cancer Network (NCCN) Clinical Practice Guidelines in Oncology for myeloproliferative neoplasms (MPNs) were published, and now include Jakafi as a recommended treatment for patients with myelofibrosis and patients with polycythemia vera who have had an inadequate response to first-line therapies, such as hydroxyurea.

In June, REACH3, a Phase 3 trial of ruxolitinib as a treatment for patients with steroid-refractory chronic GVHD, was initiated. REACH3 is being conducted in collaboration with Novartis.
RESET-272, the double-blind, randomized pivotal trial of ruxolitinib versus anagrelide for the treatment of patients with essential thrombocythemia who are resistant to or intolerant of hydroxyurea, is now open for enrollment.
GRAVITAS-301, the Phase 3 trial of itacitinib, Incyte’s selective JAK1 inhibitor, in patients with treatment-naïve acute GVHD, began dosing in July.

Following a review of the clinical profiles of Incyte’s two BRD inhibitors, INCB54329 and INCB57643, including data expected to be presented at medical meetings in the second half of 2017, the Company intends to focus future development efforts on INCB57643.
In June, Incyte initiated the Phase 1/2 dose-escalation trial of its FGFR4 inhibitor, INCB62079, in patients with hepatocellular carcinoma.

Indication Status Update
Ruxolitinib (JAK1/JAK2) Steroid-refractory acute GVHD Pivotal Phase 2 (REACH1) and Phase 3 (REACH2)
Ruxolitinib (JAK1/JAK2) Steroid-refractory chronic GVHD Phase 3 (REACH3)
Ruxolitinib (JAK1/JAK2) Essential thrombocythemia Pivotal Phase 2 (RESET-272) open for enrollment
Itacitinib (JAK1) Treatment-naïve acute GVHD Phase 3 (GRAVITAS-301)
Itacitinib (JAK1) Non-small cell lung cancer Phase 1/2 in combination with osimertinib (EGFR)
INCB52793 (JAK1) Advanced malignancies Phase 1/2 dose-escalation
INCB50465 (PI3Kδ) Diffuse large B-cell lymphoma Phase 2 (CITADEL-202)
INCB54828 (FGFR1/2/3) Bladder cancer, cholangiocarcinoma; 8p11 MPNs
Phase 2 (FIGHT-201, FIGHT-202, FIGHT-203)
INCB57643 (BRD) Advanced malignancies Phase 1/2 dose-escalation
INCB53914 (PIM) Advanced malignancies Phase 1/2 dose-escalation
INCB59872 (LSD1) Acute myeloid leukemia, small cell lung cancer Phase 1/2 dose-escalation
INCB62079 (FGFR4) Hepatocellular carcinoma Phase 1/2 dose-escalation

Cancer – Immune Therapies
At ASCO (Free ASCO Whitepaper) 2017 in June, new data from the ECHO-202 and ECHO-204 Phase 1/2 trials of epacadostat plus PD-1 inhibitors were presented in multiple tumor types. These data formed the basis of the decisions to proceed into multiple Phase 3 trials, in collaboration with each of Merck and Bristol-Myers Squibb, respectively, as announced earlier this year.

In June 2017, Incyte and Roche/Genentech decided to close the ECHO-110 trial of epacadostat plus atezolizumab to further enrollment because of slow study recruitment.

Indication Status Update
Epacadostat (IDO1) Unresectable or metastatic melanoma Phase 3 (ECHO-301) in combination with pembrolizumab (PD-1)
Epacadostat (IDO1) NSCLC, renal, bladder and head & neck cancer Phase 3 in combination with pembrolizumab (PD-1) expected to begin in 2017
Epacadostat (IDO1) NSCLC, head & neck cancer Phase 3 in combination with nivolumab (PD-1) expected to begin in 2017
Epacadostat (IDO1) Multiple tumor types Phase 2 (ECHO-202) expansion cohorts in combination with pembrolizumab (PD-1)
Epacadostat (IDO1) Multiple tumor types Phase 2 (ECHO-204) expansion cohorts in combination with nivolumab (PD-1)
Epacadostat (IDO1) Multiple tumor types Phase 2 (ECHO-203) expansion cohorts in combination with durvalumab (PD-L1)
INCB01158 (ARG)1 Solid tumors Phase 1/2 dose-escalation
INCSHR1210 (PD-1)2 Solid tumors Phase 1/2 dose-escalation completed; enrollment suspended
INCAGN1876 (GITR)3 Solid tumors Phase 1/2 dose-escalation
INCAGN1949 (OX40)3 Solid tumors Phase 1/2 dose-escalation
PD-1 platform study Solid tumors Phase 1/2, pembrolizumab (PD-1) in combination with itacitinib (JAK1) or INCB50465 (PI3Kδ)
JAK1 platform study Solid tumors Phase 1/2, itacitinib (JAK1) in combination with epacadostat (IDO1) or INCB50465 (PI3Kδ)

Notes:
1) INCB01158 co-developed with Calithera
2) INCSHR1210 licensed from Hengrui
3) INCAGN1876 & INCAGN1949 from discovery alliance with Agenus

Non-oncology
In June, Incyte initiated a Phase 2 trial of topical ruxolitinib for the treatment of patients with vitiligo.

Indication Status Update
Topical ruxolitinib (JAK1/JAK2) Atopic dermatitis, vitiligo Phase 2

Partnered
In July 2017, Lilly and Incyte announced that Japan’s Ministry of Health, Labor and Welfare granted marketing approval for Olumiant for the treatment of rheumatoid arthritis (including the prevention of structural injury of joints) in patients with inadequate response to standard-of-care therapies.

In July 2017, Lilly and Incyte announced that a resubmission to the U.S. Food and Drug Administration (FDA) for the New Drug Application (NDA) for baricitinib will be delayed for a period anticipated to be a minimum of 18 months. The companies will be further discussing the path forward with the agency and evaluating options for resubmission, including the potential for an additional clinical study, as requested by the FDA.

Novartis has stated that it anticipates submitting an NDA for capmatinib, Incyte’s potent and selective c-MET inhibitor, in 2018.

Indication Status Update
Baricitinib (JAK1/JAK2)1 Rheumatoid arthritis Approved in Europe and Japan; CRL issued by FDA
Baricitinib (JAK1/JAK2)1 Psoriatic arthritis Lilly no longer expects Phase 3 to begin in 2017
Baricitinib (JAK1/JAK2)1 Atopic dermatitis, systemic lupus erythematosus Phase 2
Capmatinib (c-MET)2 Non-small cell lung cancer, liver cancer Phase 2 in EGFR wild-type ALK negative NSCLC patients with c-MET amplification and mutation

Notes:
1) Baricitinib licensed to Lilly
2) Capmatinib licensed to Novartis

Corporate Update
In June 2017, Lothar Finke, M.D. joined the Incyte Executive Management team as Head of Development Japan and General Manager, Japan. Dr. Finke was most recently the Head of Oncology Development and Medical Affairs Japan for Novartis where he was responsible for leading an integrated organization to support oncology development. He has significant experience developing drugs in all classes of oncology including immuno-oncology, targeted therapies and cell therapies in the EU, U.S., Canada, and Japan.

2017 Second-Quarter Financial Results
Revenues For the quarter ended June 30, 2017, net product revenues of Jakafi were $276 million as compared to $208 million for the same period in 2016, representing 33 percent growth. For the six months ended June 30, 2017, net product revenues of Jakafi were $527 million as compared to $391 million for the same period in 2016, representing 35 percent growth. For the quarter ended June 30, 2017, net product revenues of Iclusig were $16 million as compared to $4 million for the same period in 2016. For the six months ended June 30, 2017, net product revenues of Iclusig were $29 million as compared to $4 million for the same period in 20161.

For the quarter and six months ended June 30, 2017, product royalties from sales of Jakavi, which has been out-licensed to Novartis outside of the United States, were $34 million and $63 million, respectively, as compared to $26 million and $48 million for the same periods in 2016. For the quarter and six months ended June 30, 2017, product royalties from sales of Olumiant outside of the United States received from Lilly were $1 million.

For the quarter and six months ended June 30, 2017, contract revenues were $0 million and $90 million, respectively, as compared to $8 million and $66 million for the same periods in 2016. These contract revenues relate to milestone payments earned.

For the quarter ended June 30, 2017, total revenues were $326 million as compared to $246 million for the same period in 2016. For the six months ended June 30, 2017, total revenues were $711 million as compared to $510 million for the same period in 2016.

Year Over Year Revenue Growth
(in thousands, unaudited)

Three Months Ended Six Months Ended
June 30, % June 30, %
2017 2016 Change 2017 2016 Change
Revenues:
Jakafi net product revenue $ 276,038 $ 208,126 33% $ 527,115 $ 391,393 35%
Iclusig net product revenue 15,629 3,990 - 29,359 3,990 -
Product royalty revenues 34,769 25,958 34% 63,990 47,860 34%
Contract revenues - 8,214 - 90,000 66,429 -
Other revenues 8 - - 62 80 -
Total revenues $ 326,444 $ 246,288 33% $ 710,526 $ 509,752 39%

Research and development expenses Research and development expenses for the quarter and six months ended June 30, 2017 were $202 million and $610 million, respectively, as compared to $120 million and $277 million for the same periods in 2016. Included in research and development expenses for the quarter and six months ended June 30, 2017 were non-cash expenses related to equity awards to our employees of $23 million and $44 million, respectively. The increase in research and development expenses was primarily due to the expansion of the Company’s clinical portfolio as well as upfront and milestone expenses of $209 million related to our collaboration and license agreements with Agenus, Calithera and Merus.

Selling, general and administrative expenses Selling, general and administrative expenses for the quarter and six months ended June 30, 2017 were $90 million and $177 million, respectively, as compared to $67 million and $131 million for the same periods in 2016. Included in selling, general and administrative expenses for the quarter and six months ended June 30, 2017 were non-cash expenses related to equity awards to our employees of $11 million and $20 million, respectively. Increased selling, general and administrative expenses were driven primarily by additional costs related to the commercialization of Jakafi and the geographic expansion in Europe.

Change in fair value of acquisition-related contingent consideration The change in fair value of acquisition-related contingent consideration for the quarter and six months ended June 30, 2017 were $7 million and $14 million, respectively, as compared to $2 million for the same periods in 2016. The change in fair value of acquisition-related contingent consideration represents the fair market value adjustments of the Company’s contingent liability related to the acquisition of the European business of ARIAD Pharmaceuticals, Inc.

Unrealized loss on long term investments Unrealized loss on long term investments for the quarter and six months ended June 30, 2017 were $20 million and $25 million, respectively, as compared to $1 million and $4 million for the same periods in 2016. The unrealized loss on long term investments for the quarter and six months ended June 30, 2017 represents the fair market value adjustments of the Company’s investments in Agenus and Merus.

Expense related to senior note conversions Expense related to senior note conversions for the quarter and six months ended June 30, 2017 were $1 million and $55 million, respectively, related to the conversions of certain of our 2018 and 2020 convertible senior notes.

Net income (loss) Net loss for the quarter ended June 30, 2017 was $12 million, or $0.06 per basic and diluted share, as compared to net income of $34 million, or $0.18 per basic and diluted share for the same period in 2016. Net loss for the six months ended June 30, 2017 was $200 million, or $1.00 per basic and diluted share, as compared to net income of $58 million, or $0.31 per basic and $0.30 per diluted share for the same period in 2016.
Cash, cash equivalents and marketable securities position As of June 30, 2017, cash, cash equivalents and marketable securities totaled $609 million as compared to $809 million as of December 31, 2016.
2017 Financial Guidance
The Company has updated its full year 2017 financial guidance, as detailed below.

Current Previous
Jakafi net product revenues $1,090-$1,120 million $1,020-$1,070 million
Iclusig net product revenues $60-$65 million Unchanged
Research and development expenses* $1,050-$1,150 million $1,000-$1,100 million
Selling, general and administrative expenses $340-$360 million Unchanged
Change in fair value of acquisition-related contingent consideration $30-$35 million Unchanged
* Includes upfront and milestone expenses of $209 million related to the amended Agenus collaboration, and the Merus and Calithera collaborations

About Jakafi (ruxolitinib)
Jakafi is a first-in-class JAK1/JAK2 inhibitor approved by the U.S. Food and Drug Administration for treatment of people with polycythemia vera (PV) who have had an inadequate response to or are intolerant of hydroxyurea. Jakafi is also indicated for treatment of people with intermediate or high-risk myelofibrosis (MF), including primary MF, post–polycythemia vera MF, and post–essential thrombocythemia MF.
Jakafi is marketed by Incyte in the United States and by Novartis as Jakavi (ruxolitinib) outside the United States.

About Iclusig (ponatinib) tablets
Iclusig targets not only native BCR-ABL but also its isoforms that carry mutations that confer resistance to treatment, including the T315I mutation, which has been associated with resistance to other approved TKIs.

In the EU, Iclusig is approved for the treatment of adult patients with chronic phase, accelerated phase or blast phase chronic myeloid leukemia (CML) who are resistant to dasatinib or nilotinib; who are intolerant to dasatinib or nilotinib and for whom subsequent treatment with imatinib is not clinically appropriate; or who have the T315I mutation, or the treatment of adult patients with Philadelphia-chromosome positive acute lymphoblastic leukemia (Ph+ ALL) who are resistant to dasatinib; who are intolerant to dasatinib and for whom subsequent treatment with imatinib is not clinically appropriate; or who have the T315I mutation.

Incyte has an exclusive license from ARIAD Pharmaceuticals, Inc, since acquired by Takeda Pharmaceutical Company Limited, to develop and commercialize Iclusig in the European Union and 22 other countries, including Switzerland, Norway, Turkey, Israel and Russia.